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Barley & Beer: USGC Outreach Affirms U.S. Commitment To Mexican Brewing Sector | Rural Radio Network

Barley & Beer: USGC Outreach Affirms U.S. Commitment To Mexican Brewing Sector

Barley & Beer: USGC Outreach Affirms U.S. Commitment To Mexican Brewing Sector
Expo Cerveza is the largest craft brewing conference in Mexico, with more than 150 producers, importers, beer exporters and input suppliers exhibiting.

The interconnectedness of barley and beer is so iconic, the relationship has its own bumper sticker. And for U.S. barley farmers, no market is more important to keep growing than Mexico’s brewing sector, which is why a delegation from Montana and North Dakota recently traveled to Mexico to meet with large brewing companies and craft brewers alike.

Montana Lieutenant Governor Mike Cooney and Montana Director of Agriculture Ben Thomas participated in the U.S. Grains Council’s (USGC’s) mission in October in addition to staff and representatives from the Montana Wheat and Barley Committee and the North Dakota Barley Council. The delegation met with craft brewers and large brewing company customers before attending the Expo Cerveza conference.

“This goodwill mission showed appreciation to our customers for their business,” said Javier Chavez, USGC marketing specialist in Mexico. “The visit also helped our members learn about continued growth in the Mexican brewing sector as well as the competitive market challenges that lay ahead.”

Total Mexican beer sales are valued at more than $20 billion each year, rising sharply due to higher exports to markets like the United States. More than half of the malted barley imported by Mexico to brew that beer originates in Montana and the state has opened its doors to Mexican brewers looking to build supply chain relationships within the state. The USGC delegation visited one such brewer who has greatly expanded business after traveling to Montana and working with the Council’s staff in Mexico.

José Luís Calderoni founded Propaganda Brewing in 2012 in a garage, producing three barrels of beer a month. Today, after participating in Council missions to Montana and other barley-producing states and USGC engagement, the company has grown into one of the largest craft breweries in northeastern Mexico, producing 300 barrels of beer a month. Propaganda not only brews their own beer, which is sold through major retailers across Mexico, but also exports beer to the United Kingdom and contract brews for other national brands.

“‘Joe,’ as we know him, came to Montana in 2014 as part of a USGC barley mission,” Chavez said. “He took advantage of the contacts made during that trip to build his business and even become a malt distributor, eventually founding another company with his brother specifically to market malt.”

Following company visits, the mission traveled to Expo Cerveza, the largest craft brewers expo in Mexico, where Lt. Governor Cooney cut the ribbon to officially open the event. More than 150 producers, importers, beer exporters and input suppliers exhibited during the event, now in its ninth year.

The event allows brewers, associations and suppliers to share their experiences with beer, discuss the current state of the industry and address common issues related to production and business models. The USGC delegation visited with craft brewers and importers to learn more about the market, plans for growth and how U.S. suppliers can meet that increased demand.

“Through in-person discussions and participating in Expo Cerveza, the delegation reaffirmed the U.S. commitment to staying a reliable supplier of high-quality barley and the desire to continue strengthening relationships,” Chavez said.

Mexico dominated U.S. barley sales in 2017/2018, purchasing 394,000 metric tons (18.1 million bushels) – a 9.7 percent increase year-over-year. These sales, however, only tell one part of a supply-and-demand story built on market access, trading relationships and explosive growth.

Prior to the North American Free Trade Agreement (NAFTA), Mexico set base tariffs for barley and malt at 128 percent and 175 percent, respectively. When the agreement entered into force, the agreement provided immediate duty-free access for 120,000 tons of U.S. barley into Mexico, with remaining tariffs eliminated over the first 10 years of the agreement.

This duty-free access made U.S. barley and malt attractive options to Mexican beer makers, who depend on malt and malted barley imports due to the lack of malting capacity in Mexico. Over time, Mexican brewing companies established efficient supply networks with U.S. barley producing states like Montana and North Dakota, some even working directly with local farmers.

The negotiation of the U.S.-Mexico-Canada Agreement (USMCA) sparked market uncertainty among customers large and small, however, and, as of last year, competing malt supplies from Europe also have duty-free access to the Mexican market. These factors make continued relationship building and maintaining U.S. duty-free exports like in USMCA not just a selling point, but a necessity for U.S. barley and malt to remain competitive.

“The announcement of trade renegotiations was a wake-up call for the Mexican brewing sector on their dependence on U.S. barley,” Chavez said. “Now more than ever, U.S. barley farmers and the organizations working on their behalf, including the Council, must continue to keep supply chains efficient and quality high to remain competitive in the Mexican market.”

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