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Issue 74 - Supply and demand

Whisky Magazine Issue 74
September 2008

 

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Supply and demand

Ian Wisniewski looks at the turbulent world of barley.

With production levels rising at various distilleries, the industry accounted for 479,000 tonnes of barley in 2007, compared to 442,000 tonnes in 2006, and 409,000 tonnes in 2005, according to The Scotch Whisky Association.

Meanwhile, the price per tonne was £80-90 in 2005, and £90 a tonne in 2006.But after the 2007 harvest prices changed dramatically, soaring to more than £200 a tonne.

“After two very poor world harvests, there were no cereal stocks to fall back on.Processors went into 2007 without having enough carry over stock to see them through until the new crop was available for malting.This is usually six weeks after harvest, around the beginning of November, so the price soared as buyers chased what little free market barley was available,” says Dr Bill Crilly of The Edrington Group.

Another aspect of supply and demand was a sustained decline in the level of barley cultivated in Scotland.

“Prices had been so low that the area of spring barley in Scotland had fallen fairly dramatically, from around 280,000 hectares 10 years ago to around 220,000 hectares in 2007.As you can produce five to six tonnes per hectare that's a lot of barley not being produced.The area of barley cultivation in Scotland has gone up,we think, to around 245,000 hectares this year, but there is still very strong demand, and it depends what happens during the harvest.There could be too much barley around, but we don't think there will be enough of an excess to bring prices down, or no...

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