Scotch whisky slowdown cuts malt demand by 300,000 tons

Barley growers and maltsters in Britain are facing rising pressure as Scotch whisky makers keep production below past levels, cutting demand for one of the industry’s main raw materials even after a difficult harvest reduced supply.

The strain is being felt across the supply chain, from farms in East Anglia and Scotland to malt plants that process grain for distillers. After a very dry summer and lower yields, many growers are also dealing with weak prices, narrower margins, and doubts about whether planting malting barley still makes economic sense.

The Agriculture and Horticulture Development Board, or AHDB, said yields this year were 17% below the five-year average, with spring barley hit especially hard. Spring barley accounts for about four-fifths of malting-quality grain. The UK summer was the hottest on record, according to the City A.M. report, and a long period without meaningful rain scorched fields across the eastern barley-growing belt. Conditions were less severe farther north, but Scotland still recorded its sixth-warmest summer on record and lower yields.

AHDB cereals and oilseeds director Anthony Hopkins said some arable farmers were under heavy financial pressure after a second or, in some cases, third consecutive difficult harvest, especially with input costs still high.

The market has offered little relief. Farmers Weekly reported that the traditional premium for malting barley over feed barley has narrowed to just £5 to £15 a metric ton. In some areas, malting barley prices have at times slipped below feed barley prices, even though malting barley must meet tighter quality standards. For growers, that weakens the case for producing a more demanding crop.

The price pressure has already changed planting decisions. AHDB said 930,000 hectares were planted with barley for this year’s harvest, down 12% from 2025 and the lowest level in 16 years. In Scotland, the planted area fell 13% to 258,000 hectares, the smallest area since 1960.

That decline is happening even though last year Scotland harvested more than 2 million tons of barley. Much of that crop, however, did not fully solve the industry’s problems because some grain failed malt specifications, including on nitrogen levels and screening.

At the same time, whisky makers have been working through high inventories. Colin Johnston, sales and marketing director at Crisp Malt, told City A.M. that the industry is in a major downturn and that whisky production is substantially lower, leading to a drop of about 300,000 tons in malt demand.

That fall has put maltsters in a difficult position. As Scotch output slowed through 2025 and 2026, many maltsters were left over-contracted and holding more grain than distillers needed. One maltster in Pencaitland, East Lothian, closed earlier this year, and others have delayed investment plans until the Scotch market improves. Johnston said this year’s smaller harvest had, in that sense, come as a relief because it limited the buildup of excess stock.

The imbalance reflects a market in which demand for Scotch has not collapsed, but supply remains abundant because warehouses are full. Johnston said distillers are still focused on reducing those inventories before returning to more normal buying patterns for malting barley. He said the industry is carrying a large amount of stock and that it could take considerable time to clear it.

There are some signs that export demand may be improving. UK Food and Drink Federation data showed that whisky export volumes rose 5.8% in the first half of 2026, while export value increased 2.2% to £2.5 billion. Even so, that improvement has not yet translated into a broad recovery in barley purchasing.

The result is a difficult mix for farmers. Weather has reduced yields, but weaker demand from distillers has capped prices. Some parts of the market have also been affected by wider geopolitical tensions. Johnston said disruption linked to the war between Russia and Ukraine helped lift malting grain prices in August and September by limiting Black Sea shipping, even though the blocking of the Strait of Hormuz had not affected cereal supplies in Europe.

The next question for the industry is whether British farmers will keep planting barley if returns remain low. Growers in England may have more alternatives as warmer conditions make other crops more viable and environmental support schemes offer different land uses. Scottish farmers may have fewer options, but they also face the same problem of planting a crop that demands high quality and offers limited reward.

That matters beyond farm incomes. If barley acreage continues to shrink and maltsters keep postponing investment, the drinks industry could face higher costs and tighter supplies when Scotch production eventually increases again. A weaker farming and malting base would also make it harder for distillers to respond quickly to a recovery in demand, and the pressure could spread to other malt-dependent beverage producers.

One possible turning point is trade. City A.M. reported that some in the sector believe stronger demand for Scotch, including potential gains from the UK-India trade pact, could eventually tighten the market and push barley prices higher. If that happens after farmers have already moved away from the crop, supply could become a bigger issue.

Johnston said the industry needs to keep barley farming attractive and argued that the burden has grown heavier since the loss of EU subsidies. He also said European grain is cheaper to produce in part because of lower energy costs.

At the same time, distillers are asking suppliers to lower emissions and improve fertilizer efficiency. That is pushing more work on regenerative farming practices, cover crops, better monitoring of nitrogen use, and more precise application of inputs. Maltsters are working with some farmers to support those changes in ways that fit local conditions, but the transition carries costs at a time when margins are already thin.

Johnston said those costs cannot fairly fall on farmers alone. Similar efforts are underway in other major barley-producing regions. City A.M. said Canadian growers are supporting trials of more resilient and higher-yielding barley varieties, while Constellation Brands in the United States has committed another $100 million over five years to strengthen barley supply chains and improve farm resilience in Idaho, Montana, and North Dakota.

For British growers and maltsters, the pressure is immediate. A poor harvest, low premiums, excess whisky inventories, and delayed investment have all combined to make barley a harder crop to justify, even though it remains central to Scotch production.