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Independent Barley & Malt

Planned Independent Barley & Malt facility signs supplier agreement with The Andersons

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MiBiz article click here.

LITCHFIELD — Proposed commercial-scale maltster Independent Barley & Malt Inc. has signed an exclusive supplier agreement with Maumee, Ohio-based The Andersons Inc.

Under the terms of the agreement, Litchfield-based Independent Barley & Malt will use The Andersons (Nasdaq: ANDE) to source, supply, deliver and store the malting barley it will use in its operations.

That includes leveraging The Andersons’ transportation and logistics network of trucks, railcars and Great Lakes vessels, as well as storage facilities at the Port of Toledo and in Reading, Mich., where Independent Barley & Malt (IB&M) plans to lease 650,000 bushels, according to a statement.

Backed by a group of investors, Independent Barley & Malt hopes to commission its commercial-scale malt house in Hillsdale County in the fourth quarter of 2020, and targets production of 47,500 tons of malted grains annually. The company aims to serve the craft beer, distilling and specialty food sectors.

Independent Barley & Malt currently is “making progress” on project financing, Mark Schauer, the company’s director of corporate affairs, told MiBiz.

The company is the first tenant announced for Michigan Hub, a $100 million natural gas-fired cogeneration power plant campus that broke ground in October, as MiBiz previously reported.

Schauer said the deal with The Andersons did not include any equity stake in the company. He declined to discuss the timeline for the exclusive supplier agreement, saying that it was “long enough to build a market with intent to extend based on success.”

“Working with IB&M is consistent with our strategic intention to grow income from originations and managing grain assets, expanding trading and risk management services, and broaden our food ingredients and specialty grain platform,” Weston Heide, vice president of food and specialty ingredients at The Andersons Trade Group, said in a statement.

The Andersons “over time” also will work on building a network of local farmers in the vicinity of Independent Barley & Malt’s facility, located in the middle of the state about 20 miles south of I-94 and about 25 miles from the Michigan-Indiana-Ohio border.

Schauer said the company last fall planted a test plot of winter barley in Litchfield that it hopes to harvest this June.

“We will engage a group of Andersons’ growers to plant winter barley in 2019 in the region for harvest [in] 2020,” he said in an email to MiBiz.

Investment group, Andersons team up for malted barley facility

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The Blade article click here.

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.”

Commercial-scale malting facility a ‘game-changer’ for state’s craft beverage supply chain

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MiBiz article click here.

LITCHFIELD — A group of investors plans to open a commercial-scale malting and grain-processing facility about an hour east of Kalamazoo to serve the region’s growing craft beverage industry.

Independent Barley & Malt Inc. is in the process of wrapping up its remaining financing and intends to break ground in April 2019 on what’s billed as the largest malt house east of Milwaukee.

According to CEO Michael Cooper, the company has secured seed capital from its partners, as well as mezzanine financing and debt, to build a commercial-scale malt house that targets production of 47,500 tons of malted grains annually. It aims to commission the plant in the fourth quarter of 2020.

Based in Litchfield, a Hillsdale County city with a population of about 1,300 people, Independent Barley & Malt is the first tenant announced for the new 42-acre Michigan Hub LLC, a $100 million natural gas-fired cogeneration power plant that broke ground last week. The facility, which could produce up to 176 megawatts of electricity by 2022, will supply power, steam and chilled water at advantageous costs to onsite companies.

“The reason we’re at Michigan Hub in Litchfield … is because this offers us the greatest competitive advantage, the lowest cost of doing business. We’re very thermally intensive. If we were combusting natural gas in our kilns, like much of the competition today, this project would not be as profitable or as successful,” said Cooper, an entrepreneur who worked for decades in the biofuels industry.

By locating within the cogen district, Independent Barley & Malt will save 41 percent on its energy bill compared to if the company had to buy energy off the grid, according to Cooper.

“The economies of scale dictate that we have to move large volumes in and out of the plant in order to be able to meet the current price points for bulk malts going into Michigan brewers,” he said.

In addition to the energy cost advantage, Independent Barley & Malt will be able to deliver freight savings to in-state operations that can take bulk malt shipments, thanks to the state’s high gross vehicle weight limit. Any other bulk malt shipments would have to come from out-of-state, where the weight limit generally follows the federal standard, which is about half of the tonnage allowed in Michigan.

Scott Graham, executive director of the Michigan Brewers Guild, describes Independent Barley & Malt’s plans as a “game-changer” for the state’s brewery supply chain. Although a handful of small malt houses have set up shop around the state and worked with farmers to develop the industry, a project of this size brings much needed scale, he said.

“Barley and malting are looking to re-emerge as an industry. There’s been good interest on the part of farmers, good work by the MSU Extension, but there’s an issue if a bunch of farmers grow it and they don’t have a market for it,” Graham said. “If we can see malting barley develop as a viable crop in Michigan, that’s a significant development. (Independent Barley & Malt is) going to require enough barley to make it a more interesting proposition for more farmers.”

