Sat, Jun 02, 2007 - Page 9 News List

Trouble brewing as German switch to biofuel raises beer prices

As farmers switch to corn and rapeseed to produce biofuels, the price of barley malt, the key ingredient in beer, has soared by more than 40 percent in two years

BY KIRSTEN GRIESHABER  /  AP , AYING, GERMANY

AP, AYING, Germany

Like most Germans, brewer Helmut Erdmann is all for the fight against global warming. Unless, that is, it drives up the price of his beer.

And that is exactly what is happening to Erdmann and other German brewers as farmers abandon barley -- the raw material for the national beverage -- to plant other, subsidized crops for sale as environmentally friendly biofuels.

"Beer prices are a very emotional issue in Germany -- people expect it to be as inexpensive as other basic staples like eggs, bread and milk," said Erdmann, director of the family-owned Ayinger brewery in Aying, an idyllic village nestled between Bavaria's rolling hills and dark forests with the towering Alps on the far horizon.

"With the current spike in barley prices, we won't be able to avoid a price increase of our beer any longer," Erdmann said, stopping to sample his freshly brewed, golden product right from the steel fermentation kettle.

In the last two years, the price of barley has doubled to 200 euros (US$271) from 102 euros per tonne 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 the key ingredient in beer -- barley malt, or barley that has been allowed to germinate -- has soared by more than 40 percent, to around 385 euros per tonne from around 270 euros a tonne two years ago, according to the Bavarian Brewers' Association.

scary news

For Germany's beer drinkers that is scary news: Their beloved beverage -- often dubbed "liquid bread" because it is a basic ingredient of many Germans' daily diet -- is getting more expensive. While some breweries have already raised prices, many others will follow later this year, brewers say.

Talk about higher beer prices has not gone unnoticed by consumers. Sitting at a long wooden table under leafy chestnut trees at the Prater, one of Berlin's biggest beer gardens, Volker Glutsch, 37, complained bitterly.

"It's absolutely outrageous that beer is getting even more expensive," Glutsch said, gulping down the last swig of his half-liter dark beer at lunch. "But there's nothing we can do about it -- except drinking less and that's not going to happen."

A meager barley harvest last year in Germany and barley-exporting countries such as France, Australia and Canada has compounded the problem. The price rise is squeezing breweries -- many of them smaller, family-owned enterprises that can ill afford it.

The Ayinger Brewery, which has 65 employees and has been family owned since its founding in 1878, produces 7.5 million liters of beer each year and purchases most of the ingredients from farmers nearby.

Eventually, Erdmann and other brewers say, it is drinkers who will bear the brunt of the higher costs for raw materials.

Already, at the annual brewery festival in Aying this week, prices for Erdmann's Ayinger beer were up at 6.40 euros from last year's 6.10 euros for a one-liter mug. That's no small matter for Bavarians, who are among the world's heaviest beer drinkers. They put away about 160l of beer a year -- well above the already high German average of 115l per person.

And organizers of the world-famous Oktoberfest in Munich have announced a 5.5 percent price increase: A one-liter mug will cost up to 7.90 euros at this year's autumn beer festival -- the highest price ever.

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