| Back in October of this year the news of an | | | | increased over the last 10 years (1995-2005) to |
| impending hop shortage claimed that prices will | | | | approximately 3% coinciding with the fall of |
| skyrocket for their favorite craft brew and that the | | | | communism and the establishment of capitalistic free |
| price of hops in general would rise to all-time highs. If | | | | market economies in Eastern Europe and China. |
| you are a micro/craft brewer perhaps the situation | | | | During the same 10-year period the world acreage |
| of the world hop market should be taken very | | | | for hops has decreased by 35%. The brewing |
| seriously. If you are a homebrewer, how will this | | | | industry could help by sending the right signal to the |
| affect you? | | | | growing community by committing to long-term |
| Supply shortages are estimated between 700 and | | | | contracts of at least 4 years duration in order to |
| 1,300 metric tons alpha or approximately 8.6% to | | | | entice growers to stay in business and to make the |
| 15.5% of the annual worldwide demand due to the | | | | necessary investments into modernizing their |
| poor 2006 European crop. The main factors that | | | | operations. Of course, forward contracts are not a |
| have contributed to this situation are that Europe's | | | | guarantee against crop failures they greatly enhance |
| 2006 crop was ruined by heavy rains; while Australia's | | | | the farmer's security of supply and represent an |
| was cut by a severe drought and Canada's was "just | | | | effective tool for forward planning. |
| average. Slovenia (grower of Styrians) lost at least 1 | | | | Right now the craft-breweries are paying tens of |
| 3 and possibly as much as 1/2 of their crop to a | | | | thousands of dollars right now for something that will |
| hailstorm. England is almost out of the hop business. | | | | not be used until the following year. When there is a |
| Their acreage of 2,400 in 2006 (down from 17,000 in | | | | price increase in raw ingredients it will be passed on |
| 1976) represents only 2 percent of the worldwide | | | | to the consumer, possibly by between 50 cents and |
| acreage. The Czech crop was down 25% and | | | | $1 per six-pack. The impact will be higher beer prices |
| estimated alphas on Czech Saaz from the 2007 crop | | | | or your favorite hop-heavy brew might have a |
| are 2.7 - 2.9. The German crop is average at best | | | | slightly different taste. |
| with earlier aroma hops coming in below normal (such | | | | What's the bottom line for homebrewers? Well, |
| as Hallertau Mittelfruh). New Zealand and Australia | | | | certain varieties are getting more expensive and a |
| crops this year (which arrived in the US in June and | | | | few varieties will run out. Brewers have to be willing |
| July) were normal. | | | | to try other varieties. Homebrewer's should prepare |
| Even though US hops for 2007 was an average crop | | | | for the potential need to substitute different hops, |
| a warehouse fire in the US that destroyed 110 metric | | | | to replace varieties that currently give your favorite |
| tons alpha. And acreage reductions as a result of low | | | | brew their "signature" flavor. In fact there may be |
| prices in the last years and a tendency of most | | | | slight flavor variations over the next several years, |
| global brewers to rely heavily on the spot market | | | | as the hop industry works to correct this situation. |
| and not on forward contracts have caused grower's | | | | Already some of larger online homebrew retailers |
| not to be able to invest in their hop fields and | | | | have raised their price and a number of "temporarily |
| equipment. For 10 years, Northwest farmers grew | | | | out of stock" statements can be found in the "Hops" |
| too many hops. Prices plummeted. Farmers grew less. | | | | section. The good news for homebrewer's is that the |
| Local farmers were lured to plant more lucrative | | | | cost of hops per five gallon batch is negligible and |
| crops, such as cherries, apples and grapes, or to sell | | | | results in an added cost of pennies per glass of |
| their land to be built on. Now, with increased beer | | | | brewed beer. So while all of your micro/craft brewed |
| output, the brewer's are in need of hops and a lot of | | | | drinking buddies are complaining about the cost of |
| the hop farmers are gone. | | | | their favorite beer, you can smile a little as you are |
| The long-term average growth in beer output has | | | | brewing your next batch of beer. |
| ranged between 1- 2%. However, annual growth has | | | | |
