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Wednesday, October 31, 2007

Barley and hops lose to ethanol?

Rock Bottom's Geoff Lively (2nd from left)
in front of his brewpub, with local beer fans
News of poor European barley and hop harvests (and a smaller hop harvest in the US) is now reaching down to local levels. Here, for an example, is a story from the DC Examiner. The writer, Whitney Blake, talked with local D.C. area brewers:

Local breweries brace for price increases

“It’s more about climate than anything else,” said brewer Geoff Lively of Rock Bottom Restaurant & Brewery in Bethesda, whose base malt prices jumped almost 70 percent.

The American barley crop was decent, he said, but the European crop didn’t fare well.

Some farmers are also switching to more profitable government-subsidized corn or soybean crops, said Lively, an observation confirmed by all of the brewers who spoke to The Examiner.

“The principal culprit is the conversion to ethanol,” said Gary F. Heurich, founder of the Olde Heurich Brewing Company, which has moved from D.C. to the Adirondacks.

Something not mentioned was the dollar/euro exchange rate. A few years ago, the rate was advantageous, making it cost effective to import European barley. It's turn-around time now: our barley (and hop) crop is quite attractive, price-wise, to European brewers even with shipping surcharges factored in.

I've seen comments from other brewers and observers on this supposed conversion of barley to corn for ethanol. But I have yet to see figures or statistics to back this claim. Corn is a low-profit item for farmers; vast amounts must be grown for a return; barley, especially brewing barley, and especially now, produces more bang per buck per acre.

Bill Covaleski, president of Victory Brewing Company, has interesting comments in a recent post - with figures to back them up.

Bittersweet Harvest
Hops have been plentiful and cheap for too long now, aiding the beermaker and harming the hop farmer. This inequity has driven farmers in many countries to give up on hops and turn their valuable acres into more fruitful crops. And though total acreage in hops was up an estimated 4,900 acres over 2006 lead by China, America and Germany, the total acreage is 50% percent lower than it was 10 years ago, around the globe. The situation is now ‘better’ from the hop farmer’s perspective with dramatically increased prices.

Some assume that it is craft brewers who buy most hops since hoppiness and bitterness are not hallmarks of mainstream beers. But, that's a (very!) incorrect assumption:
Another factor in the hops market collapse lies in the fact that the alpha acid levels that hops have been producing have been on a general downward trend for 10 years. Realize that even the blandest of beers, brewed in the immense volumes that they are by popular, industrial brewers, eat up a massive amount of alpha acids from hops.

Bill also mentions the corn for ethanol versus barley for beer conflict. Maybe this is a correct supposition. But I still would like to see accompanying acreage reports to support these claims.
Malted barley prices are up between 30 and 40% due to a 2007 crop that is insufficient now that ethanol producers are vying with brewers for a limited supply. Yielding viable crops within a single season of planting, barley is likely to stabilize its supply a lot quicker than hops will.

Notice the last statement. Barley can be planted and produce crop in a year. Hop vines need 2 to 3 years to be viable: From Hugh Sisson's Diary of a Brewer:
I am told it takes at least 3 years before newly planted hop vines can begin producing usable hops. And the amount of acreage devoted to hop production in the US has declined by almost 50% over the last 20 years as farmers look for other ways to increase their income.

Earlier posts on the topic here.

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