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Barley is a cool-season, early maturing crop and is likely the world’s oldest cultivated grain. Barley is one of the most highly adapted cereal grains with production occurring in climates ranging from sub-Arctic to subtropical. Because of its use in malt production, barley is grown in many areas of the world for cultural as well as economic reasons. The United States is the world’s seventh largest producer of barley. The European Union (EU-27) is, by far, the largest producer which is followed by Russia and Australia. (Statista By Country, 2021). Barley has traditionally been one of the most important feed grain crops produced in the United States, but has more recently been replaced largely by corn.
In the U.S., about three-quarters of the barley grown is currently used for malt production. The remainder is used for livestock feed or for human food. The human food segment is relatively small (~4%) but growing in importance. Barley is also grown as a forage. In most cases, there are specific barley varieties that are best suited for each of these uses. However, some varieties can be used for more than one purpose and in many cases, their end-use will depends upon how they are managed and the crop’s characteristics at harvest. High-quality feed barley contains high protein levels and test weights, while low protein levels and plumpness are necessary for malting purposes.
Barley competes with corn and sorghum as a feed grain. It has higher protein contents than corn, which reduces the need for protein supplements in feed rations. However, it lacks some of the other nutritional elements present in corn. In general, feed barley prices follow corn prices and are approximately 85% of corn prices on a per bushel basis.
Barley grown for human consumption is used in soups, as an extender for vegetable proteins and a small portion is milled into flour. In general, barley used for food purposes is pearled (de-hulled) though hull-less barley varieties (sometimes referred to as naked varieties) do exist but are not widely grown in the U.S. Barley flour does contain gluten so cannot be used in gluten-free application. It is used in the United States in baby food and in North Africa and Asia for flatbreads or porridges. Malt produced from barley is also widely used in the food industry in baked goods and flavorings.
U.S. producers harvested 2.2 million acres of barley in 2020 with an average yield of 77.2 bushels/acre. Total production in 2020 was 170.8 million bushels. (NASS, 2020). In 2021, Montana, Idaho and North Dakota were the largest producers of barley. Yields in Idaho were substantially higher than those recorded in Montana and North Dakota as much of their production is under irrigation (NASS Quick Stats).
Barley varieties are classified as either six-row or two-row types 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. Though traditionally six-row barley varieties were the dominant type grown in North Dakota, Minnesota, and Idaho, currently even in these state two-rowed varieties predominate as is the case in the rest of the U.S. There are both winter and spring types of barleys with most production in the U.S. using spring types. In northern regions of the U.S., growing winter types is not an option as currently available varieties do not survive the winter.
In general, specific varieties of barley are used to produce malt. The American Malting Barley Association (AMBA) maintains a list of recommended malting barley varieties to give guidance to growers as to what varieties the industry may be contracting or purchasing in the coming year. Most malt is used for brewing beer. In addition, some beer manufacturing companies have developed integrated production systems in which they contract with farmers to produce specific (and sometimes proprietary) barley varieties. The identities of these varieties are preserved as they move through the brewers’ own malting facilities and into the brewing process. Craft brewing has grown in importance recently. Craft brewers generally use a higher percentage of malt in the brewer process than the large brewing companies, which has helped the sustain the malt barley market.
Malting companies contract for both two-row and six-row barley varieties, though two-rowed types are the most commonly contracted. The preference for two-row or six-row barley stems from several factors including brewing techniques, price, and style or flavor of the finished product. Malting and brewing companies develop and contract for the production of specific barley varieties. Contract production offers malting companies a secure supply of high-quality barley and, in some cases, specific varieties. Such contracts offer price premiums over higher-yielding feed barley. These premiums are necessary to offset lower yields, higher production costs, and added risks of not making quality specifications.
Most contracts have very specific quality requirements. Meeting these requirements can be challenging, since the weather, particularly the amount and timing of rainfall can impact kernel characteristics and disease development. Requirements are specified for maximum allowable protein contents, moisture, foreign material, skinned and broken kernels, presence of DON (vomitoxin) and sprout damage. Minimum requirements are also set for factors such as color and kernel plumpness. Sampling and grading occur for every truck load brought to receiving stations. Stringent tests for the presence of diseases, such as fusarium head blight, are often conducted if there is the potential for diseased grain in the region. Most of these characteristics directly affect brewing processes. Malting barley that does not meet quality specifications may be sold in the feed market at significant price discounts.
