Grain prices creeping up.

[Northern_Brewer]

We've been through this before.

Yes the basic principle is that homebrewing is a "luxury" and so its ingredients are VATable, whereas commercial brewing is "food production" and so its ingredients are VAT exempt. Domestic food production of things like malt loaves is also VAT exempt. But there is a grey area because the same products could be used for all of these.

This happens all the time, and so the taxman comes up with rules of thumb because he needs black and white boundaries, not grey areas, and it's just not cost-effective to have someone making separate adjudications for each and every case - except in the really big ones like the £m's of VAT that depended on whether Jaffa Cakes were cakes or chocolate biscuits.

And in this case the rule of thumb depends on whether it is in retail packaging for homebrew or not. So if Rob sells 10g of coriander for making witbier - that's VATable. But a supermarket can sell 10g of coriander and it's exempt as it's probably going to go into a curry or something. And Andy can buy a 1kg tub of coriander from Rob because that's considered a "commercial" amount even though it will end up in beer.

So my memory from that previous thread is that HMRC had "officially" indicated that their rule of thumb was that a 25kg sack as wholesale and so non-VATable. I guess in theory if there was a high-profile Zadhawi-style case where it was worth their while proving that the Homebrewer McHomebrew collective was contravening the general principle of "homebrewing is VATable" and depriving the Exchequer of £m's then they might dive deeper but for now they seem comfortable with the idea that 25kg = wholesale whereas eg 5x5kg is retail.

But Rob's much closer to this so follow what he says.

 

[Brew_DD2]

Iv just checked my invoices. 25kg crisp MO (exc VAT) with Malt Miller
2021 £23.75
2022 £27.71
2023 £36.86
That’s quite a hike.
Be the same as petrol, quick to go up but doubt they will go down once trouble in Ukraine is sorted.

Is that not a bit of a myth? Petrol has come down.

 

[Leon103]

It's handled differently after passing certain thresholds. It's still payable

Payable wasn't the issue the poster said that the group scheme don't charge VAT. They would have paid VAT but charging members a price that incorporates thE VAT

 

[Agentgonzo]

Payable wasn't the issue the poster said that the group scheme don't charge VAT. They would have paid VAT but charging members a price that incorporates thE VAT

Ohhhhh!
Riiiiight. That makes total sense. I thought that it meant that the group didn't pay VAT when it bought the grain.

 

[Leon103]

Ohhhhh!
Riiiiight. That makes total sense. I thought that it meant that the group didn't pay VAT when it bought the grain.

No problem. Thread went slightly off track

 

[crescent city Mike]

This thread started out over grain prices creeping up. That's something likely to continue. there are a few adjustments any of us can make to stem the tide of high prices.
https://crescentcitybrewtalk.com/small-beers/https://crescentcitybrewtalk.com/brewing-small-and-session-beers/

 

[Clarence]

This thread started out over grain prices creeping up. That's something likely to continue. there are a few adjustments any of us can make to stem the tide of high prices.
https://crescentcitybrewtalk.com/small-beers/https://crescentcitybrewtalk.com/brewing-small-and-session-beers/

But why are malting barley prices going up? Bad harvest? Global warming? Russia's attempting genocide in Eastern Europe? Brexit? Wheat, yes. Barley, why?
Why are so many of us so willing to give profiteers free rein to increase prices as much as they like? Why are so many clamoring to make excuses for them?
Where's the indignation? Let alone action.

There may well be a very good reason that barley prices are increasing. Let's hear them?

Energy prices figure highly in the malting process. Why are they so high? I'll tell you: it's because the price of electricity, which is fixed by a cartel, is linked to the dearest method of production. Other cheaper producers are making money hand over fist that many of them are embarrassed about. We know this is the case because it's general knowledge, but otherwise, why would there be talk of windfall taxes? Where are these windfalls coming from? Can we make cider from them?

We're far to happy to be shafted. Almost begging for it!

 

[Stu's Brews]

But why are malting barley prices going up? Bad harvest? Global warming? Russia's attempting genocide in Eastern Europe? Brexit? Wheat, yes. Barley, why?
Why are so many of us so willing to give profiteers free rein to increase prices as much as they like? Why are so many clamoring to make excuses for them?
Where's the indignation? Let alone action.

There may well be a very good reason that barley prices are increasing. Let's hear them?

Energy prices figure highly in the malting process. Why are they so high? I'll tell you: it's because the price of electricity, which is fixed by a cartel, is linked to the dearest method of production. Other cheaper producers are making money hand over fist that many of them are embarrassed about. We know this is the case because it's general knowledge, but otherwise, why would there be talk of windfall taxes? Where are these windfalls coming from? Can we make cider from them?

We're far to happy to be shafted. Almost begging for it!

I did post this a couple of pages back but it may have got lost in all of the VAT discussion:

https://www.thehomebrewforum.co.uk/threads/grain-prices-creeping-up.99914/post-1196965
Very much agree that there is a lot of profiteering going on within the energy sector and it's definitely not something I'm happy about! However, I don't think malt prices are being driven up by excessive profiteering (there may well be some rounding up going on) within the brewing supply chain as it isn't monopolised in the same way as energy prices - that may be wishful thinking though!

 

[AJA]

Energy prices are the biggest con of all, and we are all (consumers, businesses etc) being screwed over, for the reasons you mention.

