Investment group, Andersons team up for malted barley facility

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LITCHFIELD, MICH. — An investment group in southeast Michigan plans to build a $100 million facility to process malting barley for use by craft brewers, and it will be getting a big helping hand from The Andersons Inc.

Independent Barley & Malt Inc., of Litchfield, Mich., in western Hillsdale County, hopes to start construction on its 10-acre project by this summer and have it turning grain into malted barley by 2020.

The investment group said Tuesday it had signed a memorandum of understanding with The Andersons. The Monclova Township-based agribusiness will be the exclusive supplier of the crop and will provide delivery and storage of malting barley via its existing storage facility in Litchfield.

When completed, the malting facility will have more than 8,000 square feet of production, grain storage, and warehouse on 10 acres of a 42-acre site that could be expanded if successful. The facility will be able to make 47,500 tons of malted barley for brewing per year, utilizing more than 2 million bushels of malting barley and other grains.

IB&M said its facility, which will have 65 workers, will be the largest malting barley processing plant east of Milwaukee and be a boon to Michigan, Ohio, and Indiana craft brewers, most of whom must get their malted barley from Germany, Canada, and the northern plains regions of the United States.

A large commercial brewery uses about 35 pounds of malted barley to make a barrel of beer. But craft brewers use 70 to 120 or more pounds of malted barley per barrel beer.

“It’s been over forty years since the last large malt plant closed in Michigan. Michigan farmers basically stopped growing malting barley,” said Hal Reed, IB&M’s director of development and its board chairman.

“Today, Michigan’s malt industry is virtually non-existent, forcing craft brewers to import more than $100 million per year from out-of-state or foreign suppliers,” he added.

The investment group is working “to bring malting barley back to Michigan and produce a competitively priced, premium malt product for our craft customers,” Mr. Reed said.

According to Michigan State University’s extension service, throughout the first half of the 20th century it wasn’t unusual for Michigan to harvest more than 100,000 acres of barley annually. At peak times malting barley reached 300,000 acres.

But the numbers declined steadily starting in the 1950s. Demand dropped significantly after 1985 when the 135-year-old Stroh brewery on Detroit’s east side closed.

The past 10 years saw state production average just 10,000 acres. Craft brewers want a local source of malted barley, but there were few options for malt processing, Michigan State experts said.

Mark Schauer, director of corporate affairs for IB&M, said The Andersons was a key cog in the decision to build the Litchfield malted barley plant.

“The Andersons has a presence in Hillsdale County and we’ve known and respected their work in Michigan and the region as a grain company and their ability to develop big projects like their Albion corn ethanol facility,” Mr. Schauer said. “We knew their capabilities first-hand and had knowledge of the important work they do in agriculture,” he added.

The agribusiness already has a grain facility near Litchfield.

But more importantly, IB&M’s Mr. Reed is The Andersons’ former chief operating officer. He retired in 2016 but knew intimately the company’s grain capabilities.

“Working with IB&M is consistent with our strategic intention to grow income from originations and managing grain assets, expand trading and risk management services, and broaden our food ingredients and specialty grains platform,” said Weston Heide, vice president of Food and Specialty Ingredients at The Andersons.

The food and specialty ingredients business, which is part of the company’s Trade Group, has been supplying a variety of ingredients to the food and beverage industry for several years. It also has supplied malting barley to the craft brew market before, said Andersons spokesman Kate Langenderfer.

Mr. Schauer said The Andersons will provide additional support by advising farmers in southeast Michigan and northwest Ohio on the best methods to grow malting barley, what herbicides and fertilizers to use, and how to market the crop.

Most farmers in the region plant winter wheat, but planting malting barley might be more lucrative because it fetches about $2 more per bushel, Mr. Schauer said.

IB&M said it has targeted 2020 to start operating, but it could take five years or more to get the region’s farmers on board with planting malting barley as a winter crop.

“Our plan is to be in production in 2020, but the lion’s share of our barely will be imported. We have a study that says it will take 10 years before all of the barley we process is local, but we think it’ll be much quicker than that,” Mr. Schauer said. “We would like to cut that time in half.”