Hop Growers report "cautious optimism"

Modern Brewery Age,  Nov 6, 2000  

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Hop Growers of America reports a "sense of cautious optimism" about prices for this year's hop harvest, noting that prices for some key super alpha varieties cleared the $3/lb. mark in the United States, and 800 DM/ZTR in Germany. "Growers seem to be waiting to see where the market will take them in the hopes that this year could be the next price spike in the infamous hop cycle," says Douglas MacKinnon, executive director of Hop Growers of America. "[But] with no long-term contracts between growers and merchants no longer the norm, this year's spike may be very short-lived. If this becomes the case the contract and spot prices return to their abysmally low levels, the future for many hop growers is bleak."

MacKinnon reports that only 2/3rds of the U.S. hop crop for 2001 is contracted. "There have been no reports of any contracts offered at recent and few expect there will be in the coming weeks," he says. "Traditionally, the bulk of forward contracting occurs between the end of harvest and the spring of the following year. We therefore have plenty of time for the current market to change for better or worse."

MacKinnon reports that the 2000 U.S. hop crop is up slightly over 1999 figures, but 3-5% below the pre-harvest estimated production of 68.28 million pounds. "If current world acreage levels remain the same and if the 2001 crop year produces an average or above average crop, there could easily be a 5-10% increase in worldwide production of hops relative to the year 2000," he says. "The potential hop acreage already in the ground around the world is significant, but has been disguised by poor performance this year."

MacKinnon calls the U.S. hop growing industry a "frail shadow of its former self," after the generally low prices of the past decade.

"A handful of farmers have survived, very much the worse for wear," MacKinnon says. "Prices above the cost of production must become the norm for the hop industry to survive. Rather than positioning to exploit price spikes once every decade, growers, merchants and even brewers would benefit from a more stable system under which respectable prices are available from year to year."

MacKinnon asserts that growers selling hops for prices below the cost of production jeopardize the long-term viability of the entire U.S. hop growing industry. "Growers must remember that as we enter this time of sales and negotiations is that the consequences of selling hops for a price below production is far-reaching, significant and very costly for everybody," he says. "The price of cheap hops is more costly than it appears."

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