Sunday, January 12, 2025

Decline in Beer Consumption Poses Challenge for Barley Farmers

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The burgeoning hard seltzer market and a shift towards reduced alcohol consumption have left barley farmers in a predicament.

Don Nygaard, a third-generation farmer from a secluded corner of North Dakota, used to cultivate malt barley for Rahr Malting Corporation for the production of lagers, pale ales, and IPAs.

However, this year, he failed to secure any lucrative contracts from Minnesota-based Rahr or other beer producers. Consequently, his expansive farm is now focusing on food-grade barley and wheat, both of which are currently priced at near four-year lows.

With overall beer consumption in the U.S. plummeting to its lowest levels since the 1970s, as per data from the Brewers Association, the U.S. Plains states are grappling with a significant barley surplus. Americans are imbibing less beer and patronizing fewer craft breweries that require ample malt per serving.

The surging popularity of hard seltzers and the trend towards diminished alcohol intake have resulted in a sharp decline in barley demand from beer manufacturers. Coupled with several seasons of exceptional barley harvests, this scenario has led to plummeting prices, eliminating a once profitable avenue for farmers in a challenging year where breaking even with any crop is a struggle, as highlighted by farmers, agronomists, and industry experts.

“I am concerned about the prevailing trends,” Nygaard voiced. “The upcoming winter will be tough for all of us as we navigate our financial obligations.”

Rahr, operating a barley procurement facility in Taft, North Dakota, did not respond to requests seeking comment.

THE GREATEST SUFFERER

Fruit-infused hard seltzers, pre-mixed cocktails, and cannabis-infused beverages have been eroding beer’s market share for years. From sports events to college parties, White Claw seltzers have become nearly as commonplace as Bud Lights. White Claw markets itself in the U.S. as devoid of grains, despite containing grains like barley in certain regions.

Many popular hard seltzer brands such as Truly, High Noon, Bud Light Seltzer, and White Claw eschew barley and opt for fermented sugar, vodka, or tequila to supply alcohol content. Nonetheless, products like Vizzy and non-alcoholic beers still rely on malt barley.

“Beer is the most significant loser,” emphasized Bart Watson, chief economist at the Brewers Association. “There is fierce competition from products that didn’t exist half a century ago.”

In contrast to major barley exporters in the European Union and Australia, the U.S. predominantly consumes the malt barley it produces.

Even in rural North Dakota, advertisements for hard seltzers are prevalent on billboards and in local bars. Major malt plants, where barley kernels are transformed into the primary ingredient for beer, are entering into fewer contracts with farmers due to dwindling brewery demand, remarked farmers and economists.

Escalating interest rates, inflated pesticide and equipment costs, in addition to dismal crop prices, have farmers apprehensive about repaying the loans that funded their crops.

“This year will be exceptionally challenging for commodity cultivation,” remarked Steve Sheffels, a fourth-generation barley and wheat farmer. “I hope to yield enough to cover my expenses.”

A SOURCE OF ANXIETY

The once-prosperous craft beer industry has contracted, with microbrewery shutdowns surpassing openings for the first time in 2023, per the Brewers Association. Craft beer demands roughly four to five times more malt than mass-produced beer, further impacting barley demand, according to Sheffels.

Kaj Peterson, the lead maltster at Maltwerks in Minnesota, disclosed a near 50% reduction in their barley acquisitions compared to five years ago owing to diminished demand from craft breweries across the state.

“Our bottom line has taken a hit,” Peterson conceded. “We are beginning to observe cutbacks from breweries—they are scaling back production. It is anxiety-inducing.”

As the rapid proliferation of breweries has decelerated, surviving establishments have had to broaden their offerings to engage customers, noted Mark Bjornstad, owner of Drekker Brewing Company in Fargo, North Dakota.

The brewery’s ambience is infused with a citrus aroma emanating from the IPA on tap, which the company pairs with alcoholic smoothies and non-alcoholic beers to enhance business.

“Consumers are discerning,” he affirmed.

On top of stiff competition from alternative beverages, the beer industry grapples with another challenge: young individuals are imbibing less alcohol than previous generations.

A burgeoning “sober curious” movement, embraced by millennials and Gen Zers and fueled by social media, has led consumers to reevaluate their alcohol consumption, occasionally opting for abstinence.

While healthier choices and novel drink options benefit consumers, they disrupt the core of farmers’ livelihoods.

“Being 67, I indulged in my fair share of beer in my youth. Now, these trendy drinks that do not necessitate malt are overshadowing traditional choices,” Nygaard reflected.

(Reported by Heather Schlitz, Edited by Caroline Stauffer and Anna Driver)


Vocabulary List:

  1. Predicament /prɪˈdɪk.ə.mənt/ (noun): A difficult unpleasant or embarrassing situation.
  2. Dwindling /ˈdwɪnd.lɪŋ/ (verb): Gradually decreasing in size amount or strength.
  3. Surge /sɜrdʒ/ (verb): To increase suddenly and powerfully.
  4. Ample /ˈæm.pəl/ (adjective): More than enough; plentiful.
  5. Infused /ɪnˈfjuzd/ (verb): To fill something or permeate something with a quality or element.
  6. Erode /ɪˈroʊd/ (verb): To gradually destroy or diminish.

How much do you know?

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What is impacting barley demand from beer manufacturers?
Increased barley harvests
Rising interest rates
Diminished brewery demand
Reduced equipment costs


Which beverage type has been eroding beer's market share for years?
Wine
Soft drinks
Hard seltzers
Coffee


What does White Claw market itself as in the U.S.?
Barley-free
Sugar-free
Grain-free
Malt-free


What has led to a sharp decline in barley demand according to the text?
Increased beer consumption
Reduced barley harvests
Diminished alcohol intake trend
Rising interest rates


Who remarked that the year will be exceptionally challenging for commodity cultivation?
Don Nygaard
Bart Watson
Steve Sheffels
Kaj Peterson


Which specific drink options have disrupted the core of farmers' livelihoods?
Wine and cocktails
Craft beers and IPAs
Non-alcoholic beers and hard seltzers
Whiskey and vodka

This question is required

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