Cereal growers share in success of Scotch whisky
Success stories are few and far between in this time of recession, but the Scottish distilling industry, supplied by Scottish cereal growers, is thriving.
A recent report by the Scotch Whisky Association showed Scotch whisky exports grew again last year, hitting a record £4.2 billion shipment value, up 23 per cent on 2010.
Rising demand in both emerging and more mature markets has resulted in export values increasing by an average of 10 per cent a year over the last five years, says the report. Scotch Whisky exports now contribute £134 per second to the UK balance of trade.
Exports to the USA, the biggest market by value, broke the £600 million barrier for the first time in 2011 to reach £654.9m – up 31 per cent on 2010. France, the second biggest market, saw exports grow by 27 per cent to £535.4m.
“Affluent young professionals in fast growing economies are increasingly developing a taste for Scotch Whisky,” says the report. “This is contributing to growth in countries across Asia and Latin America.”
To meet this demand, distillers are investing record amounts in Scottish production capacity.
In the last four years, the Scotch whisky industry has invested over £1bn in new facilities. There are five big commercial distilleries in Scotland, of which Diageo’s Cameron Bridge is the biggest, and more than 100 smaller malt distilleries, each producing their own brand of single malt.
The crop
People tend to think of malting barley when considering distilling, but most of the Scottish wheat crop is destined for distilling. The alcohol produced can be used both in blended whiskies and in other drinks.
According to the Scotch Whisky Association, Scotch whisky distillers mashed 317,139 tonnes of malting barley in the first half of 2011 and 331,016t of other cereals, mainly wheat, for grain whisky. In 2010 the figures were 533,657t of barley and 560,965t of other cereals.
Bairds Malt is the biggest sales maltster in Scotland. It operates five malting sites across the UK, stretching from Inverness to Essex. Total annual production capacity is more than 245,000t of malt, which is used primarily in the distilling industry at home and abroad.
According to Keith Headridge, commercial director for Scotgrain, the Scottish Agricultural Merchanting division of Bairds Malt, based at Arbroath, there were about 1mt of wheat grown in Scotland in 2011, of which three quarters went to the distilling sector.
Of the 1.5mt of spring barley grown, around 800,000t was also used in the distilling process.
It is anticipated the wheat crop will be down slightly this year, due to poor sowing conditions in the autumn, and spring barley will be farmers’ first choice to replace it, as long as they can keep nitrogen levels down and make malting quality to achieve the premium, says Mr Headridge.
Surprisingly, considering last year’s poor harvest weather, the Scottish barley crop was of very good quality, while in England and France the crops suffered from high nitrogen levels, he says.
“Barley with low nitrogen levels – less than 1.65 per cent – is used for pot still malt production, while high N barley (1.75 per cent plus) can be used for grain distilling, along with wheat, or for brewing, although there is a limited amount of brewing taking place in Scotland these days.”
He says Concerto will overtake Optic as the number one barley variety this year, both in terms of yield for the grower and quality for the maltster.
As far as wheat goes, most soft endosperm varieties are acceptable to the distilleries as long as they meet the specification of below 15 per cent moisture and minimum 72kg/hl.
“Because this spec is the same for feeding as distilling, it trades at a similar price to feed,” says Mr Headridge. “However the situation with malting barley is different, with prices loosely based on a £20/t premium over November wheat futures.”
New developments
Breeders’ interest in developing soft wheats for the UK market has increased since English growers started supplying ethanol plants in the south. Scottish growers and distillers are also starting to see the benefits.
A new potential distilling wheat called Horatio has performed well in Scottish Agronomy trials and is likely to have a significant impact on the market.
Andrew Gilchrist, senior agronomist with the company, says: “Horatio looks like it will be the real deal.
“It has a slight yield advantage over the current leading variety, Viscount, is clean in terms of disease and has good sprouting resistance, which is particularly important in Scotland.
“Last harvest was extremely wet and the variety performed well under some pretty testing conditions.”
The Scotch Whisky Research Institute is responsible for pre-tests on new varieties to determine their potential for distilling. According to Dr James Brosnan, Horatio has provisionally been rated ‘medium’, with consistent, reasonable alcohol yield levels and no processing problems.
Limagrain also has two new malting barley varieties, which have shown promising results.
“Both Odyssey and Chronicle have produced excellent results, but we are particularly excited by Odyssey, which is the first time in 20 years a new variety has been top of the tree in terms of yield combined with whisky quality,” says Mr Gilchrist.
SAC is optimistic about the new varieties, which could extend the malting sector options for growers to replace current favourites, Optic and Concerto, says cereals researcher Dr Steve Hoad.
According to the SWRI both varieties have shown promise in laboratory testing for distilling and brewing and are undergoing testing which will be completed in summer 2013 with full scale commercial trials.”
The growers’ view
Old Cullen Farms of Cullen, Buckie, is one of the biggest spring barley growers in Scotland with 891 hectares (2,200 acres) grown on contract to local maltsters.
The barley all makes the minimum specification of 1.65 per cent nitrogen, and average yields in recent years have been just below 7t/ha (2.8t/acre).
This year, about 70 per cent Concerto and 30 per cent Optic has been sown. Farm manager Ronnie Urquhart is looking for a variety to replace Optic, which he says, yields lower each year.
He likes the sound of the new varieties, but says it will be the 2014 harvest before the maltsters will take them.
Mr Urquhart says the huge global demand for malt may lead to a price boost for farmers, but the biggest influence on price is supply and demand.
“There is a lot of spring barley in the ground in Scotland this year because people did not manage to get wheat sown in the autumn, so contracts will probably average out at about £170/t.
“The best thing that could happen is that we have a decent autumn so farmers can get back to growing wheat and the barley area will reduce in 2013.”
Much further south, Alex King, Wolfstar, East Lothian, has 148ha (400 acres) of spring barley sown this year, with about one quarter of the crop on contract to Bairds Malt.
Mr King likes to keep his options open and, with good storage facilities on his farm, he usually sells the larger portion of his Optic crop on the open market.
He also grows a variety called Braemar, on a buy-back contract with Bairds.
“Scotch whisky cannot be made without malting barley and Scottish farmers are best at producing the quality required,” says Mr King.
