When COVID-19 first started making headlines in this country, I tried to foresee how it might possibly affect my business. Agriculture is considered an essential enterprise, so we have been able to …
When COVID-19 first started making headlines in this country, I tried to foresee how it might possibly affect my business. Agriculture is considered an essential enterprise, so we have been able to carry on our day to day business much like we have in the past.
Most farmers are more at home in a tractor somewhere in an 80-acre field, than in a group of people, so social distancing didn’t create much of an inconvenience either. Nearly all of the commodities I produce had been contracted months before commodity prices took a tumble. I even read where beer consumption is up — a result of people being stuck in their homes with nothing better to do I suppose, so I assumed that the barley we produce for malt might possibly be the most secure crop I grow.
Malt barley is the single largest crop grown in Park and Big Horn counties, and Briess Malt is the largest purchaser of that barley. Briess came to this area for the quality of barley that is grown here. Their malt ends up being used in lots of markets, including pizza dough, pet food and is in many food products. But Briess’ primary market is in premium specialty malts it produces for the craft beer industry. Unlike brands like Budweiser or Miller — where you might pick up a case to take home — craft beer is consumed mostly in pubs, restaurants, clubs and friendly gatherings. You will even see bags of Briess malt in our own WYOld West Brewery. In the absence of a better word, craft beer is “social” beer.
As these establishments have had to shut down, so has the consumption of craft beer. As a result, Briess sent an email to its growers in Wyoming and Montana on Saturday invoking a force majeure clause in its contract with the growers because their market for malt has been decimated by the effects of COVID-19. This clause, also called an act of God clause, is common in nearly all contracts farmers sign with purchasers of their commodities. If something occurs beyond the control of either party (in this case, a pandemic) the contract can be voided. To offset Briess’ loss of market, it has determined to only accept and pay contract price for 50% of the quantity of malt barley that growers have contracted with them.
Because of some delays in planting this spring, some growers are just getting started planting. Those acres will likely be replaced by other crops such as sugar beets, beans, corn, wheat, or sunflower seed. Even though those acres can be replaced with other crops, those fields were probably prepared and fertilized for barley, creating a huge interruption in crop plans, and crop rotations.
Other growers, however, have already finished planting 100% of their contracted acres. Their situation is much more precarious. Briess has promised to monitor its malt sales during the summer to see if they can possibly increase the quantity of barley they will purchase from growers beyond the 50%, but there remains much uncertainty. As it stands now, barley delivered above the 50% of contracted quantities will likely be priced as feed barley, which is less than half the value of malt barley.
As with every other hardship our hard-working producers face, they will overcome this one, live to see another day (or another year in this case), and ultimately feel blessed to do something we have taken for granted all these years: the ability to go to work every day.
(Fred Hopkin farms in the Penrose area. He was a member of the Briess advisory group for about 10 years, but no longer. This assessment was offered strictly as an individual barley grower.)