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Biofuels Raise Beer Prices

June 1, 2007 - The cost of barley is rising - due to an suspecti8ng culprit; biofuels.

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German farmers are slowly abandoning barley planting to plant other, subsidized crops for sale as environmentally-friendly biofuels..

In the last two years, the price of barley has doubled to 200 euros ($271) from 102 euros per ton as farmers plant more crops such as rapeseed and corn that can be turned into ethanol or bio-diesel, a fuel made from vegetable oil.

As a result, the price for barley has soared by more than 40%, to around 385 euros ($522) per ton from around 270 euros a ton two years ago, according to the Bavarian Brewers' Association.

While some breweries have already raised prices, many others will follow later this year, brewers say.

Brewers predict that higher barley prices will add about 1 euro ($1.35) to each 10-liter case of beer, but the German Farmers Association disputes that, saying the figure is about 33 euro cents ($0.45). Other factors like higher salaries and energy prices are also jacking up prices.

The German government subsidizes biofuel crops at the rate of euro45 per hectare (US$24.60 per acre), according to the Agency for Renewable Energies, part of the Agriculture Ministry.

Barley production in Germany went down by 5.5% - from 542,000 hectares in 2006 to 514,000 hectares in 2007, according to the Bavarian Farmers Association. On the other hand, the production of corn for biofuel more than doubled last year and the production of rapeseed for biofuel grew by 3.4%.

Biofuels, which reduce the emission of greenhouse gases believed to cause global warming, have been seen by many as a cleaner and cheaper way to meet the world's soaring energy needs than with greenhouse-gas emitting fossil fuels. European leaders have decided that at least 10% of fuels will come from biofuels by 2020.


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