Monday, February 4, 2008

Hops & Barley Shortage

Our brethren in the beer industry are facing a crisis due to shortages of hops and barley. Several factors lead to this development: rotation to higher margin crops, increased beer consumption in China, real estate speculation, the weather (drought in Australia and storms in Europe), and government subsidies for bio-fuels and ethanol. Demand for ethanol has doubled the price of corn and farmers have switched to rapeseed and canola as the government subsidizes biofuels - so why grow barley. In fact, very few in the Federal government will acknowledge that their search for the ethanol Holy Grail has negatively affected other farm products - expect your dairy and beef prices to rise as well.

As a result of these factors brewers either can not find substantial supplies of barley or hops or can not find the specific type of hops they prefer. When they do find a hops supplier, the price is between 300 to 400% higher than last year. Many craft brewers have had to suspend brands such as our favorite Tuppers' Hop Packet Ale and New River Pale Ale. In other instances, breweries have closed and consolidated. In theory, the higher prices of hops and barley should induce farmers to switch back to these crops. In the meantime, expect a smaller variety of craft beers this year - at a higher price.

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