CRAFT BEER

U.S. barley acreage hit lowest level since 1876 as beer demand sinks

Ann Bailey — Mon, 30 Dec 2024 14:00:00 GMT

Barley, once a major U.S. cereal grains crop, largely has fallen out of favor with U.S. farmers.

U.S. harvested barley acreage in 2024 fell to 1.875 million, the lowest number since 1876 when the country’s farmers harvested 1.702 million, according to the U.S. Department of Agriculture's National Agricultural Statistics Service.

Acreage, and subsequently, production of the grain has fallen to levels so low that many people refer to it as a specialty crop, though it is not one by USDA standards.

The decline in acres of barley is the result of a combination of several factors.

Demand for feed barley, which used to commonly be used in livestock rations, has all but disappeared because producers are feeding corn and soybean meal rations. Corn and soybean acreage dramatically has risen as improved varieties have made them economically viable to grow in the northern Plains. A decline in the number of livestock producers in the region and a reduction in U.S. feed barley exports also have contributed to the reduction in feed barley demand.

A small amount of barley annually is sold to pet food manufacturers who primarily use it as an ingredient in dry dog food. But the vast majority of the crop — an estimated 75% — is sold for malting barley, 80% of which is precontracted, said Mark Black, Malteurop North American barley procurement and trials manager.

Black, who spoke during the barley program at the Prairie Grains Conference in Grand Forks, North Dakota, in December 2023 and December 2024, summed up the lack of demand for barley from the beer industry this way: “No beer. No barley.”

That slogan is in sharp contrast to the National Barley Growers Association, an organization that has on its missions page, “No barley. No beer.”

A drop in beer demand

While production of barley has sharply declined, there’s still more than enough of the crop grown to meet the needs of the maltsters and brewers who also have seen a reduction in demand for their product. According to the Brewers Association, a not-for-profit trade association of the craft brewing industry, U.S. beer production and imports were down 5.1% in 2023.

Factors that have reduced demand for beer include inflation, legalized marijuana and a shift in younger people’s alcohol preferences from beer to seltzers, mixed drinks and other liquors, Black said.

Craft beer sales are projected to decline slightly again in 2024 after a decline in 2023. Sales of commercial beer also continue to decline.

The reduction in demand for beer combined with the robust supply on hand in 2023 led to fewer brewers offering farmers less contracted acres than in previous years.

In fall 2023, Anheuser-Busch offered farmers 2024 contracts with prices and acreage amounts on par with previous years' contracts. But the company later told farmers they would have to store barley for a year to 15 months after harvest, later reducing the storage period to eight months.

Some North Dakota farmers opted instead to contract acres with Constellation Brands, which makes Corona and Modelo, which replaced Bud Light in 2023 as the No. 1 beer sold in the U.S. Modelo continues to hold the top spot. Meanwhile, farmers at the Prairie Grains conference who contracted in 2024 with Anheuser-Busch indicated they expect to store 2024 barley until the summer of 2025.

Anheuser-Busch in November 2024 announced it was closing its malt plant in Moorhead, Minnesota, and selling its elevators in West Fargo, North Dakota and Sutton, North Dakota. The Moorhead plant, built in 1978, processed about 8 million bushels of barley each year to make about 2 billion bottles of beer annually.

Closing the Moorhead plant is a result of an agreement the company made with Rahr Malting Co. to take on the full capacity of malt production for Moorhead, Anheuser-Busch said in a Nov. 14, 2024, statement. Any supply of new barley produced in North Dakota and Minnesota will be redirected to Rahr’s Shakopee, Minnesota, malt house beginning in 2025.

“As we continue to build toward a strong future, we’re updating our malting operations and expanding our decades-long relationship with Rahr, a trusted partner and leading malting company," Nicole Zaharadka, director of agronomy for Anheuser-Busch, said in a statement. “Anheuser-Busch purchases, on average, more than $50 million a year in barley from our 250+ grower partners across the Midwest, including North Dakota and Minnesota, which is more than any other brewer, and this will not change.

“We remain committed to supporting our grower partners and will continue to source directly from them as we have for the past 165 years," she said. “We are confident that the actions we’re taking now will allow us to even better serve our customers while also becoming a stronger company and industry leader.”

