November 22, 2017
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How Maine could reap far more from the craft beer craze

By Rosie Hughes, BDN staff
Updated:

Editor’s note: We set out to understand how the Bangor region could grow its economy, and we’d like your help as we publish stories on the subject. Please visit the end of this page to answer a few questions to inform our reporting. Thank you.

Just after dawn on July 31, Brent, Joshua, Jacob and Caleb Buck put on their Carhartts and tool belts and began assembling a steel tank for storing barley at their farm in Mapleton, in Aroostook County.

“We kind of learn as we go,” said Joshua, who is 26. “The first time we put up a tank a few years ago, we winged it. Now we don’t even need directions.”

The Bucks, who own and operate a 1,000-acre potato and barley farm, were doing their part to overcome a hurdle standing in the way of Maine’s craft beer industry becoming a larger player in the state’s economy: building infrastructure.

Like most potato farmers in Aroostook County, the Bucks had grown barley in rotation with potatoes for decades since it’s good at replenishing nutrients in the soil. They’d sell their raw barley to a big commercial buyer for a low price.

But in 2015 the Bucks started malting their barley and selling it to Maine’s growing number of craft breweries for far more than what they’d been getting for the raw grain. Barley is the main ingredient in beer after water, but first it must be malted, a weeklong process that transforms the grain from plain old barley into malted barley, or malt.

Today demand for the Bucks’ malted barley is outstripping what they can supply, so they’re investing in more equipment, like this steel tank.

Maine’s craft beer industry — which has grown by 25 percent since 2013 and is projected to grow another 41 percent by 2020, according to a University of Maine study commissioned by the Maine Brewers’ Guild — along with other growing niche markets like bread flour, are presenting farmers and entrepreneurs like the Bucks with a rare opportunity to turn plain grains into something far more valuable: malt and beer.

If the malting industry continues to develop, more money will stay and circulate in Maine — particularly in the rural areas of Aroostook County where most barley is grown, economists said. Farmers can fetch more than double the price by selling barley to local markets as opposed to large commercial buyers who process the grain out of the state.  

Craft beer holds the most potential to grow Maine’s economy when it is exported, which helps bring in new money from away. Maine’s large craft breweries get 57 percent of their revenues from out-of-state sales, while small breweries get 9 percent, according to the University of Maine study. That’s not counting the amount tourists spend on beer in Maine, which appears to be rising.

But despite the opportunity and growing demand for products made from local grains, farmers, maltsters and brewers have run into problems: farmers and maltsters don’t have the equipment needed for cleaning, drying and storing the grain; not enough farmers know how to grow the right quality of grains; and brewers often can’t afford the high prices of local grains.

Overcoming these challenges will require that everyone with a stake — including brewers, farmers, state government and everyone in between — agree on a common vision, work together and share the financial risks inherent in any new venture, according to interviews with farmers, maltsters and brewers across Maine.

Experts suggested a range of ways the state could help: passing laws that provide incentives for brewers to use local ingredients, supporting agricultural programs and funding research.

It’s unlikely that local grains and beer will become dominant industries in Maine in terms of sheer economic value. But the sector is growing and builds on Maine’s strengths, notably its land. The craft beer industry, which brings in more than $150 million in revenue a year, is growing especially quickly in Penobscot County, where the output of craft beer is expected to increase by 92 percent over the next five years, according to the University of Maine study.

The economic potential of the local grain industry has yet to be studied, but the Maine Grain Alliance, a nonprofit trade group, estimates the number of acres of grain grown for human consumption has more than quadrupled in the last decade, from roughly 200 acres to well over 1,000 acres, suggesting steady growth.

Craft brewing has the potential to pull other higher-value grain markets up with it, including bread flour and organic feed, according to Gray Harris of Coastal Enterprises Inc., a nonprofit economic development and lending organization.

“Craft brewing is one of the largest market opportunities [in Maine] right now,” she said.

Yet Maine has a long way to go to realize the potential of malt barley. Of the estimated 3,000 to 7,000 acres of malt-quality barley now grown in Maine each year, only about 300 acres are being malted in the state. Put another way, just 7 percent of grains used in Maine’s craft beers come from Maine, according to Ellen Mallory, an associate professor with the University of Maine Cooperative Extension.

“We have this incredible craft brewing industry in Maine, and Maine has a fabulous reputation for beer and grain,” Mallory said. “Can we translate that into larger economic opportunity for the state?”

Infrastructure

For decades politicians and economists have recommended that Maine grow its economy by increasing the value of its natural resources, such as its thousands of acres of grain fields, by turning raw ingredients into processed products for sale beyond the state’s borders.

In his 1994 gubernatorial campaign, now-Sen. Angus King made famous the line, “Let no fish leave the state of Maine with its head on” to emphasize the need for more products with enhanced value.

