By Gail Oberst
Can we expect a hop shortage in the near future, driving Oregon IBUs down and prices for your pint up?
That was certainly the buzz a few months ago, when an article in the Wall Street Journal, followed by a lemming-like response from other writers, heralded gloom and doom for “small” brewers – producers of less than 15,000 barrels per year, thus, all but about seven of Oregon’s 170 breweries. Suggesting that a hop shortage is looming, the article warned that our beloved hoppy beers would soon cost too much for anyone to drink or give way to – Baccus forbid! – low-hop beverages like lagers or lambics or even meads and ciders.
But is there truly a nationwide – possibly world- wide – shortage brought on by your intense love of hoppy beers?
Psych! No there isn’t!
In a word, no, there’s no hop shortage, according to national and local experts.
Or to be more precise, there is no shortage of hops in the real sense, as it was in 2007-2008 when – for various reasons both environmental and economic – we suffered a real shortage, making the current situation far too mild to be called a “shortage.” But without a doubt, demand for hoppy beers has changed the market and brewers would be smart to plan.
Growers are doing their best to respond to a heavy demand for aroma hops, especially Cascades, the workhorse of the IPA and other hop-centric beers, said Nancy Sites, executive director of the Oregon Hop Commission. And they are doing a great job of it. Oregon’s potential harvest this year is nearly 800 acres more than it was last year and more than 570 of those acres are strung up with Cascades, the mother of aroma hops. Centennial, Chinook, Citra, Golding, Crystal, Mt. Hood, Perle, Sterling and Willamette all saw increases in acreage this year in Oregon. If you were a brewer counting on Nugget – currently Oregon’s largest acreage hops – you might be looking at a tight market, as acreage fell by just under 300 as demand shifts to other types. But replacement hops were plentiful. And Washington, which has 29,021 acres in hops this year (to Oregon’s has 5,559), has grown by nearly 2,000 acres since last year. “Shortage” is a word you would use when hop acreage falls from 17,000 acres to 5,700 acres, as it did in 1954. Even Idaho, with its 3,812 acres of hops, is up by more than 400 acres this year. Hardly the numbers of shortages, points out Chris Swersey of the Brewers Association.
So where does the Wall Street Journal get its idea that there’s a “shortage” of hops?
The word is sometimes used when prices rise, which they are apt to do as demand and values increase. And there has been a drop in the number of acres devoted to bittering or alpha acid hops – Galena, Nugget, Millenium — as brewers replace them with the aroma hops – Cascades and Centennials. And, as large brewers follow the consumer demand for aroma hops, those may quickly disappear from the open market, making contracts even more important for the small brewery.
The Job’s Not Done Until the Paperwork Is...
Perhaps those local brewers who chose not to enter into contracts or those newer brewers who haven’t established relationships with hop growers and distributors may find themselves short in some cases, Swersey said. More than 90 percent of Brewers Association members maintain contracts for hops, guaranteeing them product and reducing the chance of “shortages.” Many brewers establish hop contracts long before they even brew their first professional beers. These agreements are safeguards for big and small breweries, Swersey added.
In Oregon, some varieties are in short supply, but these are mostly privately licensed varieties where owners are maintaining higher prices to avoid oversupply, Sites said.
Sites said there’s reason to believe aroma hop acreage, as opposed to bittering hops, will continue to expand in 2015. “We are also trying to get a handle on how many acres are being grown in other parts of the U.S., and are still working on surveying those growers,” she said.
Doubtless, she said, the market is tight. “It sounds like ‘spot market’ hops for some varieties are a little harder to find and the price is higher right now because there aren’t a lot of ‘extras’ out there that are not spoken for in the form of contracts. Many brewers now are contracting for their hops two to three years out to ensure they get the amount and varieties that they need. Brewers that do contract usually end up paying a little less than brewers that wait to buy on the spot market,” she said.
But enough shop talk, what about my beer?
Whether rising hop prices will impact the price of your beer will depend on what kind of a business your brewery owner is running. Rogue brewers without contracts (not the brewery, which smartly grows its own hops), might find themselves paying a lot for hops and passing the cost on to you.
But, more than likely, your brewer is like Jamie Floyd of Ninkasi or Irene Firmat of Full Sail, who stay in touch by visiting Sodbuster Farms and other growers each year with a busload of curious employees and beer drinkers. Or your brewery is like McMenamins, whose team of hopped-up brewers actually makes a tradition of picking up their fresh hops straight from the grower, called “The Running of the Hops,” aimed at getting the freshest hops to the brewhouse on the same day they are stripped from the bines.
Stuff like that is unlikely to happen anywhere near Wall Street.
Which might explain some of the disconnect (I’m being kind) between Wall Street and Beervana. Let’s just say they don’t know chit about where beer comes from. But now you do. It really is a Northwest thing.
Here’s Gail’s Wall Street hint for the day: Hops, my boy. Invest in hops. And by that I mean begin your investment by accumulating those delicious resins in your belly. If there’s going to be a hop shortage, it’s up to you, Oregon drinker, to contribute to it.
Stories from the print edition of the Oregon Beer Growler.