The backwash of Asia's economic troubles and some very aggressive selling from Eastern Europe spell trouble for feed barley growers this year, but some new malt varieties hold the promise of better things to come.
Expect something like a $50/tonne gap between feed and malt barley prices this season. That's the grim news as a world feed-grain market faces up to a 25 per cent reduction in demand for US corn and soy beans, the engine-room of the feed-grain market.
While the economic crash in Asia has had the greatest impact, a good domestic crop in Saudi Arabia and consequently reduced import requirements and some very aggressive selling from Eastern Europe, are also forcing down the feed-grain market.
Market analysts expect demand from the Saudis to drop to around 4 million tonnes, 2.5 million tonnes less than last season, while the Eastern European countries, now emerging as a force in the world feed-barley market, are bargain-basement sellers. In late April-May this year sales were being reported at between A$90 and A$105 a tonne f.o.b.
On the domestic front, the Asian crisis has affected demand from our intensive-feeding industries such as dairy, and producers have also reacted to high prices from previous years. This may be offset as this year's lower store stock and grain prices give feedlot operators some respite.
South Australia and Western Australia, in particular, where there are significant carryover stocks, may feel the full brunt of a very chilly export market.
Less malt to China, temporarily
China is expected to buy less malting barley this year (1997-98 crop). Graham Lawrence, NSW Grains Board Chief Executive Officer, says Australia was particularly successful in that market last year selling between 1.3 and 1.4 million tonnes to China (1996-97 crop).
Mr Lawrence speculates that the Canadians were stung by our success and have been very aggressive in selling to China this year, as have the Europeans. He estimates that China has already bought 400,000 to 500,000 tonnes of Canadian malting barley and some 100,000 tonnes from Europe. Australia has placed an estimated 150,000 tonnes with China and that market may need no more than another 300,000 tonnes to complete its requirements (having gone long last year).
A spokesperson for the Australian Barley Board (ABB) said the longer-range view looks more optimistic, as Canada sells more of its crop to the US, and Chinese demand continues to rise as the Asian financial crisis eases.
New varieties to compete
Leslie McLeod of maltster Barrett Burston International, which has a joint venture with Joe White Maltings in China, believes Australian producers will need to move quickly to accept and produce newer malting varieties in export quantity. These should put us on a par with the overseas competition and give us a chance to win back some of the market share we've lost in such quality-conscious markets as Japan.
The ABB has reported strong success with Arapiles in the Japanese market, exporting 41,000 tonnes there last year. "Arapiles has proven very popular for the making of shochu, a traditional Japanese distilled spirit," said ABB State Manager Victoria, Simon McNair. The total barley requirement in Japan for shochu is around 120,000 tonnes, so while the market is not enormous, it is an important, high-value sector.
"Shochu requires barley that is very pure, high starch, low moisture and with consistent-size, plump grain. The grain size issue makes Arapiles far superior to Schooner for this product. Plump grain is required because one of the first steps in the process is pearling to remove as much fibre as possible and reduce the grain to a starch ball. Plump grain results in a high pearling ratio, a high-yielding operation and thus a high price for growers."
A new variety produced at the NSW Agriculture's Wagga Research Institute is getting a second look. WB190 R was initially rejected by Australian maltsters on the grounds that it was inferior to Schooner in wort beta-glucan level, a dis-advantage in the filter process. Mr Lawrence believes this initial assessment was too harsh. "It's lower in its wort beta-glucan properties than any of the internationally successful varieties and it certainly yields much better than Schooner."
Mr Lawrence believes that this variety may find a place with some of the bigger Chinese brewers and thinks that it may also be successful in the Japanese food barley market. It's also being reassessed by domestic malsters.
In Victoria and South Australia, the ABB is encouraging producers to sow Sloop with the promise of a premium payment. The ABB reports commercial trials have shown a 30 per cent improvement in the diastatic power of Sloop grain compared to that of Schooner. This is a vital factor in markets like Japan, where rice is used as an adjunct in the brewing process. The variety can also claim a lower wort beta-glucan factor, another improvement.