Indian Barley Market and ongoing opportunity for Australia

By: "Farm Tender" News
Cattle News
May 26, 2019
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By Anirban Deb - Austrade.

A macro view of the Indian barley sector and the brewing industry reveals a whopping 1.5MT gap between the demand and domestic supply of barley for the brewers in India.

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If 65kg of barley is what it takes to make 100 litres of beer - an industry ballpark ratio, then India requires 3.25MT of barley to meet a production of 5b litres of beer – the current annual beer market as estimated by the research company BMI, (see Figure 1 BMI Research - India's Beer Market). In contrast, India’s annual barley production, as per Indian Government and USDA stats, touched 1.7MT in 2017, (Figure 2USDA Data - India's barley production). The resulting shortfall safely explains the use of adjuncts such as broken rice, maize and corn syrup in the Indian beer making process.

At a recent survey of the Indian beer and malting industry conducted by Australian Export Grains Innovation Centre AEGIC, and supported by Austrade, there were a number of compelling future trends uncovered in the Indian barley sector. Whilst the decline in acreage of the barley crop in India has been steady in the last 5 decades, from 3.4m ha in 1968 to 650,000ha in 2017,[1] the more alarming concern on the ground is the depleting underground water reserves – the main source of irrigated barley in India. A barley farmer we visited during the study showed us his crop, surrounded by barren and dusty farm plots that no longer are cultivable. It is farmers such as these who are not sure how many years their barley farms will survive, as the water table at this particular farm, and at many others, has crossed the 800ft depth mark, and further plunging.

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This destitution was echoed by a major trader in the nearby wholesale market in Chomu in the State of Rajastan, who estimated that barley could disappear from the region in 10 years, due to increasing urbanisation and the decreasing water table, unless the Government does something drastic to reverse the farming conditions.

Chomu is the largest wholesale market for barley in the State of Rajastan accounting for close to 20% of the State’s production. Barley is an irrigated crop: in Rajasthan, Punjab, Haryana over 95% of the crop is irrigated and UP it’s 77%. According to data available, Rajasthan accounts for close to 60% of India’s total barley crop under irrigation.

Arrival of barley at a wholesale market in Rajasthan. Pic by Anirban Deb

According to industry sources, the quality of barley this year is poor. Moreover, the high cost of maize has meant that a significant part of the barley production is being rerouted to cattle feed. Result is lesser volumes for malting, and brewing.

The malt industry estimates that India will buy at least four shiploads of barley this year, as against two last year. Argentina is the most important origin of barley imports for India as of today, supplying primarily the market demand of Fair & Average Quality (FAQ) barley.

While the Indian brewing and malting industry is well informed about the quality of Australian barley, there is a disparity between the fumigation standards required by India for barley, and what Australia can sign off on. As a result, at this point in time, there is no Australian barley exports to India for beer, in a market where demand for the product is on the rise, and the future of domestic supply of barley is in question.

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This market situation calls for a proactive action from the Australian barley industry, to engage with the Indian malting and brewing industries and promote Australian barley varietals, qualities and export capabilities. Delay on behalf of the Australian industry will mean the market will move towards other sources, such as the EU, Russia, Ukraine, Canada, Kazakhstan and Turkey. While price is a major determining factor, strong extractability and germination qualities of Australian barley are strong processing parameters that need to be emphasised in the market.

Austrade India invites the Australian barley industry to consider a market visit in 2019-20, to meet with key players in the Indian malting and brewing industries and establish a dialogue for a long term, strategic and sustainability supply partnership.

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