Power to the Bauer

You’d thought you’d heard it all … that higher taxes make beer more expensive … that increasing transportation costs make beer prices rise. Now, here’s a new one: protecting the environment makes beer even pricier.

It’s a bit like chaos theory. You remember, the flap of a butterfly wing that can raise a storm in the Caribbean. But not quite. The connection is much more straightforward. At first it was the rising price of tortillas in Mexico that almost led to a revolution. Now it’s German beer. And who is to be blamed? Well, obviously, the farmers. They are increasingly turning their crop into bio-energy and not into flour or malt.

The ungrateful lot.

If you happen to be European, you know what this correspondent is talking about.

Farmers in Europe don’t know anything about market economy. They don’t have to. All they know is: subsidies. For generations, if you asked them for their business skills, they pointed at some pencil-shuffling bureaucrat in some ministry of agriculture who would tell them which crop would get them the highest subsidy. If you happen to be a taxpayer, that is your money.

For a few years now the same-self farmers have been using your taxpayer’s money to turn their crops into bio-energy. That’s the stuff that many Europeans run their cars on and their houses. Environmentally conscious Europeans pat themselves on the shoulder for using bio-energy because it represents the most attractive (and painless) form of conservation. The production of bio-energy only releases the amount of carbon dioxide that the plants have previously absorbed from the atmosphere. It’s a zero sum game.

However, what they prefer to ignore is that bio-energy crops are not cultivated on low-yield fields but on highly-fertile lands which would better be used for growing wheat.

You can imagine that farmers in their thousands have been crying all the way to the bank. A hectare of barley sold to maltsters reaped EUR 700. If sold to a bio-energy producer the profit was twice as high.

Brewers, on the other hand, have been crying into their beer. Year-on-year malt prices have risen 50 percent. For the 108 million hl of beer produced in Germany in 2006 brewers paid EUR 734 million on barley, says the German Brewers’ Association. Worse is yet to come. Subsidies for bio-energy are here to stay. As farmers are loath to switch back to producing malting barley, raw material prices will continue to rise.

And what about the consumer? No chaos theory applies. It’s sod’s law. Europeans will just have to pay twice for their beer: for farming subsidies to go into bio-energy and for higher beer prices.

Ina Verstl