Montana barley growers and beer brewers are in a state of ferment as a proposed alcohol tax, designed to help fund health care reform, floats around Congress.
A letter signed by a consortium of Montana ag groups, including the Montana Grain Growers Association, Montana Farm Bureau Federation, Montana Farmers Union, Montana Agri-Business Association and the Montana Grain Elevator Association, warns that higher beer taxes will harm the state's sizable barley industry.
"As with most 'sin taxes,' they're a tax of diminishing return," says John Youngberg of the Montana Farm Bureau Federation. "As you increase the price of it, people quit buying as much. If they quit buying as much then it affects our folks who sell the malt barley...It doesn't take much of a change in the market to affect how much malt barley we sell here in Montana."
According to the National Agriculture Statistics Service's 2008 figures, Montana ranked third in the country in barley production, producing more than 31 million bushels, or about 15 percent of the country's total.
"We grow a lot of barely," Youngberg says.
And Montana also boasts a lot ofbreweries.
"We don't think it's going to pass," says Neal Leathers, Big Sky Brewing Co.'s president and co-founder. "But if it did, it would be a huge issue for brewers in general and craft brewers in particular, since it's set up to be tied to the strength of the beer, and the stronger the beer the higher the tax level."
Leathers says customers would see the tax's impact at the checkout line.
"By the time it would actually hit the store shelves," he says, "I think the average six-pack would probably have a 50-cent increase, and for some of the higher alcohol beers it might well be pushing an extra buck a six pack."
For Big Sky, the tax would come at the worst possible time. Like a lot of breweries, the business is already struggling to hold its prices in the current economy.
"That's tough enough to do," he says, "and if you have taxes making you raise your prices, that's not a good thing."
Montana Sen. Max Baucus admitted last week that the beer tax proposal was "on life support." Rep. Denny Rehberg, co-chairman of the Craft Brewers Caucus, has already spoken out against the tax.