Well, enough editorializing…..
Greetings from Mark
Hello everyone. Thanks for tuning in again. I’m sure that most of you have already heard or read the news about the astronomical increases in the price of hops and malt. The media has done a pretty good job of covering this market/agricultural issue. However, I thought that it would be appropriate to add our viewpoint and a few additional details.
During recent history, the brewing industry has never experienced this combination of events. As little as three to four years ago, surpluses of hops and malting barley existed. Today several varieties of hops and malt have increased in cost anywhere from 150 to 300 percent. Some varieties of hops will just not be available in 2008 and 2009. What happened? Well, this is a “crash course” of global supply and demand.
The number of acres for cultivation of barley replaced by corn for the production of ethanol has received a lot of attention. Although this reality has contributed to the present market condition, this factor is not the primary demon. It just represents a superficial reality. (Tonight I won’t distract myself on the danger of the policy of solely relying on corn based ethanol as the singular solution to global energy needs.)
The bottom line is that farmers are faced with many choices. Is it corn this season? Or soybeans? The future for durum might be good. Sugar beets are a main staple to our table. And, by golly, that corn may be more profitable livestock feed than that barley variety…
Hop farming is drastically different than grain farming. The hop farmer carefully nurtures a single variety of a perennial vine for up to three years before the blossoms are commercially viable. This is a long term strategy for success for the hop farmer. Simultaneously, the hop grower’s success is dependent on the demands of the large global brewers. Is it a specific aroma variety the next six years? Or is wise to consider those new high alpha types that are in demand today?
These choices of cultivating specific varieties, responding to demands of the market, and planning a strategy for future profitability represent a normal environment.
Maybe it’s because I have been cooking more lately that I’ll represent the environment of today in this kind of mood…
Let’s look at this recipe for “abnormal casserole”: Begin with a couple of poor hop and barley harvests in North America. Add a pinch of the hop warehouse fire. Next, blend into this recipe a three year retirement of some hop fields due to lack of demand and surplus of inventory. As this mixture rests, reduce the capacity of the malting industry by three years of constriction and plant closures. Finally, before folding these ingredients into the processor, add two heaping amounts of hop and barley failures on other continents. If desired, a whipping of corn based sweetener can provide a topping.
The reality of small scale brewing has many dimensions. We are more labor intensive than the national/global brewers. We pay a premium for raw materials. Bottling our beer is the largest cost of operations. During the past eighteen months, our cost of hops and malt has nearly doubled, closely equaling the cost of packaging.
We support honest market prices for the hop and grain farmers that are a part of the brewing industry. Furthermore, we support the margins of the maltsters. Beer will not be cheaper in the future.
Obviously, we will be raising our prices in early 2008. However, we will do this modestly to offer the fairest value to you. We will be searching for efficiencies in our brewery. We will not indulge in any brewing shortcuts or “dumbing-down” of any formulations. We will be here for you – as consistently as we have been in the past.
So, as we celebrate the Holidays, let’s be thankful and pray for better harvests.
