As already described in the blog, Why does the malt price change each year? Part 1: Barley, barley, or more correctly, the base cereal whatever that may be, is by far the largest contributor to the cost of brewing and distilling malt. Again, referring back to the earlier piece, there can be dramatic swings in raw material cost, and this then reflects through into the malt price.
However, many other elements have an impact on the malt price, and some are more variable than others, as we shall see as we work through the various cost elements.
Energy is a significant cost and a big point of environmental focus; hence we do all we can to minimise usage. However, the malting process means the barley needs drying and ventilating before & during storage, and lots of ventilation throughout the malting process to keep temperatures under control and achieve an even modification of the grains, culminating in the drying and curing of the malt to achieve the desired specifications. Hence hefty bills for both gas & electricity.
Obviously, we want to minimise our use of energy, and so there are many energy saving devices used in the maltings to help. Probably the biggest is the heat recovery systems in the kilns. At the start of kilning, when the air coming out of the kiln is saturated as the malt starts to dry, the air is passed through glass tube heat exchangers, over which the incoming air is passing. This warms the incoming air significantly, without it coming into contact with the damp air, making use of this otherwise waste heat. Later in kilning, as the malt is in its final stages of drying, the air off the kiln is not saturated, and so that can be recirculated back into the kiln to reduce the heat demand from the boilers. At our biggest site at Great Ryburgh, we also have a CHP (Combined Heat & Power) plant, which generates the majority of the site’s electricity needs while at the same time generating heat as a by-product. This heat is also used in the kilns, and as we have a 24-hour demand for heat, makes the CHP plant as efficient as it can be.
Finally, using significant economy measures where possible, and especially on the more powerful fan motors, we have inverter-speed controls fitted, so these motors can run at their most efficient speeds at all times to minimise power wastage.
As I am sure all brewers and distillers are aware, if energy use is relatively constant, then the variation in cost must derive from the price of the energy. In a similar way to the barley, this comes back to both national and global influence, with local factors being gas stocks or the amount of power generators running and global factors being oil price, supply & demand.
Again, like brewers & distillers, the maltster has to use significant volumes of water to steep the barley, which in turn creates substantial volumes of effluent which has to be treated – so another significant cost. Actual usage will be influenced by malt type, time of year (so crop maturity and the ability to absorb water) and the ultimate cost of this will depend on where the water comes from (borehole likely to be significantly cheaper than mains water) and where it goes, on-site effluent treatment will involve significant capital investment but then have lower unit cost of treatment than going to the main sewer and local treatment works.
Working along the lines of the old saying “A lot of little bits make a lot” the other costs are a lot of smaller amounts that add up to a significant amount!
The biggest in here are labour, maintenance materials and depreciation; no surprises there, with complex plants needing people to operate them, but also significant investment in maintaining and replacing.
In here I include all the bagging, crushing, palletising and delivery – another large cost that will vary depending on package type and delivery location.
Our laboratory analyses all barley, in-process and malt samples, and it is the latter that provides the data for your Certificate of Analysis, but there is a lot more work undertaken than just that, with a multitude of trial work, bespoke analysis and micromalting to ensure we are delivering the best product for you at all times.
Last but not least, a mention (and another cost!) for the admin and support team that take orders, organise deliveries and offer the technical support and back-up to keep you all brewing great beer and distilling great whisky!
So barley is the biggest cost, and quite rightly so given its importance in malt! But there are significant other costs involved in malt production. The title of this piece is “Why does the malt price change each year?”, and so it could it have been a much shorter piece, something along the lines of “Like barley, it’s because energy costs are also high and variable” but who (apart from me) would have been satisfied with that?