Indie Hops Organics Update: 2012 Will Be a Big Year for the Big O

Organic hops got a boost recently when the USDA ruled that beers labeled “organic” must use organic hops by January 1, 2013. Many brewers are concerned that the organic supply will fall short of the demand. Here’s an update on what IH is doing to help supply and enhance that demand.

Indie Hops began growing organic hops last year. At Goschie Farms, we currently have 12 acres established on acreage that will be certified organic for the 2012 harvest. Of those acres, ten (10) are Cascades and two (2) are Centennial. Last year, an abnormally long and wet Spring triggered a downy mildew breakout. Fortunately, the DM spores did not strike our organic fields. Whew!

We will be planting additional acreage in 2011 on Goschie Farms as follows:

3.2 acres Centennial
3 acres Newport (15% AA, 50% Magnum parentage, CoH 38, 2.0 oil, good storage, Resistant to DM)
3 acres Perle (9% AA, 28 coH, 1.1 oil, very good storage, resistant to DM)
1 acre Fuggle (6% AA, 27 CoH, .6 oil, DM Tolerant)

All of the above varieties from our 22.2 total organic acreage will be available in 2012. Our pellet mill will also be certified organic for converting the 2012 harvest into pellets. We are pleased to note that organic hops won’t need to be trucked from Oregon farms to Yakima to be pelleted and then trucked back to Oregon brewers. Our Big O hops will be both green and greenhouse friendly.

Low Trellis, High Plant Strength

Gayle Goschie, our hop whisperer, is excited about her decision to string the organic hops on a low trellis. Organic hops face all sorts of disease and pest pressures. The best bulwark against nasty invaders is a healthy plant with a strong root system (and of course a monsoon-free spring!)

By using low trellis, we will not cut the bines at the base during harvest. The picker will strip the cones and leaves from the sidearms, but let the remaining “stripped hop skeleton” live on for another two months. During that time, the nutrients and carbohydrates in the bines will continue to nourish the root system, making for a hardier plant the following season. When the bines dry out, they will be cleared.

Hope Springs Eternal but Cross Fingers

2010 was a wet year – Biblically wet. Add moisture and warmth to soil and you have a fertile soup for mildew. Last year, we waited until mid-May for the ground to dry up before planting our Cascades and Centennials. The strategy paid off, as so far our fields look great, with the caveat that our vigilance must step up as the rains begin to recede in the Willamette Valley as the sun breaks out and the soil warms up.

To be safe, we will be planting our additional ten organic acres (Centennial, Perle, Newport and Fuggle) also in mid May. At present, our wonder weeds are getting stronger in a cool greenhouse. Later on we’ll transfer them a shade house before planting in the ground.

We’re optimistic, but crossing our fingers, toes and legs that the Spring will be dry enough so that Gayle “the Hoptomist” can walk the fields and spot treat any pest or mildew sightings. Last Spring was so wet Gayle couldn't get her tractors out to aerate the soil as often as she wanted.

One thing’s for sure, we’ll have plenty of pretty photos of our organic yards this summer. Between the hop rows Gayle will be planting vetch, an excellent nitrogen-fixing legume that bears lovely lavender flowers.

The Price is Right, We Think

The first question brewers are asking is whether the variety they want will be available. The second question is how much more will they cost than conventional hops?

We chose the varieties that we think have good disease resistance (Centennial will be the biggest challenge) and strong demand by brewers. We confess that we struggled with how to price our future organic hops. Clearly, the establishment and production costs have been greater than conventional crops. It takes three years for the acreage to transition from conventional to organic. Because of the pest and disease threats, the yields will likely be significantly lower. And processing will be more labor extensive, as well need to purge our clean, green pellet mill of any conventional hop residue.

So what do we do? How about, hmmm, the honest and right thing? We talked to both our grower and to potential brewer customers. In the end, we decided on an adjustable formula that ties the price to the yield. The higher the yield, the lower the price. On the flipside, after setting a fixed maximum price, the lower the yield, the higher the price.

