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Barley must be processed to become malt. The businesses charged with this task are called malt houses. The WAFS is home to seven malt houses. Two of these malt houses are in western Pennsylvania. However, only CNC Malt in Fennelton, just outside of Butler, PA, is a full time, dedicated malt house. Its owners, Brenden and Oana Carroll could not have been more collaborative and accommodating. They provided much information and direction during this project. We were in constant contact, and when it was time to deliver our barley, they were waiting for the delivery. The Farm to Tap project would have been arduous without the advice of the team at CNC.
The seven malt houses in the WAFS call all be looked upon as small scale or craft malting facilities. Four of the ventures – CNC Malt, Double Eagle Malt, Haus Malts, and West Branch Malt are considered stand-alone operations with fully dedicated staffs. Midgeville Malt Works, Rustic Brew Farms, and Barley Five are small scale, value added enterprises operating out of working farms. They process grains grown on their respective farms. (The WAFS has a mothballed malt house - Appalachian Malting. At the time of this writing, the owners have shut down operations to concentrate on hemp processing. The facility is still operational but not in use.) Though none of these malt houses are large-scale facilities, they are capable of processing all the malt barely currently being grown in the region. This fact is more a reflection of the limited amount of malt barley acreage grown in the WAFS than of available production capabilities.
At current operating capacities it is estimated that the four commercial facilities can process roughly 4,300 acres of barley annually.
Business or Investment Opportunity
The magazine Craft Brewing Business stated in 2017, “Doing a loose estimate based on the BA (Brewers Association) number total of 92 million lbs. of malt used in Ohio in 2017 (which does include ABI and Miller Coors), even if all craft maltsters maxed out combined, that would only address about 5 percent of the total malt used in state.”
It is not foreseeable that multiple, large-scale malt houses will open across the WAFS. It is more likely that current operators will expand their production facilities or open additional small-scale facilities. In 2014, Michigan State University released A Study Assessing the Feasibility of Michigan Malt Houses. The state of Michigan’s malt barley and malt house industries are very similar to Pennsylvania and Ohio. This study looked at five aspects of feasibility: economic, marketing, technical, financial, and management.
The authors concluded, “A malt house is feasible and has a relatively good chance of success if it has sufficient capital and has someone with experience in producing malt. The primary economic issue is access to barley. Overall there is enough barley available to produce malt, but contracting with farmers in the area to produce barley would improve the likelihood of success…The project is clearly feasible from a marketing perspective. The growth of the craft breweries that produce beers with a high malt content has increased the demand for malt. Also, some craft brewers are interested in producing beers with locally sourced inputs such as malt from locally produced wheat and barley…Technical feasibility is not a major concern. The technology is simple and not overly complicated; and the three stages of malting: steeping, germination, and kilning are well understood. The biggest obstacle is making sure that quality is maintained throughout the process…While the project is feasible from a financial perspective, profit margins are likely to be narrow. In order to be successful the firm will need adequate capital and be of sufficient size to meet the needs of brewers and other customers. . . The project is also feasible from a management perspective. It is important to separate the production functions of the firm from the operations (accounting, marketing, etc.) to be successful. While a sole proprietorship is the simplest structure, finding a partner or entering into a joint venture with a brewery or other firm may make it easier to obtain sufficient capital to ensure success.”
Though not currently operating as a malt house, a business concept that should be examined is Origin Malt. Founded in 2013, Origin Malt is an exclusive licensee of the Puffin variety of barley developed in Scotland and controlled by Limagrain Cereal Seed. Origin contracts with farmers to grow Puffin to Origin’s standards and specifications. They also advise the farmer on best agronomic growing practices and commit to buying all the barley under contract, even if the barley does not meet their malting standards. The company aspires to plant at least 75,000 acres of barley in Ohio, Pennsylvania, Michigan, Indiana, and Illinois, as well as develop a distribution and warehouse network.
Origin’s current business model can be described as a malt intermediary. They contract with farmers within a 300-mile radius of their Marysville, OH location to grow malt barley. Last year’s barley harvest was malted by the United Malt Group, one of the largest malt operations in the world.
Co-Founder Vic Thorne, has additional plans to build one of the largest industrial malt houses east of the Mississippi River. This Marysville, Ohio based facility is designed to serve brewers of all sizes. Thorne believes that his facility can co-exist with the smaller, craft malt houses. Craft brewers require more than three times the volume of malt per barrel than larger macro “light beer” producers. Craft brewers also seek base and specialty malts with more traditional European malt characteristics suited for all malt beers. Therefore, there is a rapidly growing demand for craft focused malt in the region, and smaller, craft malt houses are well suited to contribute to the fulfillment of these growing needs. In addition, the vast majority of malt procured by craft brewers in the region today is imported from Canada or Europe, or transported at least 400 miles from the Upper Western Plains of the US.
A Michigan State report projects the malting business to expand 3.9% per annum over the next 10 years, considerably higher than the 1.9% expected for the economy by and large.
One estimate expects the malting industry to grow 3.9 percent per year over the next decade, well above the 1.9 percent per year for the economy. Interest in craft brewing has supported the growth of the malt industry and will continue to do so in the near future.
Malthouses & Craft Brewers using Food21 Malt in Western Atlantic Food Shed (WAFS)