Yet since the late 1990s, Maine has steadily fallen behind on what economists call “value-added economic activity,” which measures the worth of what each worker produces. It now ranks next to last in the country, according to the Maine Development Foundation’s 2017 Measures of Growth report.

The craft beer industry has the potential to add value to something Maine already grows a lot of: grains. Maine is the largest grower of grains in the Northeast, yet the vast majority of it is being sold raw at low commodity prices to big malt houses in Canada or to the Midwest for cattle feed, according to Mallory.

Fulfilling the economic potential of Maine grains will, in part, come down to farmers having access to the right equipment to process grains into malted barley. And equipment requires money — at least $50,000 for a new drying and cleaning system alone.

The Bucks were able to buy drying, cleaning and malting equipment thanks to a combination of low-interest loans from the U.S. Department of Agriculture, grants from the Maine Department of Agriculture, Conservation and Forestry, and some plain old bank loans.

The Bucks’ infrastructure investments were also possible thanks to their own willingness to take a risk on a new market.

“This is not for the meek,” Joshua’s 51-year-old uncle, Brent Buck, said.

Today, the main grain processing gap in the state is not in the malting process itself but rather in the crucial step that comes before it: cleaning and drying.

Before barley is malted, it must first be cleaned of dirt and other detritus and dried to a precise moisture level. Farmers selling to commodity malt markets don’t need to worry about cleaning or drying, since large commodity buyers do that for them. But it’s different for Maine’s malt houses, which have much less capacity than the large commodity buyers.

Two hundred fifty miles to the south of the Bucks, Blue Ox Malt House in Lisbon Falls, in Androscoggin County, is the only facility in the state that buys barley from farmers to malt. (Until now, the Bucks have only malted their own barley, though they have plans to expand their malting business, called Maine Malt House, and buy from other farmers.)

Blue Ox doesn’t have the equipment to clean and dry the grain that farmers want processed, according to Joel Alex, its 32-year-old founder. Alex needs to receive grain that’s already been cleaned and dried, and he needs it to arrive in small but regular shipments.  

But many Maine farmers don’t have the equipment to clean and dry their grain, or to store it so they can send a little at a time. Partly because of this, Blue Ox Malt House receives less grain than it’s able to process and is currently operating at about 50 percent capacity, Alex said.

There are several ways Maine could ensure farmers can clean, dry and store their grain, according to Tristan Noyes of the Maine Grain Alliance. One would be to build community “grain hubs” that would do the work for a number of farmers in the area.

Thanks in part to a $50,000 grant from the Maine Technology Institute, the Maine Grain Alliance is in the early stages of looking at how a hub, or hubs, might work, including who would operate them and where they would be located, Noyes said.

Developing new agricultural products and markets is particularly expensive and risky, so government support is often necessary at the start, according to Brian Depew, executive director of the Center for Rural Affairs, a nonprofit research group based in Nebraska.

“It’s really about helping people develop new markets, standing up things that can be profitable businesses on their own in the long term but that need a leg up at the beginning,” Depew said, referencing state investments in agriculture research and infrastructure.

Individual farms could also invest in equipment as the Bucks have, and supplement their income by offering cleaning and drying services to other farmers for a fee, Noyes said.

Whatever the model, any investment in infrastructure will require money. Currently, a host of different organizations provide grants and loans to farmers wishing to purchase processing equipment.

For its part, the Maine Department of Agriculture, Conservation and Forestry has provided $200,000 to the grain industry through its Agriculture Development Grant since 2015, according to Jessica Nixon, the department’s director of market development.

Yet state funding to support Maine farmers has been declining. Over the past decade, the state has cut funding for the division within the department that provides assistance to farmers, including in the form of grants, by one third.

Knowledge

“I love ‘six-row’ barley!” Richard Horsley proclaimed to fellow barley enthusiasts at the University of Maine’s Rogers Farm in Old Town on July 25. “It’s got a strong head and nice strong stocks.”

Horsley, a professional barley breeder from North Dakota State University, had come to Maine to check on a multi-year experiment — called a “variety trial” — he’d been conducting throughout the Northeast to identify malt barley varieties that grow well in the region’s cold, humid climate.

In Maine, he’d partnered with Mallory, the professor with the University of Maine Cooperative Extension.

One of the most important ways a state can help develop high-value agricultural products is by sponsoring research like Horsley’s, according to Kathleen Liang, a professor at North Carolina Agricultural and Technical State University.

That’s because it takes time and research to see if and how a new crop variety can work. Typically a state-funded research university and its agricultural extension is the institution most capable of performing such research, Liang said.

To the lay public, barley is barley. To the crowd at Rogers Farm, the difference between barley varieties is everything.

For starters, only about 40 percent of the barley grown in Maine can be used for beer. The other 60 percent is for animal feed and doesn’t work for brewing, according to Noah Winslow, who does marketing and quality assurance for Irving Farms in Caribou. And of the 40 percent that can be used for beer, most of it isn’t of high enough quality for Maine’s craft brewers and maltsters.

