Diageo has offered a deal to Scotland's malting barley growers. The drinks giant has proposed cost-plus contracts to the industry, according to a report in the Herald.

Barley growers in the country have had a torrid time recently, with poor prices last autumn and excellent weather allowing the sowing of winter wheat to expand. It is expected that the UK will have the lowest area of spring barley for 45 years this year. The value of barley has gone into freefall since 1996 as a result of a world surplus of malt and currency problems.

Speaking to The Herald, Diageo's cereals procurement manager Alan MacDonald said: "We have been working closely with three groups (of Scottish farmers) and we reckon that the variable costs involved in growing, including seed, fertiliser and chemicals, are in the region of £200 per hectare."

David Houghton, the chairman of the National Farmers Union of Scotland, welcomed Diageo's move, but warned that the contracts must be transparent to avoid any unpleasant surprises for farmers. "Too often in the past, farmers have signed up with contracts and then got a nasty shock when they see the final returns," he told The Herald.