Increasing grain prices???

[Focus]

So, I'm working with a guy from Nebraska and mention that I brew. He turns to me and asks if I've noticed a rise in the cost of my barley. I'd already heard that the price of corn was on the rise this year b/c of the demand for corn oil for alternative fuels (which explains why a ton of cotton & tobacco farmers in my area of NC grew a ton of corn this year). He says that it's true for other grains as well. Seeing as he's from Nebraska, I tend to think he knows what he's talking about on the subject.

I haven't bought any ingredients in the last 6-9 months, so I don't know. I do extract brewing, but if this is so, there should be a corresponding rise in that as well.

Does anyone know anything about this?

Focus

 

[EdWort]

I facilitated a pallet purchase from North Country Malt Supply in January. My group bought over 2,300 pounds of grain. I compared the prices we paid in January to the prices on their website today for the >2000# category and domestic malt has gone up 2 cents per pounds while European malt has gone up 3 cents per pound.

Shouldn't be enough to notice.

 

[the_bird]

I haven't noticed it at the homebrew scale, but it's on my mind when I'm looking at companies like Sam Adams. The few barley indices that I see seem to indicate a pretty substantial rise over the past year, and Sammy's gross margins have been under some pressure. I'll have to dig up the latest earnings call and see what they have to say about that. Corn futures have definately gone up quite a bit, and the most common explanation has been demand for ethanol production. It's natural to expect that if corn stays relatively high-priced, we'll see more and more farmers who might otherwise have planted barley switch over to corn.

 

[Sir Humpsalot]

Yup. Even in EdWort's quantities, shipping is the real bulk of the cost. But that's still a buck for a sack of grain (or about a half of a penny per beer)

Do you notice it? Sure I guess you could. Does it hurt? Not really. If push came to shove, I've rather find a way to save a half hour on my brew sessions.

 

[EdWort]

Yup. Even in EdWort's quantities, shipping is the real bulk of the cost. But that's still a buck for a sack of grain (or about a half of a penny per beer)

Yeah, we paid like $0.30 per pound for Pale 2 row and $0.28 per pound for Pils, but the shipping was $5.46 per bag to get it shipped to Texas.

Still, after freight my Pils only cost $0.41 per pound. Even my imported Vienna from Best Malz cost only $0.52 per pound. That's about a third what you would pay at your LHBS.

 

[FlyingHorse]

Higher prices for corn = more farmers planting corn = less acreage for other grains = higher prices for other grains.

Good article here

[rant]
Higher grain prices is just another way in which the ethanol scam pulls money from our pockets. First, we get to subsidize the corn growers, at least when prices are low. Then we get to subsidize ethanol production. Then we get to fill our tanks with ethanol which costs virtually the same as gasoline, but provides roughly 2/3 the energy -- if your car gets 300 miles on a tank of gas, it'll only get 200 on a tank of ethanol. None of which, BTW, will do a thing to reduce our oil consumption, because it takes as much or more energy to produce a gallon of ethanol than the ethanol contains. Then the higher grain prices, which will flow through the entire food chain...even our malt.

[/rant]

 

[CBBaron]

Demand for corn has gone up due to increased ethanol production (not oil). This has led to an increase in corn prices which leads to more corn acreage. The corn acres take from other grain crops which decreases that supply and results in an increase in prices for barley and wheat. However the prices paid at your LHBS is still affected by profit for the maltster, the distributer, and the HBS in addition to shipping prices. That is why you pay $1.10/lb for the same grain Edwort just paid $0.30/lb and the farmer got paid a small fraction of that price. All in all an increase in fuel costs and therefore shipping costs plays a bigger factor in your malt price than an increase in the cost of grain.
On the other hand my dad sells seed to farmers and his customers are seeing much better margins due to the price increases. This is the first time he is seeing a real increase in optimism in the farmers in a long time.
Craig

 

[Reverend JC]

Seeing as he's from Nebraska, I tend to think he knows what he's talking about.

Focus

Wow, i did not realize the sway i had over people simply because i am from NE.


Lets try this:

"Please, good HBT citizens, send all of your grain to me as it is of no use to you anymore. Oh, and those of you who have SS conicals, you wont want to use those either, the plastic ale buckets are the new thing to use!"



excellent *watches the mail*

 

[TheJadedDog]

Higher prices for corn = more farmers planting corn = less acreage for other grains = higher prices for other grains.

