Growing opportunity: UW, UNL discuss hops production potential during workshop
Scottsbluff, Neb. – With the growing popularity of craft brewing and microbreweries, the University of Wyoming (UW) and University of Nebraska-Lincoln (UNL) hosted a hops yard workshop and tour to showcase current research and discuss management strategies for growing hops as a specialty crop in Wyoming and Nebraska on July 19.
During the workshop, UNL Agricultural Economics Cropping Systems Extension Educator Jessica Groskopf visited with attendees on economic considerations before starting a hops yard.
“With the capital investment we’re talking about with this project, we really need to identify our consumer before I even dig a hole to put a post in,” stressed Groskopf.
The first question potential producers should ask is what their target market is, she said.
“We live near Fort Collins Colo., which is one of the best places right now for the microbrewing and craft brewing industry, so that may open some doors for us,” commented Groskopf.
Once a target buyer is decided, growers should consider what specifications the buyers will want.
“Some questions to consider are, do they want dry hops, do they want the product packaged, what quantity and what quality do they need,” she continued.
Whether the grower will be the sole producer or if they will be part of a cooperative of growers is another consideration.
“If we’re part of a cooperative, what resources are provided for us to provide our product to them,” she asked.
If producers are looking to sell hops as a commodity and not directly to the end-user, they need to consider if they are going to use a contract or sell in an open market.
“I have some commodities that I sell on contract, and the biggest thing is knowing what those contract specifications are and what happens to that crop if my contract is not met,” Groskopf said.
She urged growers to consider adding an “Act of God” clause to a contract agreement.
“If I get hit by an adverse weather event, it says we’re no longer bound to that contract,” she explained. “If we don’t have that, we might have to pay them for the product we did not deliver.”
Groskopf also encouraged potential growers to consider both their primary and secondary market.
“If I’m contracted in my primary market, and the hops get rejected, what do I do with the product that is rejected? Can I package it differently and sell it to somebody else?” she asked.
She stressed there is a difference between trends and long-term commitments in industries, particularly in brewing.
“I don’t think craft beer is going away, but we need to ask if the India Pale Ale a brewer is creating right now uses a particular type of hops or strength of hops,” Groskopf commented. “We need to think about whether that beer is just a cool trend or a long-term commitment.”
She noted hops production gives growers the opportunity to plant multiple cultivars, but due to the longevity of the plants, special consideration should be taken to determine what the most economical plan will be long-term.
The initial investment for building the infrastructure of a one-acre hop yard is approximately $20,000.
“A lot of the expenses for labor, supplies and maintenance can be adjusted for the grower’s area,” said Groskopf.
She notes the estimate may be low for labor for some areas and does not include the costs for paying for scouting and inspection if growers have pest concerns.
“How far do we have to go to find someone who can scout our yard and know what’s going on? Scouting runs $20 to $25 per hour typically,” she continued.
While producers may need to take a financial hit initially, Groskopf stressed that it is not a long-term solution to make a business profitable.
“Our labor is not free. We have to think about paying ourselves back, too,” commented Groskopf.
Potential growers who are not within 20 miles of a hops processing facility may also need to consider additional processing equipment to sell directly to brewing companies.
“If we’re looking at picking, drying and pelletizing, we’re looking at another $15,000 into this project for one acre,” she said.
According to Groskopf, growers need to pump approximately 13 inches of water for an acre of hops, assuming 15 inches of growing season rainfall.
“We need to take into account the operating and maintenance costs from our local irrigation districts,” she said.
Another major cost not included in the initial investment that is important for growers not near a processing plant is marketing and publicity.
“Drinking beer is an experience. I’ve got to create a culture around my product that makes it different,” commented Groskopf. “This isn’t the product I take to the elevator, and I’m done. I really have to work that marketing and promotion of my product.”
Groskopf encouraged potential producers to consider how hops would work with their current crop rotation and the opportunity cost when making their final decision.
“What else can I do with that acre of land, and what is my opportunity cost? How I am investing my time and my money and determining if it’s worth it to me to do those things is important?” she concluded, noting that producers should consider all factors before jumping into planting a specialty crop like hops.
Emilee Gibb is editor of Wyoming Livestock Roundup and can be reached at firstname.lastname@example.org.