Barley Profile
By Mykel Taylor and Michael Boland, Kansas State University; and Gary Brester, Montana State University.
Revised August 2011 by Diane Huntrods, AgMRC, Iowa State University.
Overview
Barley is a short-season, early maturing crop. It is produced in a variety of climates and in both irrigated and dryland production areas. In fact, barley is the third largest feed grain crop produced in the United States, after corn and sorghum.
The 2010 barley crop yielded 180.3 million bushels, down for the second year in a row. The year's average price of $3.90 per bushel also declined for the second year in a row. As a result, the U.S. crop was valued at $691.1 million. (NASS 2011)
North Dakota remained the leading producer of barley by volume. The state harvested 43.6 million bushel of barley, which was valued at $156.8 million. Other top producing states are (in order): Idaho and Montana. (NASS 2011)
Production
Barley is classified as either six-row or two-row, depending on the physical arrangement of the kernels on the plant. Barley is also described as hulled or hull-less by the presence of beards, or awns, covering the kernels. Six-row barley is grown primarily in North Dakota, Minnesota, South Dakota and Idaho. Two-row barley is grown in Montana, Idaho, Colorado, Wyoming, Washington, Oregon and California.
Barley is one of the most highly adapted of the cereal grains, with production in climates ranging from sub-Arctic to subtropical. Because of its use in malt beverages, barley is grown in many areas of the world for cultural as well as economic reasons. According to the Foreign Ag Service (FAS 2009), the United States is the seventh largest producer of barley in the world. The European Union-27 (EU-27) is, by far, the largest producer, followed by Russia and Ukraine.
Production Contracts
Contracts for malt barley production offer maltsters a secure supply of high-quality barley and price premiums for farmers to grow malt barley over higher-yielding feed barley. Malt barley not meeting quality specifications for malting is sold in the feed market at significant price discounts relative to feed barley because of lower test weights and protein.
Malting companies contract for both two-row and six-row barley varieties. Some contracts are specific to a certain variety as well as quality requirements. The preference for two-row or six-row barley stems from several factors including quality, brewing techniques, price and style or flavor of the finished product (beer).
Most contracts have very specific quality requirements for acceptable malt barley. Characteristics include protein, moisture foreign material levels, skinned and broken kernel limitations, sprout damage, color and plumpness of kernel. There are also stringent tests for the presence of diseases such as fusarium head blight. Most of the characteristics directly affect the brewing process, making contract specifications necessary for high-quality beer production.
Prices
As of 2010, the average price of all barley was $3.90 per bushel, with a high of $4.30 and a low of $2.20. The price declined for a second year in a row. (NASS 2011)
Malt barley is a different quality than feed barley and commands a substantial price premium over feed barley. The price of malt barley is largely determined by the supply of malt in both the domestic and world markets and demand for malt and malt products. The high prices of malt barley relative to feed barley result in malt barley production that often exceeds demand, allowing maltsters to select the highest quality of malt.
From 1998 to 2002, the average price difference between malt barley and feed barley was 76 cents per bushel, with malt barley carrying a 70 percent premium. According to the USDA's National Ag Statistics Service (NASS), the average price of malting barley in 2009 was $5.02 per bushel, while the average price of feed barley was $2.61 per bushel. The U.S. Baseline Briefing Book estimates that feed use will account for less than 20 percent of projected domestic barley use beginning in 2011.
Processing
When barley is used for malt, it involves steeping the malt barley in water, under controlled conditions, allowing it to germinate or sprout. It is then dried or roasted in a kiln, cleaned and stored for extended periods.
Beer is considered a mature product, so growth occurs at a slow rate relative to newer industries. The industry measures beer consumption using beer shipments as a proxy. In 2010, 205.9 million barrels of malt beverage were consumed in the United States, a 1.3 percent decrease from the 208.7 million barrels consumed the previous year (Beer Institute). Per person consumption has actually decreased since the early 1980s. This may be an indication of the effectiveness of public policy and private sector initiatives encouraging moderation and personal responsibility regarding alcohol consumption.
Increased consumer demand for microbrews has increased the number of small breweries in the United States to more than 1,800 or seven times the number in business in 1990. Imports have grown consistently over the past decade. American brewers are increasing foreign shipments through licensing agreements and joint ventures with foreign brewers.
Value-added Products
Barley is used as livestock feed, food and barley malt. Each of these uses is best met with specific barley varieties. According to the National Barley Growers Association, 76 percent of the barley grown in the United States is used for food and industrial processing, while 22 percent is used for animal feed. Barley competes with corn and sorghum as a feed grain. It has higher protein content than corn, which reduces the need for protein supplements in feed compounds. Barley grown for human consumption is used in soups, as an extender for vegetable proteins and is occasionally milled into flour. Barley flour is used in the Unites States in baby food and in North Africa and Asia for flatbreads or porridges.
Exports and Imports
Following corn, barley is the second largest feed grain traded internationally. According to the U.S. Grains Council, the country is consistently one of the top ten world barley exporters. Barley exports were valued at $38.9 million in 2010, a 10 percent increase from the previous year. The leading markets for U.S. barley are (in order by value): Mexico, Tunisia, Canada, and Japan. Before Mexico's rise, Japan was the top-ranking buyer of barley for nearly a decade. Canada has been importing U.S. barley for some time. Exports to Mexico, Canada and Japan all experienced double digit declines in 2010. (FAS 2010)
Barley imports also dropped by double digits in 2010, decreasing 57 percent to $58.3 million. Canada was, by far, the largest supplier of barley to the United States by value, providing 96 percent of last year's imported barley. (FAS 2010)
Within the next ten years, China is likely to become the world's largest importer of malt barley. As the country's population and per person income continue to grow so does the demand for beer. A rising percentage of the world barley trade is in the form of malt. North Africa and the Middle East region is expected to remain the world's largest barley importing area.
Trends
Production for 2011 is forecast at 168 million bushels, down 7 percent from 2010. The average yield for the United States is forecast at 70.4 bushels per acre, 2.7 bushels below last year’s record high. At 2.4 million acres, area harvested for grain or seed is down 3 percent from 2010. If realized, this will be the smallest harvested area since 1881. (NASS 2011)
Barley production in the EU-27 is expected to increase as a consequence of high world prices. In turn, EU-27 exports to other countries could rise as much as 50 percent in coming years. According to the ERS (2008), Ukraine and Russia are likely to become major players in the world barley market, perhaps accounting for as much as 15 percent of the world's exports in the future.
Sources
Barley, U.S. Grains Council - A private, nonprofit corporation that develops export markets for barley as well as for sorghum and corn.
Barley, U.S. Baseline Briefing Book, Food and Ag Policy Research Institute (FAPRI), University of Missouri, 2011.
Crop Production Annual Summary, National Ag Statistics Service (NASS), USDA, 2011.
Crop Values Annual Summary, NASS, USDA, 2011.
Global Agricultural Trade System (GATS), Foreign Ag Service (FAS), USDA, 2010.
Profile written October 2005 and reviewed May 2011.
