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More hops! More hops! More hops!

The Associated Press has good news for us:

Some Yakima Valley hop growers are pulling other crops to plant the beer-flavoring ingredient and planting new acreage in response to a worldwide shortage that caught everyone – brewers, dealers and growers – by surprise.

This story makes me giddy.

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.

The story further reports that hops acreage expanded about 2,000 acres at the end of 2007 and could grow by another 5,000 this year. Ralph Olson of Hopunion thinks the figure could be closer to 8,000 acres, which would be a 25% jump in acreage.

“It’s basic economics,” said Ann George of the Washington Hop Commission. “When everyone started making orders, we found we had a shortage. The price went crazy. People are willing to spend large sums.”

And she correctly points out that prices will abate (which doesn’t have to mean they will plummet to the ridiculously low prices of recent years) when supply equals demand.

“The big challenge is finding the perfect balance. How do we hit that and keep the brewers happy and not go into oversupply?” she said.

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13 Responses to More hops! More hops! More hops!

  1. Thomas April 10, 2008 at 12:11 pm #

    Have a link for this story?

  2. Stan Hieronymus April 10, 2008 at 12:18 pm #

    Sorry – meant to put it at the top, and now I have (“has good news”).

  3. Thomas April 10, 2008 at 12:20 pm #

    Got it, thanks!

  4. Alan April 10, 2008 at 3:55 pm #

    As noted earlier in the week, grain prices are ready to drop, too, given the increase in acreage and production. I stopped in at a favorite craft brewer on the way back from Toronto who shared his expectations that of course farmers would jump in – and probably too many potentially leading to a bottoming of prices in, say 2010 or 2011. But we all, of course, expect that the present jump in beer prices (which my local craft brewer did not participate in) will be followed by a reasonable drop once the supply chain does what it does.

  5. Stan Hieronymus April 10, 2008 at 4:28 pm #

    Maybe these will help offset the fact energy prices – both the cost of getting the ingredients to the brewer and the cost of drinking beer too far from where it is brewer – don’t seem to be going anywhere but up.

    And what about grain prices long haul?

  6. Swordboarder April 10, 2008 at 4:53 pm #

    Alan, who is your local craft brewer and what style beers do they make?

  7. Jeff Alworth April 10, 2008 at 5:57 pm #

    As a brewer in Oregon points out, the three-year start-up may be long for sun-drenched Yakima. Could see some production earlier.

  8. Alan April 10, 2008 at 7:00 pm #

    Stan – he was actually more unhappy with insurance costs rising. We up here have not had the explosion (err!) in gas prices seeing as part of the US rise is due to the lower US dollar. In the mid-90s our gas in Ontario was only say 60% (59 cents a litre) of what it is now (1.05). I recall about the same time in Maine gas was around 33% (1.12 a gallon) of what is is now (3.30ish?).

    SB – nunya though I do have a nice hoppy IPA in hand. He said he did not have to pass it on.

  9. Stonch April 11, 2008 at 6:06 am #

    I fail to see why an increase in the price of hops – even by a large amount – justifies a significant jump in beer prices for the consumer. Surely the cost of the ingredients of beer is a minimal part of the total?

  10. Todd April 11, 2008 at 7:31 am #

    I heard this winter about many virus infected hopyards. I hope they didn’t get cloned –and then sold to hopeful growers.

  11. brendan April 11, 2008 at 8:02 am #

    I hope that of those acres planted, some of it at least is aroma hop and not all Super-mega-mega-titan-Alpha hops.

  12. Stan Hieronymus April 11, 2008 at 10:00 am #

    Stonch – Ingredient prices are a big deal, with malt contributing more than hops.

    I talked to a brewery that recently boosted its prices to distributors a little over $2 a case, so about 50 cents a six-pack. However that distributor won’t just increase a six-pack 50 cents, because they mark things up on a percentage basis. Same with the retailer the distributors sells to. So the increase ends up being (at least) a dollar a six pack.

    Hiking a $7.49 six-pack to $8.49 is a 13% increase. That’s a little over 4 pounds for 72 ounces of beer, given exchange rates, BTW.

  13. Stan Hieronymus April 11, 2008 at 10:02 am #

    Brendan – I guarantee you that by Wednesday afternoon at the Craft Brewers Conference I will be asking about aroma hops.

    Not just what is being planted in the NW, but also about Germany and trying to find out about what’s going on with the Styrian Goldings in Slovenia. There’s a real domino effect with those shortages.

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