SIC 2083

Companies in this industry

Industry report:

This classification covers establishments primarily engaged in manufacturing malt or malt by-products from barley or other grains.

Malt is a barley kernel that has been allowed to sprout and is used primarily for brewing and distilling. It has long been a central element in beer production. Anywhere from 25 to 50 pounds of malt are used to make one barrel of beer. In 2008, there were 15 malt plants and 2,074 brewers in the United States, according to the American Malting Barley Association. The U.S. Department of Agriculture reported that 239.4 million bushels of barley were harvested from 3.7 million acres in the United States in 2008.

Malt is created by germinating moistened barley under controlled conditions for a short period of time, usually four days. The germination process activates the enzyme systems, specialized proteins that break down the barley's starch and protein. Once germinated, the "green malt" must be kilned, or dried with heat. Essentially, the malt is cooked to stop its growth, although the enzyme activity continues. Prior to kilning, the rootlets that appear during germination are removed and discarded. What is left after kilning is considered to be malt.

According to the American Malting Barley Association, of the barley consumed domestically in the late 2000s, approximately 30 percent was used for animal feed, 64 percent for malt production, 3 percent as seed, and 3 percent in food products. Average annual exports from 2003 to 2007 were $99 million for barley and its milled products, $86 million for malt and malt extracts, and $198 million for beer.

Brewers create a mash with the malt by mixing it with water and heating it under controlled conditions. During the mashing process, the enzymes break down the starch into sugars and proteins, creating a soluble mixture or extract. The soluble product is filtered, and yeast is added. Other starches such as corn or rice are added at this time, along with hops for flavor. Beer is the alcoholic beverage of choice in the United States, comprising the largest segment of alcoholic beverages in volume and sales. A 2006 Gallup Poll on America's drinking habits showed that of people who drink alcohol, 41 percent most often drink beer.

All beer has some malt content. Budget beers usually are 50 percent malt and 50 percent corn or rice, while premium beer composition may be as high as 70 percent malt. Brewers generally specify to barley growers the variety of malt needed for particular brands.

Barley was affected by acreage reduction programs through which the U.S. government paid farmers to suspend the planting of barley on portions of their land. Annual U.S. barley production fell from the 350 million bushel range in the late 1990s to below 300 million bushels in the early 2000s. From 1998 to 2007, barley production averaged 257.8 million bushels annually, with an estimated annual value of $614.6 million. More than 279 million bushels were harvested in 2004, before the harvest declined to less than 212 million bushels in 2005 and 180 million bushels in 2006. That year, production was down throughout the prime barley growing regions of the Great Plains and Rocky Mountains because of dry conditions during most of the growing season and due to decreased planting acreage. The area of barley harvested for grain was the lowest since 1885, and production was the lowest since 1936. Production rebounded somewhat in the late 2000s, and in 2008, 239.8 million bushels of barley were harvested. North Dakota produced the most, at 86.2 million bushels, followed by Idaho with 49.8 million bushels and Montana with 37.7 million bushels.

Several leading malt producers operated as divisions of larger firms in the late 2000s, including Great Western Malting Co., a subsidiary of ConAgra, and Cargill Malt, a specialty products group of Cargill Inc. ADM Malting Division, previously a division of Archer Daniels Midland, was purchased by French malting group Malteurop in 2008. Independently owned malt producers included Premier Malt Products Inc., a division of Pabst Brewing Co. until 1982, and Briess Industries (formerly Briess Malt and Ingredients Co.), North America's leading manufacturer of specialty malt, founded in 1876. American beer producers that maintained in-house malt operations included Anheuser-Busch Inc., Miller Brewing Co., Bell's Brewery Inc., and Sierra Nevada Brewing Company Inc.

Both feed and malting barley averaged $1.98 per bushel in 1998. The price steadily increased throughout the late 1990s and early 2000s, according to the U.S. Department of Agriculture. While feed prices remained less than $2 per bushel ($1.73 and $1.87 per bushel, respectively) in 2004 and 2005, by 2002 farmers were receiving an average of $2.70 per bushel for malting barley. The price increased 10 cents per bushel in 2004 ($2.81) and 2005 ($2.80). Prices rose rapidly in the late 2000s, and by mid-2009 the average price of malting barley was $4.85 per bushel. Some of the increase in cost was passed on to consumers through higher beer prices, which rose between 4 and 10 percent in 2008.

Malt producers and brewers faced a number of major issues that made growing malting-grade barley difficult in the 2000s. One of the most pressing was a vomitoxin-producing scab that affected the malting of barley. Although it did not affect humans, barley affected with vomitoxin disturbed the malting process. Higher fuel costs also affected malt manufacturers in the late 2000s.

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News and information about Malt

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