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Thursday, April 10, 2008

Hop Talk

John Foyston has posted an article (not exactly clear who wrote it) about the movement to plant new acres of hops in response to the hop shortage--and concomitant rise in prices.

Washington, Oregon and Idaho grew hops on 30,911 acres last year, according to industry figures.

Growers are feverishly reconditioning yards and adding new land at an unheard-of pace. Growers are receiving multiple-year contracts with prices front-loaded to help them shoulder the estimated $6,000-per-acre cost to plant yards and also upgrade equipment....

Northwest hop acreage, which expanded by about 2,000 acres last year as the lack of supply became apparent, could grow by another 5,000 acres this year.

Ralph Olson, general manager of grower-owned HopUnion of Yakima, a buyer who deals primarily with smaller craft brewers, thinks the figure may be closer to 8,000 acres by the time all is said and done. That would be a jump of nearly 25 percent in acreage in one year.

"The expansion is being driven by demand," Olson said. "Part of it stems from this being an international market. You have a lot of Eastern Europeans who have the Euro, a strong currency now. They are short and have a huge demand for hops from anywhere. They will pay whatever.

Foyston also sent out an email about the article, and two brewers responded. Since they weren't commenting for attribution, I'll leave the names off, but the content is interesting. Brewer A began with some sober caveats to the news:
I want to remind folks that hops take two years to produce substantial amounts of hops. Also, there were many low alpha crops pulled to plant higher alpha hops, which means next year could be even shorter in supply. Those new hops won't produce this year. I am not trying to destroy hope, and there should at least be a little more out there, but I am being asked to contract hops forward until 2012, which is totally nuts. I should not have to commit to pricing that far in advance.

One last thing to consider is that world beer production is on the rise. The Chinese have made huge growth in their new economic situation and people are drinking beer. Problem is they need hops too. The good news is that in the future there will be more hops, just maybe not this summer.
Point taken. But then Brewer B decided to kindle hope a little more. Said he:
Yakima grown hops produce a small crop the first year.
So take from it what you will.

I do want to add one more piece, though. To elaborate on Brewer A's comment, the total acreage of hops doesn't tell the whole story. The industrial brewers don't add hops for flavor, but to balance the (albeit paltry) malt--at levels below detection. Their interest is in the highest-alpha hops available (that is, the most bitter), because these require the smallest amount to do the trick.

Craft brewers, on the other hand, rely on hops to flavor the beer. As you well know, the difference between varieties is broad, and craft brewers rely mainly on middle- to high-middle hop varieties.

The next thing we need to learn is which hop varieties the growers are planting. Because, if they've ripped out all the Cascades and are replacing them with ultra-high alpha hops, we could all be worse off. So, tentative signs that things are improving, but we should regard them with caution.

2 comments:

iggir said...

this is interesting...when i was in Napa last week, the tour guide said that land was around 1 million dollars an acre. most people were (of course) growing grapes...apparently small, homestyle vineyards grow grapes and sell them to the big wineries. so owning the land and growing grapes on it is how to make it profitable.

i wonder if Oregon will go through a similar experience with hops?

time to buy good land now for hop growing Jeff - J and I will go in with you ;)

Stan Hieronymus said...

Jeff - It was an AP story.

The point would be we are headed in the right direction, but prices aren't coming down right now and they shouldn't go as low as before.

As to contracting out, by doing that brewers give growers the confidence to make the investments they need to. (Read what the farmers have to say in the story. Even when getting higher prices late last year they got an average of something like $2.70 per pound.)

As to what varieties will be available . . . Both American hop brokers and German hop farmers will be at the Craft Brewers Conference in San Diego next week and I will be asking for details.

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