I do believe malt is a more functional market. Some (Crisp I'm looking at you) have massively hiked prices, others are around inflationary.
Consumers therefore have the option to change suppliers and Crisp will get the hint when they haemorrhage market share.

 

[Cheshire Cat]

I assume most of the barley we buy as Pale Malt is grown in the UK, so Brexit can’t be blamed, transport costs are less than importing it. So either 2022 crop yields were significantly lower, conversion costs (energy & labour) is significantly higher or the producers and/or retailers are exploiting the situation to have higher profits. Wish there was some transparency.

 

[AJA]

I assume most of the barley we buy as Pale Malt is grown in the UK, so Brexit can’t be blamed, transport costs are less than importing it. So either 2022 crop yields were significantly lower, conversion costs (energy & labour) is significantly higher or the producers and/or retailers are exploiting the situation to have higher profits. Wish there was some transparency.

Commodity costs are set globally. E.g if the equilibrium price of barley is $100 dollars a tonne, it is that globally and not regionally. E.g. a UK supplier will export grain if there is excess demand elsewhere.
So Brexit can be blamed to the extent it impacted $/£. Supply is down because of the Ukraine situation, energy and transport costs up etc

 

[Cheshire Cat]

Commodity costs are set globally. E.g if the equilibrium price of barley is $100 dollars a tonne, it is that globally and not regionally. E.g. a UK supplier will export grain if there is excess demand elsewhere.
So Brexit can be blamed to the extent it impacted $/£. Supply is down because of the Ukraine situation, energy and transport costs up etc

All excuses that are not transparent. What counts is:
Price the Producer is selling Retailers 2022 vs 2023
Price the Retailer is selling to us 2022 vs 2023.

As an aside GEB have updated their website so I can’t look at orders and can’t easily compare.

 

[The Baron]

sorry not hijacking the thread but food for thought.
Heinz Tomato Ketchup 910g £3.99
Aldi Tomato Ketchup 650g .65p
Now I know the Heinz is 260g bigger but it contains the same ingredients and the Aldi is made by one of the Major Competitors to Heinz at their factory.
So if they contain the same ingredients and are made at a similar competitors factory why the massive price hike to £3.99 a bottle.
Who's having who over - the major brands and they have record profits
PROFITEERING on a massive scale.
Right back to grain prices

 

[Cheshire Cat]

I worked for Heinz from 2000-2004 as Quality Manager when we were being attacked by cheap beans. We were charging 29p and the own brands 10p. I ran a tasting panel at 9:00 every morning to assess our products and one day bought some own brand beans and got the people who prepared the samples to add these without telling anyone. Nobody spotted any difference.
However the price of the can and ingredients was more than 10p.

 

[Agentgonzo]

when we were being attacked by cheap beans.

Sounds like the premise for a terrible movie

 

[Rodcx500z]

When i worked in the bakery we did a bean and sausage pasty and, used Heinz beans one week the delivery was late and they got, Down south beans in instead, i could not believe the difference in taste as in how much sugar there is in heinz baked beans

 

[YeastFace]

Some of the Malsters publish a harvest report which goes some way to explain their price increases.

Crisp - Barley Harvest Report 2022 | New Malting Season | Crisp Malt

Simpsons - 2022 Barley Harvest: War in Ukraine, market volatility & impact on 2023 malt prices - Simpsons Malt

Maltsters Association - MAGB Harvest Review 2022 - The Maltsters’ Association of Great Britain

 

[Leon103]

Jesus. Here we go again.
What action do you propose? Blocking the m25?

But why are malting barley prices going up? Bad harvest? Global warming? Russia's attempting genocide in Eastern Europe? Brexit? Wheat, yes. Barley, why?
Why are so many of us so willing to give profiteers free rein to increase prices as much as they like? Why are so many clamoring to make excuses for them?
Where's the indignation? Let alone action.

There may well be a very good reason that barley prices are increasing. Let's hear them?

Energy prices figure highly in the malting process. Why are they so high? I'll tell you: it's because the price of electricity, which is fixed by a cartel, is linked to the dearest method of production. Other cheaper producers are making money hand over fist that many of them are embarrassed about. We know this is the case because it's general knowledge, but otherwise, why would there be talk of windfall taxes? Where are these windfalls coming from? Can we make cider from them?

We're far to happy to be shafted. Almost begging for it!

 

[Leon103]

Jesus. Here we go again.
What action do you propose? Blocking the m25?

But why are malting barley prices going up? Bad harvest? Global warming? Russia's attempting genocide in Eastern Europe? Brexit? Wheat, yes. Barley, why?
Why are so many of us so willing to give profiteers free rein to increase prices as much as they like? Why are so many clamoring to make excuses for them?
Where's the indignation? Let alone action.

There may well be a very good reason that barley prices are increasing. Let's hear them?

Energy prices figure highly in the malting process. Why are they so high? I'll tell you: it's because the price of electricity, which is fixed by a cartel, is linked to the dearest method of production. Other cheaper producers are making money hand over fist that many of them are embarrassed about. We know this is the case because it's general knowledge, but otherwise, why would there be talk of windfall taxes? Where are these windfalls coming from? Can we make cider from them?

We're far to happy to be shafted. Almost begging for it!

 

[samale]

Jesus. Here we go again.
What action do you propose? Blocking the m25?

Same as petrol, if you want to drive you have to buy at the market price. We all like a moan but the only other option is to stop brewing.