Good article here

[rant]
Higher grain prices is just another way in which the ethanol scam pulls money from our pockets. First, we get to subsidize the corn growers, at least when prices are low. Then we get to subsidize ethanol production. Then we get to fill our tanks with ethanol which costs virtually the same as gasoline, but provides roughly 2/3 the energy -- if your car gets 300 miles on a tank of gas, it'll only get 200 on a tank of ethanol. None of which, BTW, will do a thing to reduce our oil consumption, because it takes as much or more energy to produce a gallon of ethanol than the ethanol contains. Then the higher grain prices, which will flow through the entire food chain...even our malt.

[/rant]

Couldn't have said it better myself.

 

[CBBaron]

Higher prices for corn = more farmers planting corn = less acreage for other grains = higher prices for other grains.

Good article here

[rant]
Higher grain prices is just another way in which the ethanol scam pulls money from our pockets. First, we get to subsidize the corn growers, at least when prices are low. Then we get to subsidize ethanol production. Then we get to fill our tanks with ethanol which costs virtually the same as gasoline, but provides roughly 2/3 the energy -- if your car gets 300 miles on a tank of gas, it'll only get 200 on a tank of ethanol. None of which, BTW, will do a thing to reduce our oil consumption, because it takes as much or more energy to produce a gallon of ethanol than the ethanol contains. Then the higher grain prices, which will flow through the entire food chain...even our malt.
[/rant]

Interesting article but your comments have a couple inaccuracies.
First flex fuel vehicles running on E85 (85% ethanol) usually get between 80-100% of the fuel economy they get running straight gas, much better than the 2/3 you state. Engines designed for ethanol alone could and do do better than that because ethanol burns more efficiently, making more of its energy available to do work.
Second as was stated in the article you linked, ethanol production has a net increase in energy, however the gain is not much so there is an argument whether this is a good use of the food source.
Farm subsidies have been used to help support farmers for years but few farmers are getting rich producing crops. Most struggle to get by. As the price of corn has risen the amount of subsidies has decreased and I believe the small farmers are doing much better due to the price increases.
Yes food prices have gone up but the percent increase you see due to raw material increase is much smaller the the price increase the farmers are getting. There are alot of hands that have to be paid on the way to your mashtun.
However the article you link to does have a good point about how those costs affect the very poor, especially in poor countries. When most of your calories are based on staples that are increasing in price it can price you into starvation.
Whether increased ethanol use is good policy over all I am undecided, but I can tell you it is very welcome in most of the rural midwest.
Craig

 

[FlyingHorse]

Interesting article but your comments have a couple inaccuracies.
First flex fuel vehicles running on E85 (85% ethanol) usually get between 80-100% of the fuel economy they get running straight gas, much better than the 2/3 you state.

The federal government, among others, disagree:
http://www.fueleconomy.gov/feg/ethanol.shtml

MPG. FFVs operating on E85 usually experience a 20-30% drop in miles per gallon due to ethanol’s lower energy content.

http://zfacts.com/p/436.html
http://www.marketwatch.com/News/Story/Story.aspx?guid={8698ca19-66ed-4025-b186-7b1c8233ac9e}
Technology may change this, but ask yourself this: why would auto companies, who have fought CAFE increases for years, suddenly be excited to create new efficient ethanol technology?

Second as was stated in the article you linked, ethanol production has a net increase in energy, however the gain is not much so there is an argument whether this is a good use of the food source.

There are studies done that support both sides. In any case, it's nowhere near as efficient as oil (which returns 5-6x the energy investment), and we can't produce enough ethanol to make a serious dent in our oil consumption.

Ethanol as energy is a bad policy, driven by lobbyists for the big ethanol producers like ADM. If little farmers benefit, well, that's a bright spot. But I have to believe there's a better, less expensive way to accomplish that.

 

[CBBaron]

The federal government, among others, disagree:
http://www.fueleconomy.gov/feg/ethanol.shtml

http://zfacts.com/p/436.html
http://www.marketwatch.com/News/Story/Story.aspx?guid={8698ca19-66ed-4025-b186-7b1c8233ac9e}
Technology may change this, but ask yourself this: why would auto companies, who have fought CAFE increases for years, suddenly be excited to create new efficient ethanol technology?

Poor memory on my part. It looks like ethanol has 2/3 the potential energy of gas. However it has a higher octane rating so a ethanol only car could use a higher compression engine which would operate more efficiently. Doesn't sound like it would completely make up the difference on a per gallon basis but does result in a more efficient vehicle on a per available BTU basis.

There are studies done that support both sides. In any case, it's nowhere near as efficient as oil (which returns 5-6x the energy investment), and we can't produce enough ethanol to make a serious dent in our oil consumption.

Ethanol as energy is a bad policy, driven by lobbyists for the big ethanol producers like ADM. If little farmers benefit, well, that's a bright spot. But I have to believe there's a better, less expensive way to accomplish that.

