Ethanol's new victims: beer drinkers

Joe Klamar/AFP/Getty

We witnessed the tens of thousands of demonstrators decrying the rapidly (and exorbitantly) rising price of corn in the "tortilla protests" in Mexico City earlier this year. The protests came about as a result of the growing demand for corn-based ethanol, the Bush administration's biofuel of choice. But now there appears to be a new dietary staple under threat from the rising demand for ethanol: German beer.

Der Spiegel Online reports that a 2006 barley shortage will raise the wholesale price of German beer this May. Many brewing industry lobbyists attribute the price rise to farmers forgoing barley for corn in order to satisfy the global demand for biofuels, especially from the United States. In the past year, the price of barley has doubled on the German market, from €200 to €400 per ton.

But it's not just Germany that is set to see soaring beer prices. The chief executive of Heineken (the Dutch brewer) warned in February that the expanding biofuel sector was starting to cause a "structural shift" in European and U.S. agricultural markets, which could precipitate a long-term upward shift in the price of beer. Already, futures prices for European malting barley have risen since last May by 85 percent to more than €230 a ton, and barley production in the United States has fallen to 180.05 million bushels (in 2006)—the lowest level since 1936. Global stockpiles of barley have shrunk by a third in the last two years. All of this augurs ill for beer drinkers, who may soon be paying significantly more for their pints.