I’m pretty excited having just been quoted in Forbes about this topic. I wanted to dive a little deeper into this topic, but for those who would like to see the article by Don Tse (the Don of Beer) at Forbes, here it is.

Introduction

The United States hop acreage strung for harvest in 2024 is down 18 percent from 2023, according to the latest report issued by the United States Department of Agriculture (USDA). This significant reduction in acreage highlights ongoing adjustments within the industry, which has been addressing oversupply issues for several years. 

Too Many Hops: A Long-Standing Issue

 Since 2016, the hop industry has faced a surplus, leading to a buildup of inventory. This surplus was driven by the explosive growth of the craft beer industry in the early 2010s, which significantly increased demand for hops. Farmers responded by ramping up production, particularly of popular proprietary varieties like Citra® and Mosaic®. As a result, there was an over-supply when the craft beer boom began to slow.

The Sudden Drop in Acreage 

The USDA report reveals an 18 percent drop in hop acreage strung for harvest in 2024 compared to 2023. Several factors contribute to this reduction:

                  1. Economic Pressures and Market Realities: Maintaining surplus acreage has become financially unsustainable. The costs associated with unused acreage and unsold inventory forced farmers to make substantial cuts to align production with current demand.

                  2. Delayed Market Reaction: Initially, the hop industry delayed responding to the oversupply, hoping for a market correction that never materialized. This delay led to a more immediate reduction in acreage when it became clear that demand would not increase sufficiently to absorb the surplus.

                  3. Shift to Proprietary Varieties: The industry’s shift towards proprietary aroma varieties, which require production and sales licenses, contributed to the surplus. Farmers overproduced these varieties, necessitating significant acreage cuts to correct the imbalance. 

Specific Changes in Hop Varieties

The USDA report provides detailed insights into the changes in specific hop varieties. Here are some of the notable changes: 

Idaho 

                  • Citra® (HBC 394): Down from 1,059 acres in 2023 to 822 acres in 2024.

                  •  Cashmere: Decreased from 409 acres in 2023 to 191 acres in 2024.

                  • Mosaic® (HBC 369): Reduced from 1,120 acres in 2023 to 497 acres in 2024.

                  • Comet: Dropped from 242 acres in 2023 to 8 acres in 2024.

Oregon

                  • Citra® (HBC 394): Reduced from 1,528 acres in 2023 to 1,326 acres in 2024.

                  • Centennial: Decreased from 386 acres in 2023 to 420 acres in 2024.

                  • Cascade: Down from 629 acres in 2023 to 493 acres in 2024.

                  • Mosaic® (HBC 369): Reduced from 847 acres in 2023 to 690 acres in 2024.

                  •  Strata® (OR91331): Decreased from 839 acres in 2023 to 583 acres in 2024.

                  •  Cashmere: From 209 acres in 2023 to (D) - data not disclosed to protect individual operations in 2024.

Washington 

                  • Citra® (HBC 394): Down from 6,314 acres in 2023 to 4,785 acres in 2024.

                  •  Mosaic® (HBC 369): Reduced from 3,309 acres in 2023 to 2,430 acres in 2024.

                  • Cascade: Dropped from 3,156 acres in 2023 to 2,167 acres in 2024.

                  • Cashmere: Decreased from 258 acres in 2023 to 202 acres in 2024.

                  • Simcoe® (YCR 14): Reduced from 3,483 acres in 2023 to 2,839 acres in 2024.

                  • Sabro® (HBC 438): Data withheld for 2024, was 203 acres in 2023.

Implications for the Hop Industry

The implications for the hop industry include potential consolidation, price adjustments, and changes in research and development:

                  1. Consolidation: The hop industry may see increased consolidation as smaller, independent hop farmers struggle to compete. Larger companies with proprietary varieties and better financial backing may absorb these smaller players, leading to a more consolidated market. For example, major players like Haas and Yakima Chief Hops networks control a significant portion of the market, with 47.1% of total US acreage under their control.

                  2. Price Adjustments: The reduction in acreage might initially stabilize or even increase prices due to lower supply. However, the ongoing surplus and market adjustments could prevent significant price hikes, leading to fluctuating prices as the market seeks equilibrium.

                  3.R&D and New Varieties: There may be a slowdown in research and development and the introduction of new hop varieties. Companies might focus on maintaining their current varieties, creating more robust variations (ie. Drought resistant, or disease-free) rather than investing in new ones until the market stabilizes.

The impact on hop farmers is significant, with the potential for financial strain and the need for diversification. Farmers will face considerable financial strain due to the sharp reduction in acreage. Those who have invested heavily in hop infrastructure may face substantial losses. Farmers may need to diversify their crops to remain viable. Transitioning to other crops can be challenging but necessary to ensure financial stability. This includes planting less capital-intensive crops with steady demand. However, the suitability of the land for other crops must be considered, as hop fields are often tailored specifically for hop production. While transitioning to other crops is possible, it requires careful consideration of soil health, market demand, and financial feasibility. Farmers must adapt to new market conditions by exploring viable alternatives.

Highlights from the 2023 USDA Report 

The latest USDA report provides detailed insights into the current state of the hop industry:

                  1. Acreage Cuts Make Their Impact: The 2023 acreage cuts resulted in an overall 10% reduction from 2022. Despite this, production was up 2% due to better growing conditions and increased alpha acres, which yield more per acre. Oregon growers faced the hardest hit, losing 11% of private acres, while Idaho and Washington lost 8% and 3%, respectively. Smaller and newer farmers bore the brunt of these cuts, which are expected to continue in 2024.

                  2. Endangered Hops List: Several hop varieties have seen significant acreage reductions, putting them on an endangered list. Notable varieties include Cashmere, down 60% from 857 acres to 349 acres, and Sabro™, which lost 62% of its acreage. These reductions highlight the shifting dynamics in the hop market and the challenges faced by certain varieties.

                  3. Control of the US Hop Crop: The control of US hop acreage remains predominantly in private hands, with 62.1% of acres controlled by private entities in 2023, down slightly from 64.1% in 2022. Public variety acreage increased slightly to 37.83%. The aroma hop market is even more skewed, with a 69/31% private-public split. Major players like Haas and Yakima Chief Hops networks control 47.12% of total US acreage, underscoring the significant influence of a few large entities.

Ensuring a Competitive Future 

The hop industry is at a crucial juncture. To ensure a competitive and diverse future, brewers should consider supporting independent hop farmers and purchasing public varieties. This approach will help maintain a broad selection of hop varieties and stabilize prices.

Conclusion

The hop industry’s sharp acreage reduction in 2024 is a necessary response to a prolonged oversupply issue. While it presents immediate challenges, it is a step toward stabilizing the market and ensuring long-term viability. Hop farmers will need to adapt by diversifying their crops and finding new ways to sustain their operations amidst changing market conditions. The industry must also develop new contracting strategies and manage supply more effectively to avoid repeating past mistakes and ensure a stable future.

As a seasoned expert in the hops industry, I see the importance of these changes and the need for innovative strategies to foster sustainable growth. The future of the hop industry will depend on its ability to navigate these challenges and embrace new opportunities for innovation and collaboration.