NORTH DAKOTA Farmers getting more for barley

Beer companies aren't saying whether they'll raise prices to reflect the higher cost of barley.
BISMARCK, N.D. (AP) -- Production and storage problems have brewers and malt makers worried about their barley supplies, and that has helped boost prices for farmers.
Last year's barley crop nationwide, at 227 million bushels, was the smallest since 1937, the U.S. Department of Agriculture said.
Production in North Dakota, which typically leads the nation, was down 28 percent last year from the previous year, to 57 million bushels. Production in Canada dropped 33 percent, according to Statistics Canada.
Disease, drought and other weather problems were to blame for the drop in production.
Scott Heisel, a vice president and technical director with the American Malting Barley Association, said brewing companies typically do not disclose how much supply they have on hand, for competition reasons. But he said "there has been a shortage of malting barley."
Heisel declined to comment on whether that could lead to higher beer prices, citing competition among brewers.
What's expected
Broten said planted barley acreage in North Dakota likely will increase slightly because of the higher grain prices driven by the reduced supply.
"If we have a short crop again ... it could be a problem," he said. "People don't quit drinking beer."
Thanks to the steep decline, quality malting barley has been bringing $3.50 per bushel or more at grain elevators, compared with about $2.25 last year at the same time.
"The last time we had a price spike this high was in 1988," said Jim Broten, a Dazey farmer and chairman of the North Dakota Barley Council.
"The ones who were lucky enough to have a pretty fair crop, especially if they didn't contract, they're going to come out with a good barley year," Broten said. "Unfortunately, that's a small minority."
Many farmers have a smaller-than-normal crop to sell, and not all barley is of high grade, Broten said.
The Milwaukee-based American Malting Barley Association, which represents major U.S. brewers such as Anheuser-Busch and Miller along with major U.S. maltsters, is asking farmers to closely monitor the crop they have stored in their bins.
"Rainfall during or just prior to harvest has made a substantial portion of the crop unsuitable for malting due to initiation of germination ... and high grain moisture that leads to heat or mold damage," said Michael Davis, president of the trade association.
Reason for concern
Broten said the words of caution come as no surprise.
"They're really pushing it, because if there's any high-quality barley, they want to preserve it," he said. "We've had quality problems for the last eight to 10 years, and the supply of high-quality barley has slipped."
Ray Albrecht, an agronomist with Cargill Malt, said poor weather conditions during 2002 might limit the supply of quality planting seed in the spring.
Broten said some brewers began contracting with farmers late last year for this year's crop -- a process that does not normally start until after the first of the year.
"Contract prices are up 80 cents to a dollar [per bushel] over last year," Broten said.