The Wall Street Journal had an interesting article last week about an apparently growing trend, entitled Hop Farmers Find Growth Business. Essentially it chronicles how many people saw all the stories that began last fall reporting the shortage of hops and the huge rise in prices for the essential beer ingredient and saw an opportunity. As a result, despite the steep learning curve and heavy capital needed, a number of people have apparently turned to growing hops. Some are brewers hoping to control at least a small portion of their own destiny, some are part-time entrepreneurs looking to cash in, while still others are trying to make a go of at as full-time hop farmers.
I know several brewers who have planted small amounts of hops on their existing property or have bought or leased additional land just for that purpose. In no case will it meet all their hop needs, but it will be a great story to tell, that they’re using at least some hops that they’ve grown themselves. Plus, many of the brewers I’ve talked to think it will be fun (though they know it’s hard work) and just want to see if they can do it themselves and outside the ideal climate of Washington, Oregon and Idaho. Hops did used to be most prevalent in upstate New York until the mid-1800s when a blight wiped out the entire industry there, so we know there are other climates where it will grow effectively. Curiously, at least two people told me they tried to get some help from the Hop Growers of America, a trade group that represents hop farmers in the tri-state area, but were soundly rebuffed. Their website states they “represent and promote the interests of U.S. growers” but dig a little deeper and you’ll see that’s not exactly accurate. Under “Growing Regions,” itself under “U.S. Hops,” the area even shown are the same three states of the Pacific Northwest Hop Growing Region. Since I know there are other hop farms — albeit quite small — around the country, when I inquired about those I was essentially told they were too small to matter.
This is one of those curious examples of how related, but competing, interests can diverge. It’s in the best interests of brewers to have a steady supply of all the hop varieties they want to use for an affordable price. I should probably say “lowest” price, but I believe most, if not all, brewers do sincerely understand and accept that hop farmers deserve a fair price. But, of course, the best interests of hop farmers is to get the best fair price they can and maximize the amount they can realize for their crops, usually on a per acre basis. The point of divergence often comes when trying to define what constitutes a price that’s “fair.” But you can also easily see why they would view any new hop farmer — no matter how small — as competition, especially outside the four main growing areas in the three typical Pacific Northwest states. And so they would be protectionist, and would not be willing to assist in their own demise or dilution of market share. I get that. But it is still a little disappointing that they wouldn’t be willing to help out a brewer growing such a small amount that it can’t be reasonably seen to be serious competition.
My friend Ralph Olson, who owns HopUnion, is quoted at the end of the Wall Street Journal piece warning that many of the new crop of hop farmers “won’t be in business in a few years. Prices will come down, and insects can wreak havoc.” And I think that’s essentially true. From everything I’ve learned talking with hop farmers and visiting the hop growing areas, hops is a difficult business that requires more effort than other kinds of farming. The processing equipment is capital intensive and dealing with potential pests and diseases a veritable nightmare. Many of the current hop growers are third or fourth generation, farming the same land as their ancestors. They say that hops gets in your blood and that is what keeps them in the game. Seeing what’s involved, I believe them.
But I also believe that the craft beer brewers got a little spooked by this last shortage, coming somewhat unexpectedly at a time when they were riding high on several years of double-digit growth. I myself had that sinking feeling when just as things seemed to be going so great for the industry, it appeared that the hop shortage/price increases might bring that growth to a screeching halt. Some brewers felt that the people who sell hops could have done a better job last year (and even before that) of managing the supply and the pricing and should have done more to warn the industry about the impending shortages. After the shortages revealed themselves, they encouraged every brewer to enter into long term contracts to ensure their price and supply, but prior to that time some brewers were unable to get a hop contract at any price.
Again, what I think we’re seeing here is competing interests, normally symbiotic, but occasionally — like now — less so. According to August 1st estimates, it appears this year’s harvest will be up 27% over last year. I haven’t seen that broken down by varieties yet, but most of the new acreage planted was the high alphas preferred by the large breweries rather than the diverse aroma hops that craft brewers need. So even with what appears to be good news overall, I expect that there will be some hop varieties still scarce and that prices won’t drop much, if at all.
But as long as there are still opportunities to make a living growing hops, we’ll see people try their hand at it. We can embrace them, as most brewers have done, or discourage them, like it would appear the hop growers, or at least the trade group that speaks for them, has done. While I can’t fault them for wanting to protect themselves and their market, especially those that have stuck with it during the lean times, it still strikes me as a somewhat bitter response. It will be interesting to see how many breweries make their beer with hops from unusual sources this fall, though in truth any hops planted for the first time last spring will not be at full yield (that takes three years). But with necessity being the mother of invention, I’m sure we’ll see a lot of creative innovation nonetheless.
Hops just before harvest time in Yakima, Washington, where over 70% of American hops are grown.