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My very good friend Brant (2nd place 2007 Mid-South Homebrewer of the Year!!!) wrote this summary of part of the Dec. 2, 2007 Sunday Session interview with Ralph Olsen. I haven’t gotten to listen to it yet, but Brant’s write up is pretty good, and he said I could post it here. Thanks for the info Brant!

Brant wrote:
I’m behind on The Brewing Network archives, and just now listening to the 12/2/2007 episode. I’m only partway through it, but so far it is very interesting. Ralph Olson, the Hopunion honcho, is interviewed about the hops shortage. If you want to hear it from the horse’s mouth, I’d suggest downloading that from their archives, and giving it a listen sometime when you have about an hour to spare. Fastforward to about the 20 minute mark or so to get to Ralph. They’ve also got Ian Ward, pres of the Brewers Supply Group, later in the show talking about the malt shortage; I haven’t gotten far enough through the show to comment on that, though.

Anyway, from the Ralph Olson part, here are some of the high points I picked up about the cause of the hops shortage: Less than 1/2 of the acreage worldwide grows hops than 15 years ago. That is mainly because hops farmers were run out of business or otherwise sold out (housing developments, strip malls, etc.), or switched to growing other crops. And the reasons for that are because there were way more hops being produced in the past 10 – 15 years ago than needed — 230-something acres were just too much. The important thing to know is that those excess hops were not just disposed of; instead they were converted to extracts. Hop extracts are what the big brewers worldwide use, and it will store for several years without going bad (that’s a very important point). In the past few years, from the overproduction days, there has been an abundance of extract available from crops grown years earlier for the big brewers to buy cheap . That kept hops prices deflated, and that in turn ran many farmers out of business each year. The problem today is because demand for new hops did not pass the reserves of extract until way too many farmers were run out of business, and there are now not enough hops produced to fulfill the big orders. Add that this year’s crop was bad, and as Ralph put it, even if we had a bumper crop this year, we would still be in trouble. Ralph says he has seen this coming for years (dwindling acreage over years’ time), but there was nothing he could do to stop it.

Here are some high points about what is going on today: The big brewers are paying whatever they have to buy up all of the hops, especially the high-alpha ones, and naturally, that is inflating the prices. Yeah, we already knew that. What I hadn’t considered before are the international buyers, whose currencies are stronger than the US dollar — they aren’t really paying as much as we are, so they can offer more money without it costing them as much. And the reason different types of hops cost different amounts of money is largely based on their per-acre yield. Most of the high-alpha hops yield two to three times as much poundage as the flavor/aroma hops, and farmers are going to price them accordingly. For example, Cascade might cost twice as much as, say, Columbus, and Hallertau as much as three time that.

And here are some high points about what we’ll probably see in the future: Farmers will tend to produce high-alpha hops over bittering hops, because that is where the demand is (from the big brewers wanting extracts), many high-alphas can produce in the first year of planting (vs the 2 – 3 years of other types of hops), and the greater per-acre yield. New acreage will be high-alpha hops, and some existing acreage will convert to high-alpha hops. He even speculates that some types of aroma hops might be gone forever. Scary is the Hallertau in Germany, where a wilt disease is pretty much killing off all of them! It will be years before the high-alpha demand subsides, so the aroma hops that craft and home brewers want will continue to be in short supply for a long time. Prices will never return to what they were last year — but that’s probably a good thing in the long run, since they were really too low to keep the needed farmers in business.

I don’t know — I’ve heard some retailers saying things will be fine next year, but I think Hopunion would know better about what is going on than them…