The future supply of Scottish grain to the whisky industry is being threatened by the low prices paid to farmers. Scotland's farming union has made the point as MSPs debate the use of Scottish grain in Scotch whisky today (Thursday 21 April).

Many farmers are thinking twice about growing malting barley, a key ingredient in the production of Scotch whisky, because the price being paid to them does not cover production costs. NFUS is extremely concerned that any increase in the use of imported, non-Scottish grain in the production of Scotch whisky could undermine the integrity of the Scotch whisky brand and jeopardise future sales.

The price pressure is not restricted to farmers. The malting industry is suffering from a similar squeeze. Two of Scotland's malting facilities have announced their closure in recent months - the Muntons plant in Kirkcaldy and Greencore's facility in Carnoustie. NFUS is urging the supply chain, primarily distillers and retailers, to ensure the profits on whisky are shared fairly to protect the supply of one of its key ingredients and to protect the Scotch brand.

MSPs are today involved in a member's debate in the Scottish Parliament led by Andrew Arbuckle MSP. The motion calls for Protected Geographic Indicator (PGI) status for Scotch whisky, demanding the use of Scottish-only grain in whisky production. Whilst NFUS recognises the difficulties with this route and the question marks over its effect on the industry, NFUS believes that distillers should adopt an official 'Scottish-first' policy when sourcing grain and ensure the right price incentive exists to secure Scottish supplies.

Chairman of the NFUS Combinable Crops Committee is David Houghton, a cereal farmer from Easter Ross. He said:

“On average, it costs over £100 to produce a tonne of malting barley, yet farmers' prices have consistently been £90 a tonne or less. Understandably, many farmers are thinking twice about planting the crop. That has major implications for the whisky industry.

“Worth over £2 billion a year, the Scotch whisky export industry is marketed on its 'Scottishness' and is a brand which is globally recognised. Any increase in the use of non-Scottish grain will undermine this brand. That will happen unless the profits from the whisky industry are shared more fairly through the supply chain. Whilst the whisky industry's commitment to Scottish grain has improved over the years and it now buys around 90 per cent of its grain requirements from Scotland, it may lose that option if that commitment is not translated into fairer prices.

“We recognise that PGI status is problematic, legally and commercially. However, a Scottish-first policy of sourcing grain is extremely important. And that policy should be protected by a pricing structure which recognises the need to secure local supply and reflects the cost to farmers of producing quality.”

Improved profitability key to Whisky supply chain