The miserable Bank Holiday weather will get worse today with deluges in many parts. But it will be nowhere near enough to end the drought, which experts said yesterday is threatening to put 30p on the price of a pint. Brewers say the extremely dry conditions are wreaking havoc on crops of barley and hops. British Beer and Pub Association communications manager Neil Williams said: “There is no doubt the drought will place pressure on beer prices because of the poor barley harvest. "About 80% of the crop is grown in the UK and it accounts for between 3% and 10% of the price of a pint.” Beer buff Pete Brown said: “Barley and hops are the main building blocks for beer so if they become more expensive, so will the price of a pint.”
"Beer" and "buff" rarely go together so good for Pete to be the one to break new territory even if only through objectification. But that isn't what attracted my eye to the story. It was the idea that a 30p per pint price rise could be caused by an increase in something that constituted 3% to 10% of that pint's price. I am going to use 3 pounds as the average price of a pint but appreciate that is a bit arbitrary. The handy thing is that the price rise of 30p is that is represents 10% of the price of a pint. That would mean, if the article is to be accepted, that the cost associated with malt would have to double if it accounts for 10% of price and would have to increase 350% if barley serves as 3% of the cost of a beer.
Here are some things I do not understand about this argument. Recently, UK was a significant exporter of malting barley. We read, for example, that "malting barley production during 2008/09 amounted to 2.43 million tonnes, while demand was 1.77 million tonnes, resulting in a 660,000-tonne surplus." Further, we recently read that large scale UK brewers are agreeing to drop alcohol levels in beers which presumably means using fewer fermentables as in barley malt. Surely these sort of factors place some buffer on the affect of a drought. Plus the degree of price increase reported earlier in 2012 was a fraction of the order of magnitude suggested in the article - something more like a 15% increase from September 2011 to January 2012.
There seems to be a connection to the reported in the Mirror and else where with this survey reported in Farmers Weekly last week. It appears to be about perceptions and forecasting difficulties as challenges to malting barley growers as opposed to the direct effect of a lack of rainfall. While the story leans towards the report that 17% of barley growers planning to reduce acreage, it also points out that 85% of barley growers find it quite profitable and that 14% were planning to expand acreage. Plus, UK barley is simply in demand globally... hence, one presumes, the large annual surplus and the 85% of barley farmers who are happily profitable.
What does it all point to? That malting barley represents a small part of the cost of a pint of UK beer and that the factors going into the price of malting barley are complex and include concurrent inflationary and deflationary pressures. A 30p per pint increase based only on the malting barley costs? I'd be asking more questions if it was what I was being asked to pay.