2011 a question mark for hop growers
With the oversupply of hops mounting, industry experts expect brewers and brokers not to buy any more of the crop than they already have under contract.
"There's no spot market to speak of," said Alex Barth, chief vice president of the Barth-Haas hop merchant company.
In some cases, major buyers have offered to pay farmers a portion of the contracted price to take fields out of production, said John Annen, chairman of the Oregon Hop Commission.
It's even rumored that growers who refuse to reduce their hop deliveries will not be considered for future contracts, Annen said.
Right now, however, Northwest farmers are still generally under contract to grow hops through 2010, he said.
The big question is what hop buyers will do in 2011, since most contracts will have expired by then. Normally, contract negotiations would start the preceding spring, but Annen said he's not heard about any deal-making yet.
The elephant in the room is Anheuser-Busch Inbev, the world's largest brewer, which controls about 20 percent of the market, based on figures from Hop Growers of America.
In 2009, the company reported $11.5 billion in profits on total sales of $36.7 billion. To put that in perspective, the value of the entire Northwest's hop production reached $336 million last year.
It's possible that recent volatility in the hop industry has been so drastic that ABI hasn't made final buying decisions, said Annen. "I don't think they know themselves."
Hop procurement has become much more concentrated in the past two decades, said Ann George, administrator of Hop Growers of America. Twenty years ago, the top 10 brewers produced about one-fourth of the world's beer, she said. They now produce nearly two-thirds.