Irish Grain Growers slams Boortmalt malting barley pricing structure

As reported last week, Boortmalt's new pricing arrangement is indexed on MATIF December futures and applies three bands of deductions to the MATIF price:

No deduction applies if the MATIF price falls below €170/t.

IGG argues that the pricing structure effectively caps the price at €170/t by encouraging farmers to sell if the MATIF hits the high €160s, with little prospect of getting a better price unless MATIF futures jump above €185/t.

The Boortmalt contract agreed with the IFA is "restrictive and not capable of delivering the price margin needed," IGG said in a statement this Tuesday.

Dissatisfaction

At the IFA malt barley growers' meeting in Carlow two weeks ago, there was widespread acknowledgement of dissatisfaction with the current model. IFA grain chair Mark Browne stated that his committee had pushed hard for a minimum payment of €170/t when the MATIF was over €170/t. He also had highlighted that the revamped model does deliver a better price than previously when the MATIF price ranges between €160/t and €175/t, with the price increase ranging from €6/t to €9/t on last year. This is the band the MATIF has largely languished in in recent times.

The IFA is scheduled to begin negotiations for 2019 with Boortmalt in April, and is likely to look for a redrawing of the current model. Prior to the commencement of the negotiations, the price bonus for distilling grain is to be agreed, with farmers waiting for Boortmalt to return with a firm bonus price proposal.

Next season's supply

"Growers have begun to return seed or inform Boortmalt that they will not be growing for them this season," IGG claimed. "This deal does not guarantee Boortmalt a supply of barley next harvest because more attractive offers for barley may be available from other merchants."

A Boortmalt spokesperson told the Irish Farmers Journal that virtually no seed had been returned, except to request a different variety of malting barley before planting as per usual practice. The spokesperson added that demand for seed was higher than last year and the amount of malting barley sown in Ireland this year could hit a record.

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