We’re All in this Together

Our philosophy in setting the price is simple: we’re all in this together. This is a time of transition. Organics are no longer a fad, as consumers have begun to embrace the environmental and health benefits of synthetics-free foods. But to get to that point where the price gap between organic and non-organic hops narrows, the farmers will need to get it right. That takes time, trial and error, persistence and luck.

Here’s what we came up with: a maximum “worst case scenario” price per pound has been set at $18.00. That way a brewer knows that even in an extremely low yield situation there is a ceiling to what they need to pay for organic hops. The table below shows the price decreases as yields go up. Hey.... those prices look better than conventional hop prices during recent years!

Our agreement with the farm is that revenue from organic hop sales will first go toward covering the farms costs of organically cultivating the 20+ acres of hops. Once the farms costs are covered, the sales go toward covering the smaller IH direct costs of processing and handling. With direct costs covered for both parties, any additional sales revenue will be split 50/50 since we have shared the costs of establishing the organic acreage over the four years prior to the first certified organic harvest.

Yield per Acre (lbs.)     Wholesale Price/lb.
Less than 750 lbs.             $18.00
750-849 lbs.                     $17.50
850-999 lbs.                     $17.00
1000-1199 lbs.                 $16.00
1200-1399 lbs.                 $15.00
1400-1599 lbs.                 $14.00
1600 and above                $13.00

Brewers interested in planning ahead for some of their organic hops needs are encouraged to come visit this year to see the progress of the crop themselves. We also encourage you to contract ahead for greater security of supply.

We of course remain encouraged by Gayle’s optimism. We’re also buoyed by the slow but steady progress by “chemical companies” to ramp up production on organic compounds to control the undesirable pests, weeds and mildews.

Let's raise a pint to insecticidal soaps, fish oils, garlic extracts, biopesticides and plant and soil boosters! May the salubrious lady bugs and the pernicious aphids find a happy balance. As for mildew, can we please have more sun and less rain this Spring? And, if not, a note to the nasty mildew spores: may Gayle find you and give you a farewell squirt of hot copper.

RGW
4/2/2011

For an excellent article on the challenges faced by organic hop growers, please read the April 2011 issue of The New Brewer, “ New Rules for Organic Hops: Time is of essence for brewers, growers.” Click here.

Competition Good for Hops, Farmers and Brewers

Attention Craft Brewers:

I hope this note finds you in a robust spirit as we settle in to the new year. Fortunately, we have much to be upbeat about – craft brewing is one of the few bright spots in an otherwise dismal economy. Every day it seems we’re hoisting hoppier beers and welcoming more happy converts.

As you plan your future hop needs, please consider Indie Hops.

• Our prices may not be the lowest you can find but they will be competitive enough to not have a significant effect on the hop portion of your COGS. If it's more, it will be a tiny fraction of the $10 more per lb. you were paying just recently and it's a fair price to pay to insure that everyone in the supply chain is healthy so that the hop supply stabilizes.

• After several years of selling hops at a 400% markup, the de facto hop cartel in Yakima can afford to offer new contracts virtually at cost in order to keep you dependent on them when the next price cycle comes along. Yes, there was a tight market in 2008 and it is reasonable that brewers without contracts would have to pay more that year. However, the very next year 7,000 additional acres of hops were put in and there was no longer a shortage to justify the long contracts at record high prices. Having few alternatives, you had little choice but to agree to lopsided terms.

• Do you want to reward the Yakima merchants for this behavior by giving them all of your business now that spot prices are low? Unless Indie Hops and others are around to offer competition the next time the supply tightens, you will once again have no choice.

So having said all that, I politely encourage you to continue to diversify. Buy from your current suppliers. Buy directly from farmers. Buy locally. Buy from overseas. And buy from the new guys with the lightly processed fresh pellets who believe in promoting publicly owned cultivars – Indie Hops. Spread the love, lower the risks of controversial shortages, promote hop and hop farmer diversification, and make a new friend with a fresh spirit.

