Laying the foundation for a good barley crop

Barley can be a lucrative crop if not downgraded to feed. Manfred Venter, head of agriculture at Anheuser-Busch InBev SA/NV South Africa, spoke to Glenneis Kriel about how farmers can make the most of this crop.

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Since malting barley production started in South Africa around 1978, it has turned into a valued inclusion in cereal rotations by improving soil health, strengthening herbicide-resistance management, and becoming a valuable source of income. That is, unless it is downgraded to feed grade.

Manfred Venter, head of agriculture at Anheuser-Busch InBev SA/NV South Africa (AB InBev South Africa), explains that malt barley prices are directly linked to the Wheat B1 SAFEX price, ensuring price transparency for farmers. Additionally, South African Breweries (SAB) provides substantial quality premiums to farmers who meet specified delivery criteria set by SAB Maltsters.

FEED GRADE

Venter says the unpredictable supply and demand dynamics of feed barley, however, mean that its price can fall as low as 80% of the yellow maize price.

He ascribes this to the market for feed barley not being as robust as in other parts of the world, primarily because the volumes of feed barley produced in South Africa are insufficient to incentivise feed companies to substitute their usual yellow maize feed mix with barley.

“Yellow maize, being readily available near major feed companies and large feedlots, offers a more competitive option both in terms of pricing and feed-conversion efficiency. Consequently, the demand for feed barley remains low, driving its prices down to levels that are economically unviable for farmers," Venter says.

Downgrades also have repercussions for companies. Venter explains that SAB may face additional financial burdens as it needs to compensate for domestic shortfalls with imported malting barley that is typically more costly than locally sourced barley and carries a larger carbon footprint.

THE UNPREDICTABLE SUPPLY AND DEMAND DYNAMICS OF FEED BARLEY CAN CAUSE ITS PRICE TO DROP TO AS LOW AS 80% OF THE YELLOW MAIZE