Farmers at Prairie Grains indicated Anheuser-Busch began offering malting barley contracts for the 2025 crop year in fall of 2024. The contract price per bushel fluctuates based on the Chicago Board of Trade December wheat futures price.

Malteurop expects to offer 2025 malting barley contracts when it has determined commitments from brewers, Black said. Farmers will deliver the crop to MarKit County Grain LLC in Alvarado, Minnesota, or to CHS in Devils Lake, North Dakota.

The future of barley

Total U.S. barley production in 2024 was 144 million bushels, 23% lower than 2023, NASS said. A robust increase in per-acre yields — the national 2024 average yield, pegged at 76.7 bushels, was 4.4 bushels higher than 2023 and nearly 5 bushels above the five-year average — was not enough to offset the decline in acreage, USDA Economic Research Service said.

Barley acreage and production across the northern Plains has dropped dramatically, in line with the U.S. acreage decrease.

In Montana, the No. 1 state for barley acreage and No. 2 for production behind Idaho, harvested barley acres fell to 710,000 in 2024, a 31% decline from 2023. Montana farmers’ yields rose to an average of 51 bushels, a 2 bushel increase from 2023, and production fell 28% from 2023 to 36.2 million.

Acreage in North Dakota, the third largest U.S. barley producer in both acreage and production, dropped to 285,000 in 2024, half of what the state’s farmers planted in 2023, according to the USDA ERS. In North Dakota, 2024 yields rose to 78 bushels per acre — 4 bushels per acre higher than 2023 — but the state’s 2024 production, pegged at 21.1 million bushels, was 49.6% lower than 2023 when farmers produced 40.5 million bushels.

The most stark changes have been in Minnesota, where the crop has been grown for more than 100 years. Acreage has declined from a peak of 1.2 million in 1988 to only 40,0000 planted in 2024. About 40% of that acreage — 25,000 acres — was harvested for malting barley. USDA's September 2024 Small Grains Summary pegged Minnesota barley production at 1.75 million bushels, compared to 3.996 million in 2023.

That drop in interest in growing barley has led Minnesota barley farmers to decide to terminate the Minnesota Barley Research and Promotion Council.

The council, established in 1990, collected a 1.5% per bushel fee on barley sales, which has been only about $40,000 per year, officials said. More than 15% of the state's barley producers signed a petition to terminate the council. Barley growers voted on the proposal at Prairie Grains. Brittany Raveill, communication coordinator with the Minnesota Department of Agriculture, said there were eight votes submitted — seven to terminate and one not to terminate. The council will terminate at the end of the marketing year, on June 30, 2025, she said.

However, while the brewing industry does not need as much barley as it used to, demand remains for malting barley, and companies value their partnerships with farmers, Black said.

Despite decreased acreage, the crop isn't going away. In contrast to Minnesota, North Dakota Barley Council members in December 2024 voted unanimously to increase their state’s barley checkoff by 1 cent per bushel to 3 cents. The organization will request that lawmakers approve the increase during the North Dakota legislative session, which begins in January 2025. The Legislature previously approved increases in 1997 and 2009 for the council, which was established in 1983.

Besides its use in beer making, barley is an important rotational crop, especially in parts of North Dakota where soybeans and corn aren’t viable options and on land with poorer soils. Including barley in the crop rotation also spreads out risk, North Dakota Barley Council members say.

The checkoff dollars go to research that helps improve varieties and production practices.

Rich Horsley, North Dakota State University plant breeder, develops both commercial and craft beer varieties. The checkoff dollars also are used to help fund research of Thomas Baldwn, NDSU plant pathologist who studies barley diseases including fusarium head blight and spot blotch.

“There’s a lot of very good research being done at NDSU,” said Ed Kessel, a Dickinson, North Dakota barley farmer and North Dakota Grain Growers Association board president.

]]>

Supply chain problems leave brewers feeling tapped out

John Molseed — Thu, 22 Sep 2022 23:00:00 GMT

ROCHESTER, Minn. — Breweries are feeling a pinch in cost and availability of supplies.

Due to drought and other bad weather, last year’s crop of barley was smaller than normal nationally. A major supplier of carbon dioxide having to shut off its supply isn’t helping either.

