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Hop growers are under pressure, association says.

Stagnant hop prices combined with higher yields will force hop growers to change the way they do business, according to Douglas MacKinnon, executive director of the Hop Growers of America. "U.S. hop growers are fighting the battle of their lives," MacKinnon says. "In the past year, it has become painfully apparent in the hop industry that something must change. Hop growers must re-evaluate the way they do business if they are to stay in business."

Hop prices have remained flat since the early 1980s, preventing many hop growers from investing in their farms. Despite this, MacKinnon notes, the U.S. was the number one producer of hops in the world in 1999, producing 31% of the world's supply on 24% of the world's hop acreage.

"American hop growers produce their hops independently, and that is also how they have traditionally sold their hops, with contracts extending up to five years into the future," MacKinnon says. "This method provided the grower with some predictability in a turbulent world hop market. In the past decade, the industry has moved toward more short-term and spot market dealing. Recent changes have shifted risk away from hop buyers to the dealers and growers. Whether through greed, fear or a need for some semblance of stability, hop farmers have been selling their hops at prices below their cost of production. For the past five years, the hop market has truly been a buyer's paradise."

MacKinnon says the result has been a slow drain on the hop industry, with little profit margin left for farmers to reinvest in their farms. He says that if prices do not increase, it will mean increased difficulties for the U.S. hop growing industry. "Some options being considered to support the price of hops are production controls, reserve pools and minimum recommended prices," MacKinnon says, "but good old teamwork might be the best solution. Unfortunately, however, the simplest solution may be the hardest to achieve. As long as hop growers continue to subsidize the beer industry at their own expense, there is no reason for the price of hops to increase...If hop growers simply maintain the status quo, they may soon be packing up the family farm and looking around for other professions."
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Publication:Modern Brewery Age
Article Type:Brief Article
Geographic Code:1USA
Date:Feb 7, 2000
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