Ann: GrainCorp upgrades FY22 earnings guidance, page-45

This extract is lifted from GNC spinoff UMG's trading update of Tuesday 26 April 2022. It is relevant to GNC as one would bet London to a brick that GNC could well have partly or fully supplied this barley required by UMG:


Canadian drought impact

As disclosed in the Company’s November FY21 results announcement, and at the Annual General
Meeting in February 2022, the Canadian business has been impacted by the severe 2021 drought
in Canada which caused a 35% reduction in thetotalbarley crop from the prior year4. United Malt is
the largest buyer of malting quality barley in Canada.
The drought has also reduced barley quality.Barley is a perishable commodityand lower quality
barley degrades at a faster rate than a normal crop. Thisleadsto reduced yields and higher
production costs as more barley is required to produce the same quantity of malt,expected to be
~$10–13million in FY22, of which ~$5.5million has been incurred in the first half.
The significantly reduced Canadian crop has resulted in the Company incurring additional logistics
coststo import barley intoour processing plants inCanada from Denmark and Australia, expected
to be ~$10–12 million in FY225,of which ~$2.5 million has been incurred in the first half.
The Company has incurred these additional costs in order to fulfil its commitment to provide
uninterrupted supply of quality malt tocustomers to allow them to continue producing food and
beverage products. The combined impact of additional barley required to address reduced quality
and yield and additional logistics costs for importing barley is expected to negatively affect FY22
EBITDA by ~$20–25 million (as noted above).
These added costs are expected to be temporary. Planting for the 2022 Canadian barley crop has
commenced and the new season crop is expected to be harvested in early FY23.Agriculture and
Agri-Food Canada’s (AAFC)latest Canadian barley outlook is projected at 10.6 million tonnes
production, 52% higher than 20214, assuming a return to normal weather conditions and trend yields.