CNYBrew.com: Hops of wrath

Tuesday, November 20, 2007

Hops of wrath



So far I have seen a lot of conversation about the hops shortage and what it is going to mean to brewers, both home and craft. Ted offered up a great post on pricing which spun into an ongoing conversation about how the hops shortage will affect us as homebrewers.

I'll admit, at first I figured that it would only mean a jack up in price and I would suck it up and brew on. However, it's much worse than I could have imagined. LHBS's all over the country are rationing hops to 2oz per kind of hops you buy. I went to my LHBS and the fridge was almost bare! He said he had ordered 800oz of hops and gotten 300 of them in.

Now as homebrewers, we are going to make changes much like our older brothers (and sisters for the sake of being PC) the craft brewers. Recipes that are milder in hops and have a greater malt profile will become the norm and we will brew on. Weak and infant breweries will probably die off and the strong breweries will prevail from this shortage. For homebrewers however, I honestly can’t see it having the kind of impact regarding peoples interest as it would to a small craft brewery.

With all of that said, I would like to offer my take one the hops shortage based on what I have been reading and what I understand:

Background

The hops industry has a turbulent history to say the least. As a cash crop it is heavy on expenses and light on profit. Globally, Germany and the United States supply two thirds of all the hops. In the US, Yakima Valley is chief producer of hops supplying 70% of all domestic hops.

Traditional hops producers such as England and the Czech Republic have decreased their production over the years. England is nearly out of the business all together contributing only 2% of the global hops production.

Why the decrease in production?

In the US there has been a 30% decrease in hops production since 1995 for a verity of reasons. Yakima Valley farmers have been turning in the farms to developers who are building houses and malls due to the high cost of growing hops and the low profit margins. The once rich hops fields are attractive to the booming Yakima Valley housing and development market.

This combined with "spot buying" of hops (consists of breweries seeking out inexpensive short-term year to year deals with hop farmers instead of the three and four year contracts) has created an environment where a lot of choices are out there for hop farmers and unfortunately at this point all of them are more attractive than dealing with the instability of hops farming. Spot buying was originally a way for small microbreweries to make ends meet, but in recent years many of the larger breweries have joined in and are now paying the price.

To further the shortage there was a fire at a Yakima Valley storage facility the destroyed 110 metric tons of hops (it's a lot). Europe has had two poor harvest years due to weather ranging from severe rains to hail. All of these coupled with normal to sub-par production years in other regions has led to a perfect storm.

How is this going to affect me?

No one knows. At best, we all pay a lot more for hops for the next few years. At worst hops rationing kicks in and homebrewers will have to start scrambling for their supply. Already I have heard multiple reports that LHBS are going to be only allowing brewers to buy 2oz of any one kind of hops.

The situation is still early, but unfortunately as Ed from my LHBS said "we are the low man on the totem pole" referring to homebrewers and the priority to supply us with hops.

What's next?

Rock soup? Packing up the wagon and headed to the rich plush growing fields of California (instead of Okies, maybe they will call us 'hoppies')? Who knows (OK, so I am being a little dramatic). There are a lot of things working that at least from the outside, give the impression that there is no short-term solution to this problem. Yakima Valley has become a popular place to live and prices are going to have to really skyrocket just to keep the growers we have. The price of wheat is up at $10 a bushel now, up from $3 a few years ago and this is a much more inexpensive crop to grow compared to hops. That coupled with the allure of selling out altogether leads me to believe that there is not going to be an end to shortage anytime soon.

Unfortunately the outlook is grim. Things will have to get bad before they get better and it's not going to happen overnight. Even if it does take place and hops is suddenly a very profitable cash crop, the reason that it will be profitable is because we will be paying for it. As one might expect it will have the most noticeable impact on craft brewers as they struggle to make ends meet. This will translate to increased prices on shelves and eventually a retarding of the once booming craft brew industry.

For the last few years craft brew has been the only growth in the beer industry. In the beer production world, the yellow fizz producers have battled over market share, but seen the only growth has gone to the craft brew market (up 12%). However, this could serve as at least an anchor to slow this growth. Is it the end of the world? No, but it will be the end to a lot of breweries unfortunately.

What about us?

Well we will all need to wash the salty tears in our beer down and move on. I would recommend that if you have a LHBS and you have been shopping online for lot of things to save money, you consider going back and keeping your money close to home. After all, it’s better for the environment that mailing things halfway across the country to save a buck. LHBSs are going to have to raise prices and there will be some fall out, suck it up and keep your money close to home. The last thing on Earth you want is your LHBS to close it's doors, that would suck.

Two other important ways that we as homebrewers can help out is brew on and get other people to join! Homebrewing is fun and if there are people with money they want to spend, products and retailers will be around. Are we going to be able to supplant the current craft industries usage? No, but just keep in mind that we want people drinking good beer. Even if they don't brew it, they will buy it. Once you go craft you never go back. This will help the industry work through this turbulent time.

Sorry for the depressing post. Relax and have a homebrew. Cheers

Reference:
http://www.yakima-herald.com/page/dis/290075330547310


2 comments:

Adam said...

Wow! I just skimmed this, but, thanks for all the background. I'll dig in when I have a bit more time.

Andrew said...

I spent a wonderful weekend with my daughter/son-in-law and was enchanted by a brew that they made at a micro-brewery in Sacramento. I was also given an education on the supply of hops and lack of it. Better yet,I was gifted with some! As a Ca. farmer in the fresh fruit business, I was skeptical of what they had told me. After reading the "Hops of wrath", I now understand what is going on. I have been looking at hop production