Author: Sam Anderson
Images: U.S. Grains Council
China’s beer production accounts for 22% of the global beer complex. 2.6-3.0 million metric tons of malt is consumed yearly, while in 2021 12.5 million metric tons of barley for feed and malt use was imported by China. The top barley exporters for China are Argentina, France, Canada, and Ukraine. Playing into this is Mexico, one of the largest beer producers in the world.
Historically China was a large purchaser of Australian barley. In 2017 China and Australia began an ever so familiar political argument between international security and relations with the Unites States. By 2020 a coronavirus blame game started, followed by sweeping Chinese tariffs on Australian beef and barley. With no resolution to date, this all too familiar trade war has affected a Montana barley farmer indirectly.
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The Good
Before you fill up with political anger, it’s not all bad for a Montana barley farmer. Given the significant import demand from China, a phrase that was frequently mentioned in the Golden Triangle was the “Canadian barley vacuum”. Canada was shipping feed and malt barley to China like we’ve never seen before. Demand surged to fill voids in Canadian feed lots and for short time, feed barley prices surpassed malt barley prices in Montana. The Canadian barley vacuum sucked up large volumes of Montana barley after a huge 2020 crop. Grain traders offered, logistics and premium prices that outcompeted domestic malt demand.
The Bad
Mexico and the United States have enjoyed a North American beer supply chain for decades. With consistent malted barley purchases and was a small player in 2019 with un-malted barley purchases split between U.S, Canada and France. We’ve seen consistent shipment volumes into Mexico, but with the 2020 scenario with China’s 80% tariff on Australian barley. The 2020 scenario offered cheap Australian barley by the boatload which was combined with U.S feed barley demand and a 2021 U.S barley drought. The U.S. un-malted barley shipments halted. Mexico looked towards the outback to meet their needs. Mexico is by far Montana’s largest international barley customer with immense growth potential.
We’re Working On It
As a result of your check-off dollars, the Montana Wheat and Barley Committee in partnership with U.S. Grains Council has been working tirelessly to change this situation. Mexico and China staff have been meeting with barley buyers to continue to express the need for consistent supply while demonstrating the higher value of Montana barley performance in the malt house and brewery. Montana staff have been consulting with Mexican brewers to set up a consistent supply chain of raw barley that will weather any international trade dispute or drought. Spreading the risk between irrigated and dryland acres, geography and varieties will be the key to developing a supply chain that works for the Montana barley farmer and the Mexican brewer. The Australia-China trade relations no doubt disrupted the Montana barley situation. Fortunately, a Montana farmer is about as tough as they get. We can weather any storm, two countries playing commodity patty cake won’t bother us one bit.