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bandt9299 · 09-08-2007, 05:42 PM

Just got back from my LHBS and he told me that the price of grain is going to increase 2 fold in the upcoming months, needless to say he was very discouraged, as was I. Time to buy a few hundred pounds. What have you guys heard?

**Sir Humpsalot** · 09-08-2007, 06:06 PM

This is the third time this topic has come up. You are NOT buying grain. You are buying MALT!!!

The cost you pay for your malt includes the cost of buying the grain. And the cost of storing it in the silo, paying for the silo and the person to manage them and maintain the silos. It also includes the cost of shipping that grain to the maltster. To ship it there, they have to pay a train engineer to drive a train loaded with malt. And they have to pay the maintenance guys to maintain the trains and the tracks. Then they pay the guys to offload the grain into the maltster's facility. Then there's the cost of malting the grain- energy, time, and space is required for the process. And of course, you have to pay the maltster so that he can feed his family. And you also have to pay all the employees of the maltster! They don't work for free! Don't forget that the malt has to be bagged and stored. Bags cost money. After an order is placed (by an ordering department somewhere), the bags probably go on another train to another storage facility. Right there is another train engineer and a bunch of track workers who also need to get paid. Then, they off-load the sacks and store them in a warehouse. Warehouses require real estate and facilities. Warehouses. And a warehouse manager. And that warehouse manager needs to feed his family too! And he manages employees and forklifts and keeps the roof repaired on the warehouse. And all those people who work around that facility, even the roofers, all have families to feed. And then the warehouse has a shipping department and that shipping department negotiates for cheap trucking prices and they get that grain trucked to the LHBS or the brewery- in exchange for their salary. So they get paid, and so do the truck drivers who drive the malt. After all, truck drivers have families too! Then you have your LHBS who needs to feed his family and pay rent in a retail district to sell you the grain.

The bottom line is, the price of grain is maybe eight cents a pound. the cost of malting, storing, transporting, and of course, profit accounts for the remainder of what you pay... When you really think about it, it's amazing that ANYTHING can get to your door for less than a dollar a pound!!!!!

Anyway, the "price of grain" just includes whatever the farmer is paid to grow it. That's like maybe eight cents a pound, I believe. So a fifty percent increase is an extra four cents a pound.
An extra four cents a pound isn't going to break the bank for me...

**Bobby_M** · 09-08-2007, 06:11 PM

If by saying "two fold" he thinks going to need to charge $80 for a sack, he's way off. Let's say he's right, that increase would carry down all the way to commerical beers so homebrewing all grain wouls still fall in the same value as it does today.

ohiobrewtus · 09-08-2007, 06:11 PM

I've heard that the cost of grains could be going up a bit due to farmers getting government money for growing corn (for E85 and other alternative fuels), but I have not heard that prices would be doubling. That seems quite high to me. How honest is the owner of your LHBS?

The Pol · 09-08-2007, 06:12 PM

$.04/lb!? Okay, I have a brand new AG system for sale... wait, then I could afford grain.. but Id have no brewing equipment! Umm, I am asking my boss for a raise to fund my obsession.

**Orfy** · 09-08-2007, 06:18 PM

If the cost of grain goes up by a % then this doesn't mean malt goes up by the same %. If it does you are being ripped off.

Quote:

The article reports that Colorado Commissioner of Agriculture John Stump explains the price of agricultural raw materials is just a small fraction of the price of most processed foods. In his more accurate example he shows the real impact of barley price increases:

"the price of barley is now about $4 for a 46-pound bushel. It typically takes about a pound of barley to produce a gallon of beer. Thus, even with today's higher grain prices, the barley in a gallon of beer costs about 9 cents - or roughly a dime for a six-pack of beer that sells for anywhere from $3 to $5 in a package store and far more if the barley is brewed into the kind of "craft beer" featured in Denver brewpubs."

So the TOTAL cost of barley, even with an increase, is just 9 cents out of a $5.00 six pack. For those of you without a calculator, that's less than 2%. OK, let's be precise, 1.8%.

The article then goes on and accurately explains the other cost drivers impacting beer prices:

bandt9299 · 09-08-2007, 06:31 PM

My home brew shop is excellent I get treated very well, and the prices are excellent especially for malt. His wife works there too and she is the one that told me that prices could almost double. Sorry for jumping to conclusions, but my shop is surely NOT a rip off by any means. So I kind of believed her. Doubling does sound a bit steep.

**Sir Humpsalot** · 09-08-2007, 06:40 PM

Whenever economic factors come into play, retailers like to "prepare their customers for the worst". I'm not saying that they're going to lie to you, but the economic reality might look something like this:

Each person who has their hand in the grain industry, might see this "huge increase" as a great time to tack on an extra half of a penny per pound to their profit margin.

Instead of paying 8 cents a pound for barley, the maltster pays 12. So he increases the cost of his product, by 5 cents rather than 4. He blames it on the cost increases and nobody knows the difference. At the end of the day, the maltster has a little more money to feed his family. Then the truckers, and the warehouses, and distributors and everybody else will tack on a penny, or a nickel or whatever. By the time it gets down to the consumer, there is a price increase completely out of line with the economic reality. It kind of sucks at first blush, but don't think of it as being a rip off.

Prices fluctuate, income levels fluctuate. Sure, you might make a rock-steady $15 per hour because you work for a corporation, but "real life' isn't like that for business owners. Some days their margins get squeezed to hell due to market forces and people will squeeze every nickel and dime they can out of them. Other days, the market will just "accept" an increase because they know the market is afraid to push their suppliers too far. It's not really anybody attempting to gouge, it's just cut-throat businesses trying to reclaim their margins.

If they go too far though, a few players will take advantage of the over-reaching and go on another round of price cutting. So it's really nothing to fret about. Just accept that it's part of the capitalist system.... It's just folks, up and down the line, trying to take care of themselves. We can't really fault them for that, can we?

Cheers!

homebrewer_99 · 09-08-2007, 07:28 PM

Quote:

Originally Posted by Damn Squirrels

Whenever economic factors come into play, retailers like to "prepare their customers for the worst". I'm not saying that they're going to lie to you, but the economic reality might look something like this:

Each person who has their hand in the grain industry, might see this "huge increase" as a great time to tack on an extra half of a penny per pound to their profit margin.

Instead of paying 8 cents a pound for barley, the maltster pays 12. So he increases the cost of his product, by 5 cents rather than 4. He blames it on the cost increases and nobody knows the difference. At the end of the day, the maltster has a little more money to feed his family. Then the truckers, and the warehouses, and distributors and everybody else will tack on a penny, or a nickel or whatever. By the time it gets down to the consumer, there is a price increase completely out of line with the economic reality. It kind of sucks at first blush, but don't think of it as being a rip off.

Prices fluctuate, income levels fluctuate. Sure, you might make a rock-steady $15 per hour because you work for a corporation, but "real life' isn't like that for business owners. Some days their margins get squeezed to hell due to market forces and people will squeeze every nickel and dime they can out of them. Other days, the market will just "accept" an increase because they know the market is afraid to push their suppliers too far. It's not really anybody attempting to gouge, it's just cut-throat businesses trying to reclaim their margins.

If they go too far though, a few players will take advantage of the over-reaching and go on another round of price cutting. So it's really nothing to fret about. Just accept that it's part of the capitalist system.... It's just folks, up and down the line, trying to take care of themselves. We can't really fault them for that, can we?

Cheers!

I think you're off a bit, but it comes down to this...every increase is passed on to the consumer...

**Orfy** · 09-08-2007, 07:30 PM

Nothing wrong with a supplier increasing cost but they don't need to lie about it or blame in on someone else.