October 15, 2008
BIOFUELS, BEER AND YOUR POCKETBOOK
How the biofuel boom may increase financial emissions on ale
The push towards increasing the production of biofuels derived from agricultural crops has received quite the attention in the past year since climate change fever hit the mainstream.
As this crop-based alternative to petroleum is being promoted as a solution to reducing greenhouse gas emissions and dependence on foreign oil, the subsidies flowing into this new industry are staggering. Prime Minister Harper along with many world leaders has legislated and proposed mandates for the inclusion of ethanol and biodiesel in fuel tanks by 2010 and 2012 respectively.
It appears that the actions by Canada and other industrialized nations to promote biofuels have not been affected by the increasingly poor image biofuels are now receiving. In a recently unearthed report by The World Bank, it was suggested that 75 per cent of the blame for recent rises in the price of food could be attributed to these biofuel mandates and the biofuel boom.
For the average Canadian beer drinker, however, the most important question to ask when any change in policy is announced, is how will this affect a pint?!
Beer's primary grain is barley, but barley has yet to be looked upon as a serious source for biofuel. Nevertheless, research is underway on the viability of barley as a fuel source. In May 2007, $262,000 in funding from Agriculture and Agri-Food Canada was put towards the Barley and Bioproducts Opportunities Project. With a total budget of $380,000, the project is a partnership between the Western Barley Growers Association and the Alberta Barley Commission.
Depending on the outcome of this research, it seems clear that the price of beer may soon increase.
In Europe, where agricultural land is less abundant, there has already been documented evidence that the rising value of crops such as corn and rapeseed (canola) for biofuels is pushing barley farmers there to recognize a more lucrative opportunity growing biofuel crops.
Futures prices in Europe for barley rose 85% between May 2006 and January 2007, while in that same period in Canada, prices rose by a third.
Similar trends are happening in Canada where the land base for canola (a key biofuel crop) increased 25 per cent from 2003 to 2007. In that same period, acreage devoted to malting barley decreased by 24 per cent.
In the United States, barley production is at an all-time low since 1935, with values to farmers being at their lowest since 1970. The U.S. Department of Agriculture has confirmed the trends as the result of barley farmers switching to corn to supply growing demands for ethanol.
How all of this will affect the price of beer remains to be seen. Companies like Heineken have predicted an increase in the price of beer, but with that company maintaining such a poor track record of trust in recent years since being fined for price-fixing, one can only wonder if such predictions are self-serving or realistic.
The Western Barley Growers Association suggests that the price of beer in Canada will not change because barley constitutes only a small percentage of beer's total cost. But in Europe, where the biofuel boom emerged long before it did in North America, the price of malted barley has risen 40% in the past two years.
Perhaps brewers may choose to absorb the increasing costs so as not to pass them on to consumers, while other brewers may simply resort to using lower grades of barley. The latter may not be so much of a concern for those who funnel beer right to the gut, but it's not so thrilling of a prediction for those of us who actually taste our beer!
On a positive note, just as alternatives are being implemented across the country in response to food security concerns, perhaps barley could make its way into some of these projects. Recent Deconstructing Dinner columns have covered Canada's first community supported agriculture (CSA) project for grain operating in the southern interior of British Columbia. While the project is currently only supplying wheats and oats for local consumption, there's no reason why malting barley couldn't be grown for local brewers in the area. Some brewers have already begun sourcing locally grown hops due to recent global shortages for that other key ingredients of beer.
Recent communication with the CSA organizers has confirmed that they are indeed considering approaching one brewer in particular to gauge their interest in locally grown barley.
Stay posted for updates!
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