March 21, 2002

Consider Barley in 2002 if Malting Quality can be Achieved

By George Flaskerud, Crops Economist
NDSU Extension Service

Barley may compete with spring wheat in 2002 if the majority of it produced is malting quality. At least that is what the 2002 crop budgets reveal for the North Central Region of North Dakota. The crop budgets are available from your local county extension agent.

A malting barley price of $2.16 and spring wheat price of $3.07 were used in the crop budgets. A feed barley budget was not included, but a government loan price of $1.45 would be relevant for feed barley in Ward County. A barley yield of 50 bushels per harvested acre was used in the budgets and 28 bushels per harvested acre was used for wheat.

Under these conditions, returns over variable costs per planted acre would be $22.11 for feed barley, $57.61 for malting barley and $35.27 for spring wheat. Variable costs are those such as fertilizer and chemicals that vary with the level of production and usually vary among crops. Return over variable costs is the amount available to cover land and machinery ownership costs and labor and management.

On average, 60 percent of the barley in the North Central Region was sold as malting during 1990-1999. The amount varied from 22 percent in 1993 to 85 percent in 1995. If a farmer produces 60 percent malting barley and 40 percent feed barley for the specified prices, then the return over variable costs from the whole barley crop would be $43.41 per acre versus $35.27 for spring wheat.

The Food and Agricultural Policy Research Institute (FAPRI) projected in November 2001 that all barley acres would increase 4 percent in 2002, total supply would increase 5.5 percent, and total use would increase 3.4 percent. As a result, the stocks-to-use ratio would increase from 28.3 percent in 2001-02 to 31.3 percent 2002-03.

FAPRI projected an average farm price of $2.23 for all barley during 2002-03. In the March Supply and Demand Report, USDA projected a 2001-02 average farm price of $2.20-$2.30

The strongest influence on the feed barley price will be the corn price. If the national average corn yield should drop sharply, the corn price would strengthen substantially, and so would barley prices. The 2001-02 corn stocks-to-use ratio was projected to be 16.3 percent in USDA’s March report and the average farm price was projected to be $1.85-$2.05. FAPRI is projecting a corn price of $2.13 for 2002-03.

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Source: George Flaskerud, (701) 231-7377, gflasker@ndsuext.nodak.edu
Editor: Tom Jirik, (701) 231-9629, tjirik@ndsuext.nodak.edu