You would think. But part of the reason food cost are so low is the farm subsidies, not only in the US but in many other countries as well. However I do feel that those subsidies in the US do more to help the big companies like ADM than they do to support small family farms and sustainable agriculture. I should also mention that as the grain farmers are seeing better profits the animal farmers (pork, chicken, beef) are having a harder time as they have to pay more for corn to feed their animals. There is no free lunch.

Back to brewing. The increased prices are going to have a very small affect on home brewers, but may affect the bottom line of bigger brewers. I'm guessing that the bigger the brewer the greater a percent of their sale price is the grain cost.
Craig

 

[Focus]

Wow, that generated a ton of unexpected information and debate - thanks a lot guys!

CBBarron & Bike n Brew specifically
From my very un-scientific and non-economic perspective, I'd throw in to your spirited discussion that even if fuel prices remained the same in a primarily E85-based economy, I'd be happy to pay the same prices if it ment that the US was less dependant on foreign - read Middle East and Venezualen - oil. I've been saying for a few years now that if GW got on TV and announced to the country that he was enacting a $1/gal tax on gasoline for the specific purpose of funding alternative fuel research, I'd be 100% willing to pay it. If I knew in my heart of hearts that 1 whole dollar from each gallon was going directly toward releasing us from dependancy on OPEC, I'd pay just about anything for gas.

The faster we're off the OPEC teat - and the faster that the Mid-east Oil Barrons have nothing but miles and miles of desert no one gives a rat-**** about - the better off we are. Whatever it takes to develop "alternative fuels" is worth it IMHO.

Let the spears fly,
Focus

 

[JeffNYC]

Yeah, we paid like $0.30 per pound for Pale 2 row and $0.28 per pound for Pils, but the shipping was $5.46 per bag to get it shipped to Texas.

Still, after freight my Pils only cost $0.41 per pound. Even my imported Vienna from Best Malz cost only $0.52 per pound. That's about a third what you would pay at your LHBS.

Please advise how to get prices like this! With shipping I'm no where this low.

 

[EdWort]

Please advise how to get prices like this! With shipping I'm no where this low.

I take it you are from New York. North Country Malt has a flat rate price for pallets, so take the flat rate and divide by how many bags you put on it. The more bags (up to 42) the lower the cost of shipping per bag. Get some friends to go in on it with you. For example, for the entire state of NY, they will ship a pallet for $80 plus a 17.5% fuel surcharge ($14), so a pallet will ship for $94. If you put together a 42 bag order, that brings shipping down to $2.24 per bag. Pretty sweet! Us Texans pay over twice that.

Here's North Country's Flat Rate Pallet shipping program.

 

[vtchuck]

I drove over and picked up 3 55 lb bags of malt from North Country in August. They said prices would be going up by as much as 30% due to weak dollar, farmers switching from barley to corn (for ethanol) and high demand for hops. Malt was about $25 a bag & hops were $8 - 10 a lb.

Just my $.02

 

[JeffNYC]

I'm the only home brewer I know...

Supplies here in the Northeast are tough to come by (New York and Connecticut). I've been buying from midwestsupplies.com, and I like their service and product range, but shipping drives up the price quite a bit. Maltose in middle of Connecticut is too far. Perhaps the best I can do is a brewery in NJ that sells grain, too. But that is a bit out of my way, too.

Anyone out there have a good source to share? This North Country Malt looks interesting, even for smaller orders (a few bags at the most), with FedEx, I'll look into that.

 

[SPLASTiK]

I'm the only home brewer I know...

Supplies here in the Northeast are tough to come by (New York and Connecticut). I've been buying from midwestsupplies.com, and I like their service and product range, but shipping drives up the price quite a bit. Maltose in middle of Connecticut is too far. Perhaps the best I can do is a brewery in NJ that sells grain, too. But that is a bit out of my way, too.

Anyone out there have a good source to share? This North Country Malt looks interesting, even for smaller orders (a few bags at the most), with FedEx, I'll look into that.

If you're willing to make it to Jersey... there's a big pallet order to NCM happening with some folks at Northern Brewer's forums. I think shipping is going to come out to like $5 or so a sack. Might be worth it to join in and stock up for the year with prices soon to rise. I think they're ordering early next week.

http://forum.northernbrewer.com/viewtopic.php?t=48790

 

[JeffNYC]

Thanks for the heads up! I'll look into that.

 

[Bernie Brewer]

Talked to the lady at Point Brew Supply on Fri. She told me that Briess 2-row is going up in price by 200%. It's already $50 per bag. I bought some Rahr for $30 and ran.