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Irish Grain Growers Group Calls on Malting Barley Growers to Reject Boortmalt Offer

It was announced last month that the dominant company in the Irish malting sector, Boortmalt had finalized a two year deal with the IFA. This announcement has been met with opposition with the Irish Grain Growers Group calling on malting barley growers to reject the deal. They also have released a press release on the matter.

This brings the future of the malting barley industry to a halt.

It is suggested that this is the latest charade in the long running campaign by Boortmalt to squeeze growers’ margins through headline prices, tightening specifications and additional costs.

The IFA throughout this process has failed to defend the little peoples, growers, interests. This brings it to the conclusion that the growers are compromised.

Once seen as a premium crop in Ireland, malting barley, is usually grown by experienced growers on some of the countries finest tillage land.

Supposed premium prices for malting barley over feed is described by Irish Grain growers group as “an illusion peddled by the IFA”.

The reality in fact is that malting barley is a poorer first cousin of feed wheat and barley. This is in terms of margin per acre.

This has led to growers either having to walk away from the trade or reducing the amount of land they have dedicated to the crop.

Worry now floods the malting barley industry with growers unsure of what comes next for them.

Comparisons were made by the Irish Grain Growers group to the downfall of the sugar beet industry in Ireland.

Worries are rampant that profit maximising behaviour by Boortmalt will lead to a large number of growers quitting the industry and very few being left.

The company are currently importing the crop from abroad, and if current trends are anything to go by this is likely to increase.

Given the distilling industry in Ireland has experienced a Renaissance in recent years, it would be terrible news that all raw materials be reported and drive our growers out of the industry. This could, as speculated by the Irish Grain Growers group, lead to the relationship between growers and Guinness being lost.

Even though Ireland’s malting barley being used in Guinness products is part of Diageo advertising campaigns at present and even in the Guinness storehouse.

The distilling barley specification is a source of huge frustration to growers. Boortmalt demands in 2017 that each grower must deliver for 30% of their contracted tonnage barley with a maximum protein content of 8.8%. In comparison European malting barley growers have a much broader protein range of 9.5%-13%.

In conflict with research conducted by Teagasc, Boortmalt claim that growers’ can meet these specifications without a loss of yield.

The fairest alternative suggested by the Growers group is to offer growers a premium to help compensate for the additional costs and risks associated with growing the crop.

According to the growers group they feel there shouldn’t be any mandatory contract amount and it should be left to the growers to decide.

The growers group also added “We wholeheartedly welcome the revival of the distilling industry but growers are in no position to subsidise it.”

The group also feel that seeing as the IFA have overseen this that they “do not care about the demise of the tillage sector” and that “keeping grain cheap suits the IFA to keep a majority of their members happy”.

Squeezing margins by the Boortmalt group include:

  • Inflated seed costs compared to other merchants on average €5-7 per tonne off the value of grain grown.
  • Boortmalt will only buy an average of between 1.8-2.2 tonnes/acre per grower. Which dilutes the farmers income per acre. That’s approximately 25-40% at feed price going on recent yield records.
  • Seperate contracts issued in 2017, divided 70/30 for distilling and brewing grain. This places a further strain on growers.
  • Boortmalt as previously stated are outsourcing the growing of the crop to other merchants with no restrictions in place.
  • Informing growers that the Bagenalstown branch is closing just after farmers have the crop sown thus adding more handling costs etc. to those farmer affected.
  • Increasing chemical input costs by up to 10% in 2017 compared to last year.
  • Boortmalt insisting on unfettered access to farmers properties in the contracts.

The Irish Growers Group also stated “Feed grain growers should sit up and take notice of the inept way IFA are treating the demise of malting barley growing margins . This is a reflection on how the tillage sector is being treated. The gradual reduction in area each year under tillage is true proof.”

Earlier this year prior to this press release The Irish Grain Growers group contacted Boortmalt requesting a meeting and forwarded a malting barley proposal to them. They have yet to receive any response and as growers voted to be represented by the group, boortmalt must respond to the request.

It is estimated the group represent almost 50% of growers in the country.

In conclusion the group had this to say “Irish tillage farmers need be masters of their own destiny .They need their own voice and that’s the goal of the Irish Grain Growers Group”.

The table below shows the required price of distilling malting barley to break even with spring feed

Pass rate 2.5 tonne / acre 2.75 tonne / acre 3 tonne / acre
10% € 520.0 € 358.2 € 223.3
20% € 330.0 € 249.1 € 181.7
30% € 266.7 € 212.7 € 167.8
40% € 235.0 € 194.5 € 160.8
50% € 216.0 € 183.6 € 156.7
60% € 203.3 € 176.4 € 153.9
70% € 194.3 € 171.2 € 151.9
80% € 187.5 € 167.3 € 150.4
90% € 182.2 € 164.2 € 149.3
100% € 178.0 € 161.8 € 148.3

Source: Thats Farming