Irish malting industry ‘faces extinction’
The IFA said it was incredible that Diageo and publicans were set to increase the price of the pint by 15 cent while malting barley growers, who provide the main ingredient, were getting less than one cent of the average €3.60 cost of a pint.
The IFA said that at a time when both the Greencore subsidiary Minch Malt and Diageo are passing on their increased costs to consumers and increasing their own margins and profits, malting barley farmers have been offered €4/tonne less than last year.
It described a €13/tonne offer by Minch Malt as an insult to growers and claimed that the company and Diageo are abusing their dominant market position by forcing their farmer suppliers to take less for their produce. At the same time, the IRA said, the firms are passing on their increased costs to consumers and increasing their own margins and profits.
However, Minch North said negotiations are on-going between the company and the IFA on the premium for the 2004 malting barley crop. This premium is paid on top of the average harvest feed barley price.
“It is crucial to remember that Minch Malt operates in an increasingly competitive world malt market where the highest quality is assumed and competitiveness is the order winner.
“We are the sixth largest maltsters in the world with plants in Ireland, Belgium and Britain. We are the largest British maltsters and we also manage six malting plants in Russia.
“Almost three quarters of our Irish malt production at Minch Malt goes to export markets either directly as malt, or indirectly in the products of our customers.
“Bearing this in mind, it is important that growers understand that raw material prices must reflect the realities of the marketplace,” the company said.
IFA grain committee chairman Paddy Harrington said the price of malting barley has fallen by €60/tonne from €178/tonne in the mid-eighties to €118/tonne in 2003.
But the price of a pint has increased by 500% to 600% in the same period. Yet, the growers’ share of the pint price is now less than 1 cent (0.2%) while Guinness’s share is about 90 cent, or 25% of the consumer price at €3.60 per pint.
He said the remaining 74.8% is divided between the publican and the Government. Doubling the malting price would still only increase the price of a pint by 0.7 cent, a negligible sum in the context of the current price increase being sought.
“Given Minch Malt's derisory offer of €13/tonne, the majority of malting barley growers have vowed to quit growing this high risk, low margin crop from 2005,” he said.
“Farmers are no longer prepared to work for low margins. Unless Minch Malt, Guinness and the Government get their act together we will no longer have a malting industry in Ireland,” he added.
Mr Harrington said a meeting has been arranged with Guinness in the coming weeks to impress upon them the seriousness of the current situation.
Mr Harrington also announced that a meeting of growers will take place next Tuesday night in the Dolmen Hotel, Carlow, to discuss the issue.
