Montana Barley Farmers Face a Perfect Storm of Threats: Tariffs, Declining Beer Consumption, and Rising Costs
Montana barley grower Mitch Konen, a 65-year-old farmer whose remote farm offers stunning views of the snow-capped Rocky Mountains, faces a growing sense of anxiety as he navigates a confluence of economic pressures threatening his livelihood. Like many barley farmers across the United States, Konen is grappling with the dual challenges of potential tariffs on exports and a decline in domestic beer consumption, compounded by rising input costs. The situation has created a climate of uncertainty, leaving farmers questioning their ability to remain viable in the long term.
Konen, who also serves as vice president of the National Barley Growers Association, expresses deep concern about the future. "Down here on the farm we’re already stretched pretty thin financially," he says. "It makes us wonder whether or not we can even stay in business." His apprehension stems from the potential loss of crucial export markets, particularly Mexico, which currently receives approximately half of Konen’s barley. This barley is used to produce popular Mexican beers like Modelo, Corona, and Pacifico, some of which are then imported back into the United States.
Mexico is a significant importer of U.S. barley and the largest importer of U.S. malt, a key ingredient in beer produced from germinated barley kernels. Should Mexico retaliate against U.S. tariffs by imposing its own levies on American barley or shifting its sourcing to other countries, the impact on U.S. barley farmers could be devastating. Experts warn that such a move could further exacerbate the economic challenges faced by these farmers, already struggling with decreased domestic demand.
The situation is further complicated by tariffs imposed by Canada, the largest importer of U.S. malt barley, which went into effect on March 4. Frayne Olson, a crop economist at North Dakota State University, highlights the severity of the situation, stating that farmers fear tariffs could "decimate" U.S. barley exports to Canada.
The trade disputes, initiated by U.S. President Donald Trump with the stated aim of curbing illegal drug and migrant flows, have been criticized for their detrimental impact on American farmers and businesses. Despite the President’s attempts to downplay the consequences, farmers like Steve Sheffels, vice president of the Montana Grain Growers Association, argue that they are the ones bearing the brunt of these policies. "The people who pay for tariffs are the farmers," Sheffels asserts. "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."
Beyond the direct impact of tariffs on export markets, farmers are also facing rising costs for essential inputs. Fertilizer, a crucial component for barley production, is largely sourced from Canada, and tariffs are expected to drive up its price. Similarly, tariffs imposed on imported crop chemicals from China have already led to increased costs, squeezing farmers’ profit margins even further.
Sheffels expresses a pervasive sense of anxiety and uncertainty within the farming community. "There’s a sinking feeling and a feeling of dread that things are bad, and things are going to stay bad for a while," he says. "We are scared almost to death about tariffs."
Adding to the farmers’ woes is a long-term decline in U.S. beer consumption. According to Bart Watson, chief economist at the Brewers Association, beer consumption in the U.S. reached its lowest level in over 40 years in 2024, as consumers increasingly opt for alternative alcoholic beverages. The rise in popularity of hard seltzer drinks and canned cocktails has posed a significant challenge to the beer industry, further eroding demand for barley.
Changing consumer preferences are also contributing to the decline in beer consumption. Gen Z-ers and millennials are drinking less alcohol than previous generations, and growing health concerns are prompting some individuals to abstain from alcohol altogether. In January, former U.S. Surgeon General Vivek Murthy advocated for cancer warnings on alcoholic beverages, while multiple studies have suggested that no amount of alcohol is safe to drink.
The combination of declining demand and rising costs is putting pressure on breweries, which are faced with difficult decisions regarding pricing. Watson suggests that major beer companies may choose to maintain stable prices in an effort to preserve market share and sales volume. However, craft breweries, with their smaller scale and tighter margins, may be forced to raise prices to absorb higher costs.
The 25% tariffs imposed on metals by the White House are also likely to impact the beer industry, increasing the cost of kegs and cans, which are often manufactured from steel and aluminum imported from Canada. The price of imported beers like Corona and Modelo, produced in Mexico, could also increase if Mexico retaliates with tariffs on U.S. malt and the finished beer faces additional tariffs upon entry into the United States.
Watson emphasizes the challenging situation facing breweries, stating that they will have to decide whether to absorb the higher costs or pass them on to consumers. "Breweries are going to have to choose to pass this along or choose to eat it," he says. "It will have an impact."
For Montana barley farmers like Mitch Konen, the future remains uncertain. The combined pressures of potential tariffs, declining beer consumption, and rising costs pose a significant threat to their livelihoods and the viability of their farms. As they navigate this challenging landscape, they can only hope for a resolution to the trade disputes and a stabilization of the market that will allow them to continue farming for generations to come.
