Tuesday, February 27, 2007

Beer Prices Set to Rise, Blame Biofuels

Blow for beer as biofuels clean out barley

The cost of your favorite brew may be rising in the near future, due to a rapid rise in the key ingredients in beer. The strong demand for corn and soyabean for biofuels, like ethanol and biodiesel, has convinced many farmers to devote more of their land to these crops. In turn farmers have planted less barley and hops, the key ingredients in beer.

The decrease of supply of Barley, with demand staying relatively stable, has driven up prices enormously. The European wheat futures have risen 85% in the past 11 months. Meanwhile the amount of land devoted to growing barley is at its lowest level since 1866, the first year on record, reports the Financial Times. This cost increase will eventually be passed on to imbibers worldwide.

"Jean-Fran├žois van Boxmeer, chief executive of Heineken the Dutch brewer, warned last week that the expansion of the biofuel sector was beginning to cause a “structural shift” in European and US agricultural markets.One consequence, he said, could be a long-term shift upwards in the price of beer. Barley and hops account for about 7-8 per cent of brewing costs."

Among the celebrities supporting of Biofuels is Willie Nelson and Neil Young, pictured above. Nelson even has his own brand of biodiesel, aptly named BioWillie.

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