The price of all barley in 2020 averaged $4.71/bushel, which resulted in a crop value of $804.5 million. However, malting barley commands substantial price premiums over feed barley. The price of malting barley is largely determined by the supply of malt in both the domestic and world markets and by the demand for malt and malt products. Increasingly, however, malting barley prices are influenced by spring wheat and corn prices, as these represent viable production substitutes (NASS, 2021).
Value Added Opportunities
Beer is considered a mature product so that growth in this segment is primarily the result of increases in population. The beer industry uses shipments as a proxy for consumption. In 2020 the economic impact of the beer industry totaled $330 billion including all brewers, distributors, retailers, supply-chain partners and induced industries. Per capita beer consumption has 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. In addition, changing U.S. age demographics may be partially responsible (Beer Institute, 2020).
The primary value-added barley opportunities will remain in the production of malting barley. In some states where barely is a minor crop, there may be opportunities to produce barley for the craft beer market as this segment has a growing demand for malt and many of these enterprises have an interest in locally produced ingredients. Furthermore, there is a growing number of small malt houses that may provide a premium for locally produced barley that meets their quality requirements.
There is also increasing interest in the use of certain barley varieties for human nutrition purposes. Some barley varieties have been bred to produce waxy starch which is almost 100% amylopectin. The combination of hull-less barley and this waxy starch characteristic produces barley that is high in soluble dietary fiber and, especially, beta-glucan. Beta-glucan is also present in oats and has been shown to lower serum cholesterol. Arabinoxylan or pentosans are also found in barley and constitute about one-half of its soluble fiber. Barley also contains tocotrienol which is an oil that can lower cholesterol levels. These high-fiber barley varieties may have important health benefits.
About a third of the barley produced globally enters into the international market with the European Union, Australia, Argentina and Russia account for more than 90% of the total barley traded. About 70% of the barley traded is used for feed. Recent exports of barley from the U.S. have been about 15% of the total production with the major market being Mexico. The primary competitive pressure on U.S. barley production continues to be from corn and spring wheat. Barley is a feed substitute for corn. Hence, higher corn prices increase the price of feed barley. In addition, the supply of barley continues to decline as crop producers move acreage away from barley production and into corn production. Much of this movement is the result of increased corn production profitability, as a result of ethanol policies and the advent of high-yielding, short-season corn varieties. Many traditional barley producing areas are able to profitably produce corn. In addition, spring wheat and barley are production substitutes because agronomic practices and land requirements are similar for both crops. Thus, higher spring wheat prices increased competitive pressures on the production of barley and spring wheat quality requirements are less stringent that those for barley for malt.
The malting barley industry will continue to be affected by these developments. That is, upward pressure on feed barley, corn and spring wheat prices will limit malting barley production. Open-market malting barley premiums over feed barley are much smaller today than just a few years ago. Given that the brewing industry has faced downward consumption trends in recent years, profit margins are being squeezed. Nonetheless, malting barley is currently necessary for beer production. Hence, it is reasonable to assume that malting barley processors will need to increase malting barley premiums in the near future. There may be opportunities to obtain an attractive premium for barley produced for maltster/brewers that have an interest in locally produced ingredients, particularly in states where barley is not traditionally grown for malt on large acreages.
Beer Institute, 2020
Statista By State The Statistics Portal, 2021
National Agricultural Statistics Service (NASS, 2021)
Barley, U.S. Grains Council.
Crop Values, Annual Summary, NASS, USDA.
Global Agricultural Trade System (GATS), Foreign Ag Service (FAS), USDA.
The Montana Wheat and Barley Committee
Statista By Country The Statistics Portal, 2021
American Malting Barley Association
USDA National Agricultural Statistics Service, Quick Stats
Guide to Malting Barley Production in the Northeast
Barley Production Guidelines for North Dakota
Idaho Spring Barley Production Guide