While these are putting pressure on the local craft beer industry, brewers expect to keep things flowing.

Rochester's Kinney Creek Brewing, which has found a niche with off-site sales of seltzers, has also found the price of cans has tripled, said Donovan Seitz, Kinney Creek owner and founder.

In the last year, four of Kinney Creek flavor compounds key to some of their most popular Seltzer drinks went on national back order, Seitz said.

“Currently, I’m still waiting on one to come back and it is one of our No. 1selling seltzer brands,” Seitz said.

Steve Finnie, co-owner of Little Thistle Brewing Co., said supplies he needs are still available but prices are up across the board.

“Just about everything has gone up 30% in price and takes longer to arrive, so it requires more planning ahead,” he said.

However, it’s not just brewing ingredients and supplies small breweries are finding in short supply or back ordered. Prices on merchandise such as T-shirts are up.

Some items are temporarily unavailable, Finnie said. Merchandise sales are a significant income for the business, he added.

Smaller breweries seem to be weathering the supply issues better.

Owners of Sylvan Brewing in Lanesboro, Minnesota, say they haven’t had trouble finding what they need when they need it.

“Surprisingly, brewing ingredients and supplies have not yet been an issue for us,” said Karen Heimdahl, Sylvan Brewing co-owner. “Costs keep increasing so we're definitely nervous.”

Seitz echoed the sentiment, recalling the difficulties the industry has had from 2020 through now.

“I hope that we are getting through this as we see things reappear in the marketplace, but it seems like there is always something looming around the corner,” Seitz said.

]]>

THC in your seltzer? Brewers and Minnesota interpret state law differently

John Molseed — Mon, 29 Aug 2022 15:30:00 GMT

ROCHESTER, Minn. — When it comes to THC, many of Minnesota’s craft brewers are taking a wait and see approach.

As of July 1, products containing up to 5 milligrams of hemp-derived tetrahydrocannabinols, the primary intoxicant in cannabis plants, can now be sold in Minnesota. The change surprised even some of the lawmakers who passed the legislation.

Some confusion on regulation of sales of THC-infused products prompted letters to liquor sellers earlier this month from the Minnesota Department of Public Safety’s Alcohol Gaming Enforcement Division stating liquor sellers aren’t authorized to sell THC products.

This caught Jack Lester, owner of Jack’s Bottle Shop in Rochester, Minnesota, by surprise.

Lester was an early adopter of THC-infused products when the law took effect in July. He said he was looking forward to offering customers THC-infused beverages.

“It was spectacular the first few weeks,” Lester said.

He said first-time customers and people who wanted to avoid smoke and vape shops were the top buyers of the THC-infused waters, chocolates and gummies he initially offered until receiving a letter from the DPS.

The letter clarified the limited list of items off-sale liquor stores are allowed to sell.

“THC products, anything, are not on this,” he said.

This has led to some breweries to hold off on plans to create THC beverages if where they can be sold is restricted.

While some breweries are beginning to introduce nonalcoholic beverages infused with THC, under current law, THC can’t be added to alcoholic beverages, DPS officials said.

That makes regulation of THC outside the purview of the Minnesota Craft Brewers Guild, said guild board president Dawn Finnie.

Finnie, who is co-owner of Little Thistle Brewing in Rochester, said her understanding is that breweries could sell THC-infused seltzers where they’re made and in taprooms and some other retailers.

The lack of clarity on off-site sales has some producers waiting before beginning to make anything in their facilities.

The passage of the legislation also took brewers by surprise, she added.

“We really hadn’t had solid conversations about it at least at a craft brewers guild level,” Finnie said.

As far as production at her brewery, that’s still up in the air.

“We hate to have something about ready and then find out, oh, we can’t sell it in this way or that way,” she said.

The owners of Kinney Creek Brewing, Rochester's oldest brewery, which already produces a line of seltzers, is similarly holding off on creating THC-infused seltzers until rules of sales and distribution are clarified.

If any Rochester brewery does move forward with something, Lester would normally jump at an opportunity to sell it.

Lester focuses on carrying sought-after and Minnesota-made beverages at his store. He said he hopes some clarifications or changes to the rule will allow him to sell what Minnesota producers have to offer.

