German Biofuels Incentives Drive Up the Price of Beer

We've noted on a number of occasions that the recent worldwide biofuels push could have a range of unintended consequences, from higher food prices to greater deforestation. In Germany, recent subsidies for biofuel crops have had an effect of the price of a dietary staple: beer. According to the Associated Press, many German farmers are now growing crops like rapeseed and corn rather than barley, and that shift is being felt at the tap:

In the last two years, the price of barley has doubled to euro200 (US$271) from euro102 per ton as farmers plant more crops such as rapeseed and corn that can be turned into ethanol or bio-diesel, a fuel made from vegetable oil.

As a result, the price for the key ingredient in beer -- barley malt, or barley that has been allowed to germinate -- has soared by more than 40 percent, to around euro385 (US$522) per ton from around euro270 a ton two years ago, according to the Bavarian Brewers' Association.

For Germany's beer drinkers that is scary news: their beloved beverage -- often dubbed 'liquid bread' because it is a basic ingredient of many Germans' daily diet -- is getting more expensive. While some breweries have already raised prices, many others will follow later this year, brewers say.

The AP also notes that last year's barley harvest was smaller than usual, so German beer drinkers are getting hit with a double whammy.

While it's tempting to write this off as a minor inconvenience, rising barley prices are also threatening the livelihood of many smaller German brewers: "The financial pressure on Germany's small and medium-sized breweries is immense," brewers association head Walter Koenig said. "The increasing costs of raw materials may become a serious threat for many breweries."

We've already seen protests over higher tortilla prices in Mexico; could mass action over beer prices in Germany be next? In each case, an item central to the culture's diet is threatened by the economics of biofuels. ::ENN

Image source: BBC/AP

Tags: Beer | Biofuels | Germany

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