American Hop Farmer Strategy “If there’s a bad crop …”

The strategy most often discussed at American hop conventions about a dozen years ago was how “Maybe next year things will be better” or how “if there’s a bad crop in Germany everything will be fine” (no offense ever intended to the German growers of course). Weak prices and a dire outlook for the future introduced plenty of humility to the hop industry. It used to be that without a fire in a kiln or a warehouse, there wasn’t enough money on the farm to pay for new equipment. I remember jokes like, “I tell my guys if the kiln catches fire to drive all the hop trucks right up next to it.” Back then, normal prices often didn’t even cover the cash cost of production. There were few people under the age of 40 in the industry. The industry was growing old and dying. 

In today’s world, everything has changed. Strong pricing the past few years has helped finance a renovation of much of the industry’s equipment. All that new investment brought along with it huge increases in capacity. It brought home a younger generation. In some cases, the pride and arrogance is off the charts. Some of them seem to think they invented hops or something. Much of the humility is gone except for those who lived through the bad times. You can tell they’re happy at the turn of fortune. It’s clear that memories of how bad things can be are just under the surface. I imagine they view the opportunities in the industry with some skepticism … and rightly so.

What hasn’t changed with all the ups and downs over the years is the American hop industry’s penchant for gluttony and the seeming inability to find a happy place. Maybe that’s just an American thing? Other countries’ hop industries seem to be relatively content when they’re making good money. When Doug Donelan of the New Zealand Hops Limited stated their strategy at an IHGC that New Zealand, that growers were content with their current levels of production, it shocked the rest of the participants. It was as if with such blasphemous statements he had just cursed the baby Jesus and the Virgin Mary in one go. Others scoffed at what they perceived to be a naïve position. They claimed those Kiwis were missing out on an opportunity of a lifetime.

I have to admit my Americanness made me wonder why they wouldn’t go for the brass ring. They seemed to have gotten it all right though. When is enough enough? Contentment?? American hop growers cannot seem to find the level at which they are content until they are looking at it in the rear view mirror. So long as there is an opportunity for growth, American hop growers will chase it. The money in today’s industry has emboldened them on that quest.

The more things change the more they stay the same. Since the last harvest I started to hear, “If there’s a bad crop everything will be just fine” again. That sounds oddly familiar. Everything is just wonderful in the industry today … isn’t it? A strategy based on somebody else’s misfortune does not sound like a good one. I believe there are cracks that lie just beneath the surface. If we scrape too much away, I imagine we will discover that what seemed like cracks in the ice are enormous crevasses.

Despite the recent upward trend, the hop market remains a fragile thing. If the industry had a strategy to responsibly manage production, as the New Zealand growers have done so well, perhaps there would be less cause for concern. Even those organizations in the U.S. that do resemble New Zealand Hops Limited aren’t showing any restraint. Unfortunately, there seems to be no plan, no strategy, no leader, no controls, no warnings and no consideration for the consequences of over supplying the market. So, we all continue forward on this roller coaster ride at full speed not knowing where the tracks may lead.