Breweries may have to import barley as there’s not enough stock to make beer.

NEW DELHI: Beer breweriesNSE -1.16 % in India are likely to use imported barley this season to offset a shortfall in domestic production of the cereal. 

Traders told ET that a vessel carrying 60,000 tonnes of barley from Argentina has arrived in the country and another is on the way, with talks on for more contracts. Domestic production of barley, they said, is expected to be less by ten percent than the previous year at 1.92 million tonnes. 

“Duty-free imports are meant for actual users and imports in such high volumes is only being done by the malting industry,” said Rajesh Paharia, a Delhi-based grain trader. 

Pramil Jindal, MD of Barmalt Malting Company, a leading player in malt extract manufacturing in India, said, “Looking at the barley crop arrival in the mandis, we expect it to be a less crop. It can be 7-10% less. Also, we feel that with prices of maize and millets very high, the cattle feed industry is buying more of barley. This is leading to firm prices.” 

The malting industry requires 500,000-600,000 tonnes of barley for beer and distilled beverages. The grain is also used to make food supplements like Horlicks, Bournvita and Boost, and breads and for animal fodder. 

A grain trader at a multinational company said imported barley is better in quality and the companies are buying at a maximum of 10% premium to the domestic price. On an average, imported barley at the company gate is being quoted at Rs 1,950-2,000 a quintal, while the Indian variety is available at Rs 1,875-1,900 a quintal, Jindal said, adding that they also have the advantage to buy a large quantity of the grain at one go. 

Trade expects five or six more vessel of 50,000-60,000 tonnes to be contracted by Indian companies by the next quarter. 

In the domestic market, new crop arrivals are at a peak, with all major companies, including United Breweries, Barmalt, Glencore, Louis Dreyfus, Cofco and Cargill, on a buying spree across Rajasthan, Haryana and Madhya Pradesh, said Paharia. 

However, Shekhar Ramamurthy, managing director of Heineken-controlled United Breweries, told ET that the Indian crop has just arrived and there is no urgency to import at this stage. “We might import for a variety of reason. A better clarity will come in the next few months,” he said. 

Barley prices climbed to Rs 2,100 per quintal in last week of April 2019, up almost 16% from Rs 1,800 a quintal in first week of April, on expectation of a huge demand from the malt and food industries this summer season, said Anuj Gupta, deputy vice-president of commodity research at Angel Broking.