Let me break this up and answer what I can...all very good questions that I would love to have the answer too.
What is your industry saying relative to the long-term market potential? Is anyone talking about it? Seems like NY is the place to be for hop farms...what is Cornell Ag Extension predicting? Other NorthEast Ag Extension agencies?
First who is "your industry". There are still big guys in the PNW claiming hops can't be grown outside of their state. That's complete B.S. There are way different obstacles in other areas so it can't be grown in the same fashion but I digress.
What's the potential? I'm going to speak to the Midwest/Great Lakes area since that's my home and market. Based on number of breweries in this area, we estimate it would take 2,000+ acres to satisfy the CRAFT brew market. (That neglects the Bud/Miller and their smaller labels.) That number is also based on # of crafts from 2 years ago which has obviously grown.
How many acres are in play right now? I would have to estimate 50 -100 acres in WI and maybe two to three times that if you include MI, MN, IL, IA and IN. How many of those acres are at full production (I mean 1,500 lbs dried or more)...maybe 10%. The rest are either too young or not properly managed.
Is NY the place to be? Well, I would take exception to that but I don't want to get into that debate. Right now, there are 3 major regions trying to take off. The original would probably be the Western Slopes of CO (talk to Glen...Hopfarmer on this forum), WI and the rest of the midwest was 2nd closely followed by NY and the New England Region. Of those three, NY has definitely had the most governmental/academic support. So from that standpoint, I guess that would be the place to be except I haven't seen as much buy in from the brewing community there as in WI and CO. We have no problem selling our entire crop and I believe CO is the same. I would love to hear from somebody in New England/New York that could speak to this aspect. Has there been any problem selling your entire crop?
On this forum there seems like ALOT of people are looking at or have recently started hop farms. Is there any idea on the number of new farms started in the past few years, and the projected number to be started?
Nope...beyond those three previously mentioned regions, there are efforts to put in farms in Vancuver, North Carolina, San Diego, Montana...the list is endless. The big grower associations in the PNW don't want to track or even acknowledge most of these groups/growers. With good reason because so many sprout up and then go away that they would waste their resources trying to track it all. The USDA needs to see a significant amount of production before they even start taking statistics.
Another thing I was wondering is the varieties you are growing and what everybody else who is jumping into the game is growing. I know alot of the most popular hop varieties (Citra, Simcoe, Amarillo) are proprietary and you don't have those...are you guys all growing the same hop varieties?
I guess you can see where I'm going here. I'm thinking hop growing may be headed toward a huge bust in a few years (like what happens to alot of unsubsidized Agriculture markets). There is alot of people getting into hop farming, they are all growing the same non-proprietary strains, and its my impression that current supply is able to meet demand (short-term shortages not withstanding).
I do understand that the craft beer market is growing which would mean an increased demand for hops, but is it going to drive up hops to the point where even the small hop farms are going to be able to unload their crops? Keep in mind the big boys in the NorthWest are probably expanding too....a cost/acre you guys can't touch....will they absorb any increase in demand or will outpace even what they can expand to handle?
In short...what are you guys seeing here?
As I previously mentioned, there is plenty of "room" in the market for new hop growers. The problem is the previously mentioned consistency and quality. Most brewers brew beer...they also do sanitation, handle waste water, are an accountant, are the sales/marketing team, run human resources, etc. They don't have time to check every batch of hops from a different grower for quality, alphas, betas...and then adjust their recipes accordingly. That's the beauty of good co-op or, in our case, business relationship were everyone in the group that hits certain quality markers gets blended together so a single variety can be bought in bulk. Now a brewer can buy 1,000 lbs of cascade, 500 lb of Goldings, and 200 lb of Perle instead of 5 lb here and 3 lb there. Its my opinion that an individual farm of only an acre or two cannot survive UNLESS they are going to sole source to a single brewer. For me, that's just too risky. Now I'm not just betting the farm on myself but also on this brewer.
Could the big guys undercut us all and drive us out of business? Yes they could in a heartbeat...IF price is the only thing brewers cared about. Most craft brewers are selling to a local market and want to support other local businesses as much as possible. So if you provide a consistent product that is the same or better than what is being delivered by the PNW, 50% or more brewers will not mind paying a premium price.
Is there going to be a "huge bust" in the small scale, non-PNW hop growers? Yep, there all ready was one but its not for the reasons you mention.
The first wave of new hop growers was in the 2008 season. These were predominately the people who saw the 2007 "shortage" and subsequent price spike. They were all going to get rich. Many put fields in, realized it was way too much work and pulled out by 2010/2011. Those that survived are the ones with more realistic attitudes.
This second wave seems to be dominated by the enthusiastic hobby grower. Maybe they want to grow hops because they want something unique. Many want to get into the "beer business" and be able to stand behind a booth at their favorite beer festival. Some are looking for something to do in retirement. There is nothing wrong with any of these reasons and I will predict that in 5 years, many of these will still be around in one form or another. The ones that aren't, again, are the ones who didn't realize the labor, time and investment it took. They will bust out before they ever get to the point of having a viable field. A few others will do a fine job of growing but won't grasp the need for proper drying, packaging, testing or some other step that their local brewers look for when buying hops.
Some give up when they get bitter because no one is buying their hops. I had one grower tell me, "Its not fair. Why can't the brewer meet me half way? I'll grow and pick and they can just take it like that instead of making me go through all that drying crap." My only answer was, "They are the customer. He who holds the gold makes the rules." When you can't meet the brewer's expectation for a product, you won't get the sale. Without the sale, either this is a hobby that you have to fund out of your own pocket or you fold.
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