Independent Barley & Malt will source all of its grain supply from Maumee, Ohio-based The Andersons Inc. (Nasdaq: ANDE), a diversified agribusiness focused on grains, plant nutrients, ethanol and rail.

To start, the maltster plans to source “a majority of the product” from Canada “for economics and quality” reasons, Cooper said. The company will use marine transport to move the grain from Thunder Bay, Ontario to the Port of Toledo, where The Andersons operates a grain terminal. The maltster also has leased space at The Andersons’ grain elevator 15 miles south of the malt house in Reading, Mich. to use for bulk barley storage.

“Not all barleys can make great malts. For world class malt, we need an all of the above (approach),” Cooper said of the company’s sourcing decisions, noting it eventually hopes to find ways to work with farmers in the Great Lakes region. “We also have a plan to implement an agronomy program where we can grow both a winter barley in the southern half of Michigan, Indiana, Ohio, and hopefully a spring barley in the north.”

The Litchfield project also includes plans for a “batch plant” where the company could work directly with brewers of all sizes to develop their own proprietary custom malts, focused on various flavors, colors, brewing properties or the origin of the grain, Cooper said.

“Instead of differentiating with hops or other adjunct additives like fruits or spruce tips, we encourage brewers to differentiate with their own malt,” he said. “All brewers are blending the same 50 varieties of malt from a small amount of global suppliers. … We’re asking folks to come to our plant and work through sensory to bring out and deliver exactly what folks are looking for.”

Cooper declined to comment on ongoing discussions with breweries and distilleries to source malt from his company, but hinted that Independent Barley & Malt had deals in the works.

“You couldn’t complete financing without having a certain amount of commitments,” he said.

Michigan-based brewery owners who spoke on background with MiBiz say they’d consider buying malt from a new source. However, executives at small producers noted that malt pricing is not a major factor in their sourcing decisions since their cost of goods remains minimal, even though they buy at a small scale. Instead, they’d gladly pay more for unique products, such as a quality, all-Michigan malt.

The undisclosed Independent Barley & Malt investment comes amid an inflection point in the craft beverage industry and its supply chain.

Nationally, craft beer garnered a 12.7-percent volume share of the beer market and accounted for 23.4 percent of retail dollars in 2017, according to the Brewers Association, which only tracks data for small and independent breweries. At midyear, the $26 billion craft beer industry grew by 5 percent, marking a continued plateau in sales growth.

More companies also are fighting for a piece of the industry. The Brewers Association estimates 6,655 breweries were active as of June 30, up nearly 1,100 from the same time a year ago. Another 2,500 to 3,000 remain in the planning stages, according to the trade group.

Additionally, the malt industry supply chain could soon face changes as a major supplier looks to exit its business. Last month, Bloomberg reported that Minnetonka, Minn.-based Cargill Inc. was considering selling off “part or all” of its global malting operation. The report cited sources that put the value of the transaction at more than $1 billion.

Coincidentally, The Andersons — which will supply Independent Barley & Malt — in September appointed former Cargill exec Pat Bowe as its new CEO. Bowe most recently served as the corporate vice president for Cargill’s food ingredients and systems platform.

For his part, Cooper believes Independent Barley & Malt will gain traction among brewers in Michigan and beyond because the company’s products will be able to compete on price and quality.

“I come from the fuel business. (Being) ratable is the ability to deliver on volume, on-spec, every time, all the time. That’s the consistency that the large brewers expect and demand,” Cooper said. “It’s going to take almost two years to build this plant. We’re going to be able to showcase the fact that we’re taking a massive investment risk to build this plant.”

IB&M Sponsors KBS Desserts with Discussion Event

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Desserts with Discussion: The Comeback of Spartan Barley

for the Michigan Brewing Industry

Barley, combined with hops, yeast and water, it is one of the four essential components of almost any beer. Currently, most barley grown in Michigan originates in North Dakota and central Canada, regions with different climatic and environmental conditions. That is until now.

In a world that is focused on local and sustainable crops, Spartan Barley is a winning heirloom variety for Michigan.  From a 5 gram sample that was saved in a seed bank Dr. Russ Freed and colleagues have been able to grow enough Spartan Barley to put it into production on a small scale.  With Dr. Dean Baas’ help the first crop was planted and harvested on the Kellogg Farm here at Kellogg Biological Station in 2016.

Dr. Russ Freed (Retired MSU Prof. CANR Dept. of Plant, Soil and Microbial Sciences) and Dr. Dean Baas (MSU Extension Sustainable Agriculture Educator) will share:

  • How the 1916 Spartan Barley was brought back to life in 2016
  • Why barley is a good fit for Michigan, and some of the challenges for the barley comeback
  • Current research projects on both winter and spring barley including variety and management trial