India: Beer and other drinks could get cheaper thanks to India relaxing import norms for Australian malting barley

Beer, whisky and flavoured alcoholic beverages could get cheaper this summer, with India relaxing import norms for malting barley from Australia, allowing more of it to enter the country, ThePint reported on February 24.

In December, India notified the World Trade Organisation (WTO) of new import conditions for Australian malting barley that will allow the import of the product even with phosphine fumigation. Before this, any import in India required all fumigation to be methyl bromide-based. However, this process is not suitable for malting barley, because it denatures the seed and impacts the malting process.

Denaturing is a process which takes away or alters the natural or molecular qualities of barley, thereby making it unfit for drinking.

“This relaxation was quite necessary as there is a huge gap in demand and supply of malt barley in India,” Pradeep Verma, adviser and techno-commercial associate at Weyermann Malts told ThePrint. “Eighty per cent of the barley production in India goes to livestock fodder diet. The import of malt barley from Australia will certainly comfort the breweries industry, which was struggling through a shortfall in demand and supply.”

A senior agriculture ministry official, who did not want to be named, said India is looking to import at least one million tonnes per year from Australia.

“The change in regulation is a great opportunity for the Indian market as we are looking at extending the number of markets to reduce the dependence of barley supply on few players in the market,” the official said.

A second ministry official said Australian malting barley will prove cheaper for Indian industries as it costs almost the same as Indian produce. On an average, imported barley from countries other than Australia costs around Rs 1,950-2,000 per quintal, while the Indian variety costs Rs 1,875-1,900 per quintal.

“Australian malt barley will perfectly cope up for the shortfall in supply to domestic breweries due to low domestic production,” the second official said.

India is set to import the product from April.

“The malt barley import is expected to be around 5,00,000 tonnes in the 2020 calendar year, which could rise up to a million tonnes from April 2020-2021. The first consignment of 60,000 tonnes of malt barley is scheduled to arrive in India in April,” the second official said.

India’s annual production of barley is around 1.6-1.8 lakh tonnes, while annual demand for barley for malting is estimated to be around 4.0-4.5 lakh tonnes, which is also increasing due to higher consumption of beer. Alcohol consumption in India amounted to about 5.4 billion litres in 2016, and was estimated to reach about 6.5 billion litres by 2020.

On average, malt and other beverage industries in India require 5-6 lakh tonnes of barley. The grain is also used to make other food supplements and flavoured drinks like Horlicks, Bournvita and Boost. It is also used to make bread and animal fodder.

According to the Agricultural and Processed Food Products Export Development Authority website, India imported a record 1.25 lakh tonnes of barley between April 2016 and March 2017, from Australia and France, due to low domestic production.

Since the demand for barley has risen, the input cost for alcohol manufacturers has also increased, which has been passed on to consumers.

In March-April 2019, beer breweries in India imported barley to offset a shortfall in domestic production. Also, barley prices climbed almost 16 per cent to Rs 2,100 per quintal in the last week of April 2019 from Rs 1,800 per quintal in the first week of that month.

Following this, in October, a delegation from the agriculture ministry led by Joint Secretary Atish Chandra, along with Indian quarantine officials, state government and industry representatives, attended the India-Australia Plant Health Technical Bilateral Meeting in Australia.

The Indian delegation then visited grain production and handling facilities in Western Australia and Victoria, where discussions regarding phosphine fumigation relaxation took place, and permit for malting barley for the Indian market was agreed upon.

The Indian market is currently supplied primarily by Canada and Europe, where a comparatively cooler climate reduces the risk of insect infestation and enables unmitigated malting barley to be exported to India.

Barley is grown on around 70 million hectares of land across the world, with a global production of 160 million tonnes. Europe is leading producer of barley, followed by Asia. The major barley producing countries are Russia, China, Canada, Spain, France, Australia, UK and India.

In India, Uttar Pradesh, Rajasthan, Madhya Pradesh, Haryana, Punjab and Himachal Pradesh are the major producers of barley.

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