Turkish brewers promise a billion for malt from Tatarstan

Foamy drink from the fields of Tatarstan

Field Day has brought a good harvest to Tatarstan farmers. At least to those who is going to participate in the agricultural programme to grow malting barley. The agreement on its launch was signed at the exhibition by the government of Tatarstan and the brewing company AB InBev Efes (appeared as a result of the merger in 2018 of Belgian AB InBev and Turkish Anadolu Efes — editor’s note). The initiative is to increase the volume of malting barley grown in the republic by 40 times by 2023. The manufacturer has already started to enter into contracts with local farmers for the purchase of raw materials.

Under the agreement, the brewers promise farmers scientific support, access to the best international practices in the agricultural sector, increasing competitiveness in the world market, and most importantly — high-quality seeds and the purchase of grown raw materials at market price. The programme will help to improve the quality and yield of malting barley, develop breeding, introduce new technologies, not to mention the creation of new industries in rural regions.

“We appreciate our long-term cooperation, so we are very pleased that the next step will be the creation of the production base for growing malting barley. This sector is very important for us, so we appreciate that an international company of this level pays special attention to this,” said President of Tatarstan Rustam Minnikhanov.

Purchases in Tatarstan are to increase to 60k tonnes

Tatarstan farmers by agreement with brewers will have access to the technology platform SmartBarley, which will give the opportunity to analyze the crop capacity of malting barley. The programme uses more than 40 complex indicators and characteristics of fields — from production volumes to efficiency of fertilizer use.

“The plant of our company in Tatarstan is one of the leaders both in terms of production and level of innovation. The launch of this programme will allow us to interact more effectively with our partners, barley producers, and in 4 years to achieve record purchases and to increase the total volume by 40 times,” said President of AB InBev Efes Dmitry Shpakov.

On the company's website, it is reported that its annual needs of purchase volumes of malting barley in Russia are estimated at the level of 240,000 tonnes annually. The agricultural programme brings together more than 30,000 farmers from 13 countries of the world growing about 3,8 million tonnes of barley. In our country, it involves about 140 farms in more than 10 regions. The Turkish-Belgian holding buys malting barley from domestic farmers in the amount of more than 3 billion rubles.

In Tatarstan, AB InBev Efes had signed contracts with Tatarstan agricultural firms for the purchase of 9,000 tonnes of malting barley before the launch of the programme this spring. In the near future, they plan to bring the supplies up to 60,000 tonnes, the ministry of agriculture and food of the Republic of Tatarstan reported Realnoe Vremya, but taking into account the needs for malt, the company probably will not stop there.

“This is a very high-margin profitable crop for our farmers”

The pioneer in the breeding of malting barley in Tatarstan at the time was Krasny Vostok. In 2001-2006, the brewing company headed by Ayrat Khayrullin developed its own programme for growing the crop on an area of 35,000 hectares, but after the sale of the breweries and malting enterprises to Turkish Efes the agricultural project was curtailed.

“Indeed, in order not to purchase malting barley abroad, we first grew it in Kursk Oblast and reached 300,000 tonnes, that is, we ourselves grew these volumes. Then we began to implement these technologies taking into account the recommendations from German colleagues-breeders here in Tatarstan and brought the production of malting barley up to 150,000 tonnes. It was very profitable. Then we sold the companies to Efes, and initially, they also joined with pleasure, grown malt here, on the site. Gradually, after the merger, they decided that this was a non-core business for the brewing company, it was necessary to produce beer and promote it on the market, and to buy malt. But a few years have passed and the fallacy of this position has become obvious. So, the fact that AB InBev Efes has returned to the subject — it's great, I'm very happy. This is a very high-margin profitable crop for our farmers,” Deputy Chairman of the Committee on Agricultural Issues of the State Duma of the Russian Federation and former co-owner of the brewing company Krasny Vostok Ayrat Khayrullin said in the interview with Realnoe Vremya.

The interlocutor of the publication also drew attention to the cost of raw materials beneficial for farmers. In previous years, the usual yield of feed barley cost from 5,000 to 8,000 rubles per tonne, while malting barley — 12,000-13,000 per tonne. Now the market price of malt reaches 13,000-15,000 rubles, that is, the price for it will always be 1,5-2 times higher. If we calculate the planned malting barley for the purchase by AB InBev Efes in Tatarstan — 60,000 tonnes, then the amount that our farmers can earn is impressive — from 780 to 900 million rubles.

“So it's great, and to the best of our capacities, we will support this project in every way. I will definitely recommend our colleagues from the company Krasny Vostok Agro to participate in this project,” said Khayrullin.

“Farms are interested in the programme”

As part of the first experience in the cultivation of malting barley in Kursk Oblast, Krasny Vostok financed 93% of farms, that is, in fact, it “fed” local farmers. Therefore, the manufacturer supported Tatarstan farmers with the decision to transfer production to the republic in 2001. After the sale of the company to Efes, the Turks curtailed independent production of malt and began to buy it from farmers. The issue of increasing the supply of crop in the country was repeatedly raised. In particular, in 2012 at a seminar-meeting in the ministry of agriculture of the Republic of Tatarstan, they considered the requirements of the Turkish company to the quality of malting barley. It was noted that the Efes demand in Tatarstan was 150,000 tonnes, while the company purchased from Tatarstan farmers about 50,000 tonnes of barley.

Therefore, now the farmers of the republic are starting cooperation with AB InBev Efes not from scratch. Many already have the necessary experience — these are farms from Alkeevsky, Alekseevsky, Nizhnekamsk districts and a number of others. The only difference is that farmers will work within the framework of the international programme and on favourable terms.

“Krasny Vostok signed no agreements with landowners — they grew themselves. But AB InBev Efes will provide agricultural firms with quality seeds of their barley varieties that are suitable for brewing and accompany the project. With strict adherence to technology, we also can grow malt according to international quality standards. The company enters into direct contracts with each farm, where the price and supply volumes are determined. Farms are interested in the programme because they will know in advance how much they will be able to gain. For example, now it is one market price for barley, but in the autumn because of a large harvest it falls. But malt will be purchased from farmers at the price under the contract,” Deputy Head of Farming Branches Development Department at the Ministry of Agriculture of Tatarstan Fargat Zinnatov explained to Realnoe Vremya.

The brewing company AB InBev Efes was formed after the merger of Belgian AB InBev and Turkish Anadolu Efes in the territory of Russia and Ukraine. The production network consists of 11 breweries in different regions of Russia: in Vladivostok (Primorsky Krai), Volzhskiy (Volgograd Oblast), Ivanovo (Ivanovo Oblast), Kazan (Republic of Tatarstan), Kaluga (Kaluga Oblast), Klin (Moscow Oblast), Novosibirsk (Novosibirsk Oblast), Omsk (Omsk Oblast), Saransk (Republic of Mordovia), Ulyanovsk (Ulyanovsk Oblast), Ufa (Republic of Bashkortostan) and three malting complexes in Kazan, Omsk and Saransk. Plus three more breweries in Ukraine. The total number of employees in both countries is more than 6,000 people. In Russia, the company offers the beer brands BUD, BUD Alcohol Free, Spaten, Corona Extra, Velkopopovický Kozel, Hoegaarden, Stary Melnik Iz Bochonka, Klinskoye, Beliy Medved and others.