Keeping competition alive will be as good for the hop industry as it has been for the brewing industry. We appreciate your support.

Cheers!

Roger

Available hops: http://www.indiehops.com/pdf/IH_Order_Form.pdf

2011 crop: http://www.indiehops.com/pdf/IH_contract_pricing.pdf

Val Peacock Drops Mushroom Cloud of Light and Reason: Crafties, Step Up and Take Action!

Listen up Crafties. Check out the latest issue of The New Brewer. The venerable Val Peacock, Phd, the former hopmeister for Anheuser-Busch, has penned a prophetic essay that you just have to read, digest, ponder and act on.

Peacock makes the following points, which are worth bulleting:

• Since Inbev bought out Bud in 2008, there’s been a huge void in enforcing quality standards for aroma hops. Or, as IH has been arguing, the Crafties can no longer “draft” off the Big Boys, and to prosper they must take charge in monitoring farm practices, breeding, yields, pest/disease problems, etc.
  


• There’s a clear and present danger that the Industrial’s obsession with pre-isomerized and downstream hop products will further erode the quality of domestic production of aroma hops. Or, as IH has inveighed, the Crafties need to invest in the farmers, breeders and merchant who serve their needs, exclusively.
  


• Aroma and super alpha hops mature differently, and thus farmers need to harvest them when they are ripe and ready, not when it’s economically expedient. Exactly, that’s why Indie Hops has financed a breeding program at OSU that includes a pilot study that is evaluating the optimal date for harvesting big oily aroma hops.
  


• The shift towards super alphas will undermine the diversity, yields and quality of US aroma hops, as well as the survival of many aroma hop farmers, who are now selling hops below the cost of production. Exactly. That’s why IH is investing in select, heritage hop farmers in the optimal terroir for aroma hops, the Willamette Valley. IH works with hop farmers who are committed to investing in quality.
  


• Dry-hop lovin’ Crafties crave flavor, but in the absence of AB’s field program, which subsidized aroma quality production, Crafties can expect a decline in to-die-for aromas and flavors. Yes. That’s why Indie Hops has financed a $1 million aroma hop breeding program. That’s why we’ve focused 100% on growing aroma and dual purpose hops.
  


• Crafties need to visit the hop farms where their hops are being grown. They need to take an interest in the cleanliness of the fields and equipment, the drying of hops, optimal harvest dates, pest infestations, etc. Can I get an Amen! That’s why IH has been inviting Crafties to come visit the yards of our farm partners. We want you to see, feel, smell and enjoy our bounty. But we also invite you to visit the nearby plant where your hops will be lightly processed, packaged and stored. Aroma hops need TLC in the fields and in the mill and we want you to hold us to the highest standard!

US hop farmers “want to do everything they can to establish long term mutually beneficial relationships with brewers, and they view craft brewers as the future.” Free at last! IH has been sermonizing from the get go that the craft revolution is big and strong enough to support its own network of farmers, breeders and processors who are committed to putting hand-crafted quality over big box quantity.

And, finally, this little mushroom cloud of bright light and awesome reason, which I just have to quote in full:

"Last but not least, don’t expect to buy your hops on the spot market every year below the cost of production and still get good quality, or for that matter, delivery of your hops in short years. This will cost you even more in the long run than paying a sustainable price, and sends a signal to growers that you don't care about investing in hop quality! If the domestic aroma market becomes commoditized as the alpha market, quality will deteriorate." (emphasis added)

Prophetic. Beautiful. Concise. Illuminating. Well written Val. We appreciate the validation. Now let’s take action. Come visit the farms where our diverse variety of non-proprietary hops are being grown. Come watch your fresh hops being converted to plump green pellets at our nearby mill in Hubbard. And we’d be happy to escort you down to Corvallis to visit our aroma hop breeding program lab and fields at OSU.

Roger Worthington
8/12/10