THE PRICE of barley, an important feed grain for the European livestock industry, has more than doubled in six weeks in response to the drought affecting Russia and Ukraine, prompting fears of increases in the cost of meat and poultry.

European feed barley has risen to €210 a tonne, up 130 per cent from €90 a tonne in mid-June.

Traders said feed barley was trading at par with milling wheat, an unusual situation. The price of malting barley, used in brewing, has also increased.

“The rise has gone unnoticed because all the attention was on wheat,” Abdolreza Abbassian, senior grain economist at the United Nations Food and Agriculture Organisation in Rome, said. “Russia and Ukraine are huge in barley.”

The Black Sea region of Ukraine, Russia and Kazakhstan last year exported 8.4 million tonnes of feed barley, half the international trade of 16.9 million tonnes, according to the US Department of Agriculture.

Ukraine alone exported 6 million tonnes, and Russia 2.1 million tonnes.

Relatively speaking the region is less important in wheat, which accounts for about a quarter of its exports.

Traders said barley supplies from the Black Sea region would be cut drastically because of the wheat export ban in Russia and lower production in Ukraine due to bad weather.

Kiev has promised it will not impose an export ban. But European traders said Ukraine was slowing supplies by measures such as customs and quality requirements to delay shipments.

Barley production is also down in the European Union and Canada – two other large exporters – due to bad weather.

The EU is sitting on large stocks built up after last year’s bumper crop. That could mitigate the rise of domestic prices or could be used to boost exports, traders said.

The livestock and poultry industries are preparing for the worst. Cees Vermeeren, director of Avec, a body representing the European poultry industry, said there was concern about the rapid rise in feed costs, which in some cases accounted for 60 per cent of total costs.

“It is essential that the prices at consumer level go up to compensate for poultry farmers’ increased costs,” he said.

Industry executives believe that during the next few months, meat and poultry prices could rise about 15 per cent.

Doug Whitehead, commodities analyst at Rabobank in London, said the effect would be larger in “those intensive livestock industries such as poultry and pig production”. – (Copyright The Financial Times Limited 2010)