Cargill will close N.D. malting factory as craft brewers drive a shift in barley

As beer drinkers exchange their American lagers for craft brews, demand for barley has shifted to a version of the crop not often grown in the Midwest.

It's a change that recently led Cargill Inc. to decide to close a North Dakota factory that processes barley into malt. The Minnetonka-based agribusiness cited falling demand in the beer industry for six-row barley, the kind North Dakota and Minnesota farmers typically grow.

Brewers, especially those of the craft-beer persuasion, increasingly favor two-row barley for their beverages. The names refer to the number of rows of kernels around the head of a barley stalk.

Soil conditions and a more humid climate make it easier to grow six-row barley in North Dakota and Minnesota, and less risky for the growers. Two-row barley is better suited for Western U.S. states, like Idaho, Wyoming and Washington.

The factory near Jamestown, N.D., can malt both varieties, but there isn't a robust local supply of two-row barley to keep it busy. As fewer customers asked for six-row malting barley, activity dropped at the plant, leading to last week's closure decision.

With the company's focus on improving the efficiency of its plants and supply chain, a malting facility in North Dakota no longer made sense, Cargill said.

About 55 people work at the Jamestown plant. Those who don't wish to apply for open positions at Cargill's other two North Dakota plants will receive transition benefits. Salaried employees will receive severance.

The malt plant's closing is also bad news for Maple Grove-based Great River Energy. The wholesale cooperative's Spirit­wood Station power plant provides waste steam to Cargill's malt plant, as well as to a nearby ethanol plant.

"We're currently evaluating the impact of the closure on our Spiritwood plant," said Therese LaCanne, a spokeswoman for Great River, which produces electricity for Minnesota's retail electric co-ops. The $437 million, coal-fired Spiritwood plant was built in 2011 but sat idle for three years.

Among brewers, the shift toward two-row began in earnest about five years ago, said Chris Swersey, a supply chain specialist for Colorado-based Brewers Association.

Many brewers think two-row creates a maltier flavor while six-row produces a grainier taste in the finished beer. But apart from taste, Swersey said many beer makers prefer two-row malting barley for financial reasons as it produces an extra 1 to 2 percent of extract.

"That's real money when you consume millions of pounds, especially when you think of freight [costs] layered on top of that," Swersey said.

Most of the beer recipe kits sold at Northern Brewer's retail stores use two-row barley, with a few exceptions, said Mike Weiss, a brewmaster for the Roseville-based home-brew supplier.

Six-row barley allows for other grains, like rice or corn, to be added to the brew. Outside of the U.S., most of the beer produced in the world uses two-row.

The large domestic breweries making classic American lagers, like Miller, Coors and Budweiser, have traditionally used six-row barley. But even they are decreasing their use of the variety, Swersey said.

"This shift toward two-row is about the brewer value proposition, which is no different from big brewers and small craft brewers, except the bigger the brewery, the more they have to gain overall," Swersey said.

Kevin Smith, an agronomist at the University of Minnesota who specializes in barley, said current regional breeding efforts are focused on developing two-row varieties that would fit the profile for craft brewers and be less susceptible to disease.

"A major difference between the Midwest and West is rainfall," Smith said. "Because of higher rainfall in the Midwest, diseases are a bigger problem. So developing two-row varieties with better disease resistance will make them a better fit for the Midwest."

After the closure, Cargill will operate 16 malting facilities in countries around the world, including Sheboygan, Wis., and Biggar, Saskatchewan, where two-row barley is abundant.

Staff reporter Mike Hughlett contributed to this report. Kristen Leigh Painter • 612-673-4767