Improving the grain’s quality requires knowledge and skill, Joshua Buck said. Malt barley is “a little bit tricky to get it right,” he said. “You need to pay attention to your soil samples and pay attention to your fertilizer.”

Because of Maine’s humid climate, the Newdale variety used by almost all the state’s farmers will often start to germinate in the field — what scientists and farmers call “pre-harvest sprouting.” When that happens, it can no longer be used for beer.

Through their research, Mallory and Horsley hope to find types of barley that are easier to grow in Maine than Newdale, Mallory said.

While the university’s Maine Food and Agriculture Center provided $4,962 for the first year of the trials in 2015, Mallory and Horsley have received no state money to support their research since then. Instead, the study has been funded by the Brewers Association, a national trade group, on a year-to-year basis.

Secure, longer-term funding would ensure Mallory and the other researchers can get results from the trials, Mallory said.

“You need to see many years of data to have confidence that [a certain variety is] a real stinker or has a lot of promise,” she said.

Across the board Maine spends less per capita on research and development than most other states, according to the Maine Development Foundation, ranking 36th in the country.

Yet research is not enough. It’s also important to have people — typically through a state’s cooperative extension service — who will share the research findings with farmers and answer their many questions, Liang, the North Carolina professor, said.

Over the past 30 years, the number of faculty working for the University of Maine Cooperative Extension has been cut about in half in response to budget cuts, from more than 100 to around 50 today, according to John Rebar, the extension’s executive director.

“You have to have the right person,” he said. “[Ellen Mallory] is committed. She has a relationship with her farmers; there’s a trust there. This is about relationships and people working together for a common goal.”

Today Mallory, based in Orono, is the only extension faculty member whose focus is to conduct grain research and reach out to farmers.

“Having somebody [else] who can just go visit farmers in their fields would really be a lot,” Mallory said. “There’s such a huge learning curve.”

Consumers

On a recent humid, cloudy Saturday, 2,500 people gathered at Portland’s Thompson’s Point to celebrate craft beer.

This was the Summer Session Beer Festival, an event that’s grown five-fold over the past three years, according to Sean Sullivan, executive director of the Maine Brewers’ Guild, which sponsors the event.

At the festival, three men in beer-themed t-shirts waited in line for the Porta Potties. When asked if they would pay more for a beer made with local grains, one man, wearing a “FARM TO FLASK” shirt, said: “That’s what this is all about. Bud Light is out. Craft beer is about drinking from a brewery who you know and respect, who ideally get their ingredients from farmers they know and respect.”

Fifty-five percent of craft beer drinkers between ages 21 and 34 believe local is an “important factor” in beers they purchase, according to a 2015 poll by Nielsen, a market research firm.

Breweries are taking note. The state’s two largest — Allagash Brewing Company and Shipyard Brewing Company — have both committed to using more Maine grains in the coming years. Allagash’s commitment is especially bold, having announced in June that it would buy one million pounds of local grain per year by 2021, up from the 100,000 annual pounds it now buys.

And three of the four largest breweries in the Bangor area told the BDN they use some local grains and plan to use more in the future, especially as the processing kinks get worked out and the prices drop. Maine malt is currently about twice as expensive as malt from out of state.

It’s a Catch-22: For more breweries to start buying more Maine grains, the prices must come down. But for the prices to come down, more breweries need to commit to buying more Maine grains, to convince farmers to invest in infrastructure.

The state could help by adopting a policy similar to that of New York’s, said Jason Perkins, the brewmaster of Allagash Brewing Company.

In 2013, New York enacted the Farm Brewery law, which created a new licence that exempts breweries from sales tax, waives a registration fee, and allows them to serve beer on site in exchange for using 20 percent of their ingredients from in-state sources. It will gradually increase to 90 percent by 2024.

Since then, the acres of malt barley being harvested in New York has tripled, according to a Cornell University study. One hundred forty seven breweries now operate under the new license, according to Paul Leone, executive director of New York State Brewers’ Association.

Cooperation

“Maine could really be the Northeast source for malt barley,” Joel Alex of Blue Ox Malt House told the crowd at Roberts Farm. “I also think that it doesn’t just have to stop in the Northeast.”

For that to happen, though, everyone from the farmer to the consumer needs to communicate, he said. The farmer needs to understand which variety and quality of barley to grow. The maltster needs to be able to turn something the farmer grew into something the brewer wants. The brewer needs to understand what consumers want and what they’re willing to pay for.

The Bucks seem to intuitively understand this need for communication and teamwork. Seven Buck men from two generations run Buck Farms and Maine Malt House — three older brothers in their 40s and 50s, and four of their sons and nephews in their 20s.

As Jacob Buck said, “None of us could do it on our own.”

Maine Focus is a journalism and community engagement initiative at the Bangor Daily News. Questions? Write to mainefocus@bangordailynews.com.

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