Boortmalt and the IFA have set out a framework price agreement for both this year and 2018.
Negotiations had been delayed as Boortmalt agreed a deal with Diageo, its biggest customer for Irish malting barley.
The deal is fundamentally similar to the agreement that expired in 2016, centred around a price based on the MATIF milling wheat price with an agreed bonus structure.
There are two differences that are immediately obvious.
The forward-selling fixed-price mechanism has been tweaked. Farmers can forward-sell up to 15% of their grain in each price window, up from the previous 10%. This is in recognition of the late start to selling of the crop, which is practically all planted at this point.
A total of 20% of contracted tonnage can be sold forward, with the first date, next Tuesday 18 April, at a price of €164/t. The second fixed-price selling date is Wednesday 28 June.
Fixed pricing for next year reverts to a maximum of 10% in each of four dates, with the same 20% overall ceiling in place. A fixed-price window will occur before Christmas for harvest 2018.
Flexibilities have also been introduced into how hedging will occur.
From next week, farmers can hedge every Wednesday. They can hedge for both this year and for 2018. The current MATIF wheat price for December 2017 (the relevant price for this year) is €173.50, with the price for December 2018 being €180.50.
At a meeting of growers in Enniscorthy on Tuesday evening, there was criticism that no deal was in place when crop decisions were being made.
One grower heavily criticised the proposal to make Wexford farmers who chose to grow Planet, the best yielding variety of barley, pay the haulage to Athy. This decision has recently been reversed, but not before the farmer in question, who had tried for five weeks to get traction on the issue, reluctantly decided not to grow Planet, and to reduce his overall acreage by 80%. Many growers will not plant Propino, which had an issue with skinned grain leading to higher rejection rates last harvest.
It was highlighted that Boortmalt had given a derogation on the acceptable level of skinned grains – increasing the tolerance level from 2% to 6%. This was contrasted with the Malt Company of Ireland, which had only moved from 2% skinned grain to 3%.
The other contentious issue is that of distilling grain. The low protein required is hard to achieve, and the main tool available to farmers – lower nitrogen levels – is likely to reduce crop yield potential. Teagasc and Boortmalt’s own research has differed on the yield/N inclusion/protein level relationship. It was stated by a Boortmalt representative that early planting, warm ground and early N application maximises the chances of achieving low protein levels. Again, Boortmalt had given a derogation on protein levels, but some growers had delivered all their corn by then.
Fintan Conway, IFA’s grain executive, pointed to the growth in tonnage in Boortmalt, from 68,000t to 147,000t over six years.
Distilling malt is the growth market, he said, and historic brewing contract tonnage has not been cut.
Conway added that hedging by growers will soon be possible on any trading day, as new technology is rolled out.
Rebuilding the malting barley industry
“Very significant progress has been made over the last seven years in rebuilding Ireland’s malting barley industry," IFA deputy president Richard Kennedy said on the deal. "The focus by growers and Boortmalt on supplying quality Irish malting barley and malt has successfully displaced imports of brewing malt onto the island and seen the demand for malting barley grow by 250%. Separate contracts are now being offered for brewing and distilling. The aim of both parties is to significantly build the tonnage of Irish malting barley and resulting malt used in the rapidly expanding distilling business."