CHICAGO, March 18 (Reuters) – As spring arrives in Montana, barley grower Mitch Konen finds himself facing mounting financial strain, with overdue loans and rising interest payments weighing heavily on him. On his remote farm, nestled in the shadow of the snow-capped Rocky Mountains, Konen, 65, spends his days baling hay and loading trailers while grappling with the threat of tariffs and a shrinking U.S. beer market.
Konen, who also serves as vice president of the National Barley Growers Association, worries that tariffs could disrupt vital export markets and inflate production costs. At the same time, a steady decline in U.S. beer consumption has led to waning demand for barley.
“Down here on the farm, we’re already stretched pretty thin financially,” said Konen. “It makes us wonder whether or not we can even stay in business.”
Konen’s farm relies heavily on exports, with roughly half of his barley destined for Mexico, where it is used in beer production. Some of this barley is even shipped back to the U.S. in popular beer brands like Modelo, Corona, and Pacifico. Mexico is the third-largest importer of U.S. barley and the largest buyer of U.S. malt, an essential beer ingredient made from germinated barley kernels.
If Mexico retaliates with tariffs or shifts to suppliers in other countries, U.S. barley farmers could face significant economic losses, especially as U.S. beer consumption continues its downward trend.
Canada, the largest importer of U.S. malt barley, imposed its own tariffs on U.S. agricultural goods, including barley, which came into effect on March 4. Frayne Olson, a crop economist at North Dakota State University, expressed concerns that these tariffs could severely impact U.S. barley exports to Canada.
President Donald Trump has stated that his tariffs on key trading partners aim to curb illegal drugs and migration, while downplaying their economic effects on U.S. businesses and consumers. However, U.S. farmers, particularly in the barley sector, are bearing the brunt of these trade policies.
“The people who pay for tariffs are the farmers,” said Steve Sheffels, vice president of the Montana Grain Growers Association. “We grow way more barley than we can possibly consume, so if those markets go away, then farmers are going to be competing for a much more limited number of buyers.”
In addition to tariffs on barley, the costs of key agricultural inputs like fertilizer—largely sourced from Canada—are also set to rise. Prices for imported crop chemicals from China have already surged due to tariffs that took effect on February 4.
“There’s a sinking feeling and a feeling of dread that things are bad, and things are going to stay bad for a while,” Sheffels added. “We are scared almost to death about tariffs.”
A SLOW DECLINE IN BEER CONSUMPTION
The challenges facing U.S. barley farmers are compounded by a long-term trend in beer consumption. In 2024, U.S. beer consumption reached its lowest level in over 40 years, as American drinkers increasingly turned to alternatives like hard seltzers and canned cocktails. Bart Watson, chief economist at the Brewers Association, highlighted the growing competition from these beverages, which has further reduced demand for traditional beer ingredients like barley.
For many barley farmers, the combination of international trade tensions and declining domestic demand for beer is a perfect storm, leaving them uncertain about the future of their businesses.
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