Over the last number of weeks Boortmalt has met with its merchant suppliers and delivered contract cuts across the board. The announcement and the late-timing of it has frustrated both malting barley growers and assemblers.

The Irish Farmers Journal understands that the contract reductions affect all merchants who supply the company. While the cuts are reported to be in the region of 20-40%, they will differ at merchant and farmer level as each merchant will have to calculate its own tonnage and contracts.

The news comes as a large majority of farmers have ordered their seed and some have crops planted. Farmers must now look for a crop to fill the gap on their farms. Had the cuts come earlier, cropping plans could have been adjusted to lessen the impact on profits.

Fixed-price offer

The company offered merchants a forward price of €230/t on Monday, available to take on 20% of a grower’s contract. However, most growers are currently unsure of what their contracted tonnage is, as assemblers try to work out the maths.

The price offers a premium of €30/t above feed barley. This premium is down €20-30/t on the premium paid for malting barley last harvest, which was approximately €40-50/t over feed prices and the drop comes as the price of many beers using Irish grain is rising at the taps.

Irish farmers have no sight of this price as it is a small market. As a result, they are unable to examine how prices are trending.

Cuts may be temporary

It is hoped that the move to cut contracts is temporary, as malting barley usage is reported to be down. Looking at the Irish situation it looks like last year’s bumper harvest may also have helped to boost supplies and carry over may be increased.

Speaking to the Irish Farmers Journal in January, Boortmalt’s managing director for Ireland and the UK said that an expansion of the company’s plant in Athy would require an extra 25,000t of green barley.

Sands welcomed the 13% increase in the value of whiskey exports and the 3% increase in the value of beer exports. At the time he remained cautious about the possibility of tariffs in the US, but commented that Boortmalt “look forward to continuing to create value and growth for the Irish drinks industry”.