Malt industry slows down barley procurement

The malt industry and distilleries have slowed down barley procurement from the mandis, as the raw material is expected to be adequately available round the year, since multinational trading firms, including Cargill and Glencore, have chosen not to procure this season. Barley is used as a raw material for manufacturing beer.

According to trading sources, companies like United Breweries, The Malt, Barmalt and Imperial Malt have reduced their buying as barley prices have crashed by Rs 100 a quintal in the last fortnight to Rs 800 a quintal.

Suresh Vashistha of Shrimadhopur-based trading firm Shiv Enterprises said, “Better crop-size coupled with improved yield, has flooded the market with barley. Exports are almost negligible as global market price is lower than the domestic market. Consequently, international trading firms have found no viability in barley procurement this year.”

 

The country’s overall barley production is estimated close to 2 million tonnes, 20 per cent higher than last year. Rajasthan, Punjab, Haryana, Uttar Pradesh and Madhya Pradesh are the main barley producing states.

After arrivals begin, malt making factories normally procure over 60 per cent of their requirement during April-June. “However, this year, since malt industries are assured of continuous supply throughout the year, that too at lower prices, they have procured only 30-40 per cent of their needs,” added Vashistha. Moreover, exports are unlikely this year, he said.

Out of the total output, around 70 per cent goes to the malt industries and is used for beer making. The rest is used mostly as cattle feed. Major malt industries are located in and around Delhi, Haryana, Uttar Pradesh and Rajasthan. Currently, around 20 per cent of the produce is with the stockists and 40 per cent with farmers.

Earlier this year, when fresh barley arrivals struck mandis, the trade began as low as Rs 750 a quintal, which subsequently climbed to over Rs 900 a quintal. Traders had then anticipated that the commodity might breach Rs 1,000-a-quintal-mark on the back of demand from malt industries. However, after clarity on the global front emerged, scenario changed.

Jaipur-based barley trader Abhishek Agarwal said, “The market has come back on the base price. Chances of rally in barley are unlikely.” Market sources said countries like Ukraine, Uzbekistan, Tajikistan and Australia have now become the main source for barley among the west Asian countries. The prices in these countries are in the range of Rs 650-700 a quintal, they added.

In the previous season, due to robust export demand, prices in the domestic market had touched as high as Rs 1,250 a quintal. The historically high realisation encouraged farmers to go for more cultivation of barley in the current season. Agarwal further added that low prices this season may have its impact on the upcoming season with farmers slowly moving away from barley cultivation.