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After the '90s glut, hope for hop growers

By ASSOCIATED PRESS
Published December 24, 2006

MOXEE, Wash. - In a frenzy of round-the-clock activity, 200 farm workers picked, dried and packaged hops at Leslie Roy's 2,300-acre central Washington farm.

The furious five-week hop harvest differed little from years past at Roy Farms, the largest independent hop operation in the country and a supplier to some of the nation's biggest brewers, including Anheuser-Busch Inc. and Coors Brewing Co. The returns, though, could be very different in 2006.

After more than a decade of slumping prices due to a worldwide surplus of hops, growers are seeing a chance to make a profit for the first time in years. Large brewers have used up their stockpiles, craft beermaking has increased demand and prices are turning up.

"When there's overproduction, it takes a long time to get it out of the system. We're finally seeing that happen with the oversupply from the 1990s," Roy said.

The United States produces about one-fourth of the world's hops, a component in brewing beer. More than 70 percent of that supply is grown in central Washington's agricultural-heavy Yakima Valley, which is dotted with apple and cherry orchards, vineyards and hop fields.

But buyers, namely brewers, have decided the price. For years, a worldwide oversupply enabled brewers to stockpile dry hops in storage indefinitely, at the same time they began using more bitter hop varieties, thereby requiring less of the crop.

The result: growers abandoning hop fields worldwide. In the United States alone, acreage fell more than 30 percent, from 43,430 acres in 1995 to the 28,928 acres in 2006.

Aside from one year in the early 1990s when Germany suffered a drought, growers largely haven't turned a profit in years, said Ann George of the Washington Hop Commission.

As much as 70 percent of the U.S. crop, valued at about $120-million, is exported.

"Are we finally returning to a growers market?" George said. "We're cautiously optimistic. We live in hope."

After federal limits on hop acreage was eliminated in the 1980s, there was an almost immediate increase in acreage - and a big surplus of hops.

In 1980, clusters sold for $1.15 per pound in August, but rose to $5 per pound when brewers began to perceive a shortage, recalled Ralph Olson, general manager of Hopunion LLC, a collection of hop growers who sell primarily to the craft brewers.

Just one year later, the price bottomed out at 30 cents.

Hop growers need at least $2 per pound to cover their costs and make a slight profit.

"You need the stability, you don't need the slot machine," he said. "You just need the in-between. It's very hard to accomplish, but I think right now we're at a place where that's going to happen."

Prices this year have ranged from $1.40 to $2.40.

[Last modified December 23, 2006, 20:23:06]