Cargill Inc. is closing a North Dakota malting factory as U.S. beer makers now prefer malting barley grown in the West rather than the Midwest.
The company announced last week it will shutter the plant near Jamestown, N.D. that processes barley into malt by the fall. The Minnetonka-based agribusiness cited decreased demand in the beer industry for six-row barley, a version of the crop typically grown by North Dakota and Minnesota farmers.
Demand for six-row barley is drying up as brewers, especially those of the craft-beer persuasion, favor two-row barley for their beverages. Soil conditions and a more humid climate make it easier to grow six-row barley in North Dakota and Minnesota, and less risky for the growers, said April Nelson, a Cargill spokeswoman.
While the factory can malt both varieties, there isn't a robust local supply of two-row barley. As fewer customers asked or six-row malted barley, activity dropped at the plant. With the company's focus on improving the efficiency of its plants and supply chain, a malting facility in North Dakota no longer made sense.
About 55 people work at the Jamestown plant. Those who don't wish to apply for open positions at Cargill's other two North Dakota plants will receive transition benefits. Salaried employees will receive severance.
The malt plant's closing is also bad news for Maple Grove-based Great River Energy. The wholesale cooperative's Spiritwood Station power plant provides waste steam to Cargill's malt plant, as well as to a nearby ethanol plant.
"We're currently evaluating the impact of the closure on our Spiritwood plant," said Therese LaCanne, a spokeswoman for Great River, which produces electricity for Minnesota's retail electric co-ops. The $437 million, coal-fired Spiritwood plant was built in 2011 but sat idle for three years.
The names of the barley varieties refer to the arrangement of the kernels around the stalk's head. The shift toward two-row began in earnest about five years ago, said Chris Swersey, a supply chain specialist for Colorado-based Brewers Association.
Many brewers think two-row creates a maltier flavor while six-row produces a grainier taste in the finished beer. But apart from taste, Swersey said many beer makers prefer two-row malting barley for financial reasons as it produces an extra one to two percent of extract.
"That's real money when you consume millions of pounds, especially when you think of freight (costs) layered on top of that," Swersey said.
Most of the beer recipe kits sold at Northern Brewer's retail stores use two-row barley, with a few exceptions, said Mike Weiss, a brewmaster for the Roseville-based home-brew supplier.
Six-row barley allows for other grains, like rice or corn, to be added to the brew. Outside of the U.S., most of the beer produced in the world uses two-row.
The large domestic breweries making classic American lagers, like Miller, Coors and Budweiser, have traditionally used six-row barley. But even they are decreasing their use of the variety, Swersey said.
"This shift toward two-row is about the brewer value proposition, which is no different from big brewers and small craft brewers, except the bigger the brewery, the more they have to gain overall," Swersey said.
Kevin Smith, an agronomist at the University of Minnesota who specializes in barley, said current regional breeding efforts are focused on developing two-row varieties that would fit the profile for craft brewers and be less susceptible to disease.
"A major difference between the Midwest and West is rainfall," Smith said. "Because of higher rainfall in the Midwest, diseases are a bigger problem. So developing two-row varieties with better disease resistance will make them a better fit for the Midwest."
After the closure, Cargill will operate 16 malting facilities in countries around the world, including Sheboygan, Wis., and Saskatchewan, Canada where two-row barley is abundant.
