One of the hot topics in the beer world these days is the soaring price of brewing materials: barley, hops, corn, rice, you-name-it. Put another way, brewers are feeling the pressure of record-high demand -- and prices -- for all grains and for dairy products. As the price of corn, for example, soars, farmers have to make a choice. Should they grow barley, or cash in on the corn craze? Those who have the right experience and farming equipment will likely choose corn. The result? A shortage, at least for now. of barley and other brewing stuff. When materials are in short supply, prices go up. Eventually, of course, the supply-demand pendulum will swing the other way: Farmers will think, "Gee, prices for barley sure are high. Maybe I should grow that instead."
But before that happens, there will likely be a shake-out in the brewing industry. The shortage of brewing materials will squeeze the smallest brewers. Indeed, some of them already know that they can't buy enough brewing materials for 2008. They may be forced to close. Or to seek an investor-partner in the form of a larger brewery. 2008 will likely be a year in which many breweries shut their doors, few new ones open -- and some well-established ones change hands.
But the more interesting question (at least in my mind) is: What's driving the demand for corn, wheat, and milk? Some pressures are obvious: Right now there's lots of experimenting with corn-based fuel additives. Others are not so obvious, but they are probably more important -- like the rising demand for meat and milk from the growing middle class in China and India.
Okay, so what's that all about? WHY are there suddenly so many more Indians and Chinese with more money to spend on food? For an answer, I'm urging everyone I know to read Thomas Friedman's book The World Is Flat. If you want to understand the challenges facing the United States now; if you want to know how and why computers and the internet have changed daily life; if you want to know why the two major political parties are in trouble -- read this book! You will never see the world the same way.