Vertical Integration for Future Growth of a Malting Operation

Growing Malt

Vertical Malt, a malting operation in Crookston, Minnesota, has integrated the malting process to add value to their end products. What started as a father-son brewing hobby has turned into a malting business that produces 175 tons of malt per year. They had their first commercial sale in 2016 and have been thinking vertically ever since. Barley is a common grain used for making malt. Adam Wagner, the president of Vertical Malt, says it takes 150 acres of barley at 70 bushels per acre to provide all they need for the business. They grow, harvest and clean the barley and malt the seed. Malting is a process of germinating the grains by soaking them in water and then drying the seeds out. This requires a special system with good airflow. The grain is then cured, which is often where the flavor gets added. After curing, it is cleaned again to remove the root material that isn't good for a brewer or distiller. The goal of the entire process is to convert the hard starches stored in the kernel and make them accessible during the brewing process to be converted into sugars. [pfi_gallery ids="51050,51051,51053,51052"] Vertical Malt grows a malting barley variety called AAC Synergy that was developed in Canada. It is a two-row malting barley that is adapted for the northern plains. They are 70 miles from the Canadian border, so this variety suits their growing conditions.

Diversifying and Adding Value

Vertical Malt also plans to build a new mill to help them expand into the flour milling industry. The new mill will be dedicated to malted barley flour and will have a capacity of 4,000 tons annually, with the potential capacity to increase to 30,000 tons annually. The roller mill they are installing provides more flexibility for developing different products. Adam says, “We're always looking to add value to other types of grains.” They will  offer toll milling or grinding services to farmers who want to have high quality meal or flour. The mill will have smaller product minimums than a large-scale mill, which will make toll milling more accessible to small scale farmers. Every bag of enriched flour produced at the North Dakota State Mill has malted barley flour as its second ingredient. The NDSM does not produce any of their own malted barley flour, because they don't want to risk the contamination it could cause in their mill. The NDSM uses a significant amount of malted barley flour each year and will be Vertical Malt's largest customer. Talks with other industrial mills are already happening. Other customers include bakers that want malted barley flour and small brewers, craft brewers, distillers and businesses looking for whole malt as well. Other long-term plans include increasing their malting capacity by building a dedicated malting facility. This will bring more processes in-house and increase their production while lowering the cost for malted barley flour. It will also allow them to explore other value-added products, such as roasting, pelleting, flaking and syrups.

Starting a New Venture

Startup ventures, including those on farms, rely on problem solving and innovation. “Any farmer who's had to worry about not being able to get a part for three days has to come up with a pretty innovative solution to the problem,” Adam says. This level of persistence is key to solving problems throughout planning and implementation. Adam says, “It is important  to leverage your time in the off season. If you can dedicate some of those winter months to really putting together a complete business plan and really trying to scrutinize the heck out of any type of product that you might try to bring to market, it will save time and headaches down the road.” Additionally, recognize what kind of leverage you have, aside from time. For some people it might be financial and for others it might be machinery and land. It also might be identifying products you already grow on your farm that you can add value to. Finding partnerships with larger industry players can be beneficial for both the farmer and the industry.  According to Adam, the question to answer is, “What kind of problem are you solving for your industrial counterparts?” Larger mills do not want to produce malted barley flour in-house because of the cross-contamination risk. Vertical Malt saw this as a problem they could solve and then used the solution, a malted barley flour mill, to create more value-added products. Farmers are expected to be a lot of different things: diesel mechanics, meteorologists, engineer, economist and more. Tapping into these skills and experiences is a great way to start a new venture.