Duluth-based Bent Paddle Brewing and Indeed Brewing in Minneapolis both announced they will produce a low-THC content seltzer this month. Minneapolis Cider Co. has introduced two flavors of Trail Magic, a nonalcoholic containing 3 milligrams of THC.

David O’Neill, co-founder of Minneapolis Cider Co., said the THC in the beverage will provide consumers with a buzz equivalent to about a 5% alcohol content cider.

Lester said those are the types of products his customers would typically buy. Trail Magic is available in some nearby liquor stores, he said, which, from his understanding, might violate the policy he was warned about.

Despite the temptation to do the same, Lester said he won’t carry those beverages until he’s given a clear OK to do so.

“I’d hate to be the poster child for what happens if you go against what is allowed or how it’s interpreted,” he said.

Besides, quietly carrying unique beverages isn’t his style, he added.

“If we’re bringing a product into the shop, we want to promote it,” he said.

For now, he’s holding off carrying any items with the hope some clarifying legislation comes from next year’s legislative session.

“I don’t mind having to jump through hoops if it means this industry can be allowed to grow in the right way,” he said. “Set those hoops up, I’ll jump through them.”

]]>

Minnesota House passes bill to relax laws on sales of craft beer, spirits

Alex Derosier — Thu, 12 May 2022 01:41:34 GMT

ST. PAUL — The Minnesota House of Representatives on Wednesday, May 11, passed a large bill that would relax state liquor laws by lifting restrictions on growler sales by major craft breweries and allowing small distilleries to directly sell their spirits to customers.

It’s a significant development for the state’s growing craft brewing and distilling industries, which have been pushing for years to expand what they can sell directly from their operations. Distilleries want to be able to sell larger bottles, and the state’s biggest craft breweries have wanted fewer restrictions on the sale of growlers, the large glass bottles typically used to carry draft beer poured from taphouses.

Liquor retailers and wholesalers have historically opposed loosening the law, but bill sponsor Zack Stephenson, DFL-Coon Rapids, told fellow House members Wednesday that his proposal balanced the interests of the traditional and craft alcohol industries. The proposal includes the creation of a state liquor advisory council made up of industry representatives appointed by the governor.

“Over the last several years the landscape of the alcohol industry here in Minnesota has changed dramatically. The craft movement has introduced hundreds of new businesses in all corners of the state,” said Stephenson. “Minnesota’s liquor laws are not written in the stars; just because they are doesn’t mean they should forever be.”

Current state law bars breweries that produce more than 20,000 barrels a year from selling growlers, but under the proposal the House passed Wednesday night, the growler cap would increase to 150,000 barrels.

Breweries currently affected by the growler cap include Two Harbors’ Castle Danger, St. Paul’s Summit, Fulton and Surly in Minneapolis and Schell’s in New Ulm. Those five are the only breweries of more than 8,000 in the U.S. that cannot directly sell beer to customers, according to the Alliance of Minnesota Craft Breweries, an industry group pushing for the state to lift the restriction.

A bipartisan mix of representatives voted 85-48 in favor of the proposal after an hour and a half of debate Wednesday night, with many Republican members voting against the bill after voicing concerns about a section of the bill that would create a new state liquor advisory council. Rep. Anne Neu Brindley, R-North Branch, and other Republicans said the council, which would be made up of nine members from retail wholesale and craft sectors of the alcohol industry, would give the alcohol industry an undue voice in government.

The Senate has also passed a bill that changes the state’s liquor laws, but not nearly to the extent that the House bill calls for. It remains unclear what the Senate might be

willing to adopt from the House bill. Both chambers must pass the same bill before the governor can sign any legislation into law.

In addition to lifting growler sale restrictions, the House version of the liquor law reform bill would allow small distilleries to sell bottles of up to 750 milliliters of spirits per customer or up to 1.125 liters per customer of any approved size no larger than 375 milliliters. Smaller brewers who produce less than 7,500 barrels would be able to sell up to 128 ounces a day in approved containers, opening the possibility for six-pack sales.

A few other small changes included in the liquor bill include allowing liquor stores to sell citrus fruits and drinking glasses, and allowing drinking establishments to be open during live broadcasts of World Cup soccer matches — which often air at odd hours in the U.S. as the tournaments are held in different locations across the world.

]]>