Global demand for Scotch appears to be holding up reasonably well, but there is clearly no shortage of supply. With bulging warehouses, distillers have cut production, causing real grief to the farmers and maltsters who supply them. Ron Emler investigates …
This year’s British summer, the hottest on record, left a scorched trail down the East Coast barley belt that feeds the whisky industry. After two months without significant rain, East Anglia’s fields began to resemble the Sahara.
Conditions eased moving north, with Scotland experiencing its sixth warmest summer on record, yet yields were down, particularly of spring barley, which provides around four-fifths of malting-quality grain. The Agriculture and Horticulture Development Board (AHDB) reported yields were 17 per cent below the five-year mean.
Anthony Hopkins, AHDB director, cereals and oilseeds, said: “This is the second, or in some cases third, successive challenging harvest. At a time of high input costs, arable farmers in the worst-affected areas are really feeling the financial pressure.”
According to Farmers Weekly, the historic price gap between malting and feed barley has shrunk to just £5 -15 per tonne. In certain areas, malting barley prices have periodically dropped below feed barley, which makes growing it unviable for many farmers given the stricter quality specs demanded.
Those low returns have driven farmers to reduce plantings. According to AHDB for this year’s harvest 930,000 hectares were under barley, 12 per cent less than in 2025 and marking a 16-year low. In Scotland, the area fell by 13 per cent to 258,000 ha. the lowest since 1960.
Last year Scottish farmers harvested a bumper crop of more than 2m tonnes, though there were many rejections due to high levels of nitrogen or poor screening levels that failed to meet the stringent specs imposed on malted barley by the distillers.
Right now, those supplying this key raw ingredient are really feeling the pinch. “We are in a major downturn,” says Colin Johnston, Sales and Marketing Director of Crisp Malt. “Whisky production is substantially down and there is a drop of about 300,000 tons in demand for malt.”
This has put strain on maltsters, with one in Pencaitland, East Lothian, closing earlier this year and others sitting on investment plans until the market for Scotch whisky begins to rise again.
As the production slowdown accelerated into 2025 and 2026, the maltsters found themselves over-contracted. By buying more grain than was needed, they ended up with excess stocks. Ironically, this year’s short harvest has come as a relief.
“There is a ‘weather” market, but there is also a ‘geopolitical’ market,” says Johnston. While the blocking of the Straits of Hormuz has had no effect on cereal supplies in Europe, malting grain prices rose in August and September because the war between Russia and Ukraine effectively closed shipping through the Black Sea.
Financial pressure
There are some glimmers of hope that the distillers might soon begin to gently increase output as global demand for Scotch whisky picks up.
Data from the UK’s Food and Drink Federation showed a 5.8 per cent increase in volume in UK whisky exports in the first six months of 2026, while value rose by 2.2 per cent to £2.5bn.
Nevertheless, distillers still feel they need to drain the surplus from their warehouses before demand for malting barley can return to more normal levels.
“The industry is sitting on a lot of stock and it’s going to take quite some time to work through that”, says Colin Johnston. “The market will be suppressed for a while. When that changes is crystal-ball stuff. Nobody really knows.”
This all begs the question of whether UK barley farmers will continue to plant the crop or if the land devoted to it will continue to shrink.
The perceived wisdom is that growers South of the Border have more options as the warming climate favours less traditional crops and there is wider access to environmental schemes. Scottish growers may have fewer options than to accept the on-going low prices.
One scenario supposes that demand for Scotch whisky improves rapidly, not least because of the UK-India trade pact, which could reverse the equation and push up barley prices at just the time farmers are turning their backs on the crop,
“We have to find a way to keep barley farming attractive for them,” says Johnston, noting that the loss of EU subsidies was a heavy blow, and that European grain is less expensive to produce because of lower energy costs.
“The drive now from distillers is for the agricultural sector to try to decarbonise and try to become more efficient in the use of fertilisers – which are fossil fuel-based,” he says.
“So, there’re lots of initiatives around regenerative agriculture, using cover cropping as alternative green fertilisers, monitoring nitrogen use efficiency, plus using technology to ensure that fertilisers are only being applied where the crop requires it.”
Where they can, maltsters are working with farmers to encourage sustainable techniques which are appropriate to their specific land and region.
Sustainable farming
That is part of a pattern of research and change around the globe. Canadian farmers are backing experimentation into more prolific and resilient barley varieties such as Churchill while the giant US brewer and distiller Constellation Brands is investing an additional $100m over the next five years to support farmers in Idaho, Montana and North Dakota. The aim is to strengthen its supply chain and back initiatives to improve the resilience and long-term sustainability of their farming operations.
Facing low returns, will UK barley farmers be willing to absorb the costs of changing growing patterns and new varieties to meet the increasing demands from distillers eager to burnish their environmental credentials?
“The cost of this transition has to be shared across the supply chain and can’t reasonably be expected to land squarely on the farmers shoulders”, says Colin Johnston.
Ron Emler is a financial journalist who has observed the drinks industry for 50 years. Following a career on The Times and the Sunday Telegraph, he is consultant City Editor at The Drinks Business. This content has been produced for Whisky Business in collaboration with WhiskyInvestDirect, the Scotch whisky trading platform for distillers, independent bottlers, and private investors.