hops feasibility study

5/19/2018 Hops Feasibility Study

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20092010FeasibilityandMarketResearchStudy

For

CommercialHopProductioninNewEngland

September30,2010

Preparedby

RosalieJ.WilsonBusinessDevelopmentServices

rosaliewilson.com

Withfundingfrom:

VermontAgencyofAgriculture,Food,andMarkets

MassachusettsDepartmentofAgriculturalResources

Four Star Farms hopyard, photo credit: r.wilson


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Page1

CommercialFeasibilityofLocalHops

2010

TableofContents

ExecutiveSummary............................................................................................................. 2

Background ..................................................................................................................... .... 3

Methodology....................................................................................................................... 6

Initialfindings...................................................................................................................... 7

MarketResearchSurveyDetails ....................................................................................... 10

ProductionFeasibility ....................................................................................................... 18

OtherIssuesAffectingGrowingCapabilityandCommercialProduction......................... 24

Conclusions ....................................................................................................................... 35

NextSteps ......................................................................................................................... 42

AppendixA SourcesofInformation

Appendix

B

List

of

Persons

Consulted

AppendixC BrewerQuestionnaireTemplate

AppendixD CashFlowScenarios

AppendixE SampleHopyardDesigns

AppendixF HopyardEstablishmentCostsPerAcre

AppendixG LaboratoryAnalysisServiceProviders

AppendixH ExpiredHopHarvesterPatents

AppendixI FujiImpulseNitrogenFlush VacuumSealerProductInformation


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ExecutiveSummary

TheVermontAgencyofAgricultureFoodandMarketsandtheMassachusetts

DepartmentofAgriculturalResourcescommissionedthisresearchprojecttostudythe

economicandlogisticfeasibilityofcommercialhopproductioninNewEngland. The

goalistoexpandopportunitiesforNewEnglandgrowerstogenerateaprofitable

incomefrom

their

land.

This

report

has

determined

that

is

feasible

to

grow

acommercialhopcropinNewEngland:

A. Thereissufficientdemandfromthebrewingcommunitytosupportaminimum

of100acresinproduction.

B.

Thereissufficientpricepointelasticitytoaffordproducersanabilitytogenerate

aprofit,andareasonabletimeframeforreturnoninvestment.

C. Theinformation,technology,andequipmentnowexistforsmallerscale,110

acrecommercialhopoperations.

D. Asidefrompotentiallimitationsoftopsoildepthtobedrock,NewEnglands

growingclimateandconditionsarewellsuitedtohopproduction.

Thefourscenariosinwhichagrowercouldyieldapositivenetincomefromgrowing

hopsareasfollows:

Scenario1: ParticipatinginavaluesharegrowingprogramwithAtlanticHops

Scenario2: Sellingwholehops,minimallyprocesseddirecttobrewers

Scenario3: UsingAtlanticHopsforprocessingservicesandsellingpelletized

hopsdirecttobrewers

Scenario4: Sellingdoityourselfpelletizedhopsdirecttobrewers

IncomePotentialandReturnOnInvestment

Scenario1 Scenario2 Scenario3 Scenario4

AverageYield

PerAcre

1,500driedlbs 1,500driedlbs 1,500driedlbs 1,500driedlbs

AverageNet

IncomePer

Acre

$4,640 $5,090 $5,090 $12,910

AverageReturn

OnInvestment

for1stAcre

5years 5years 6years 4years

Levelof

IndividualRisk Low Moderate Moderate Highassuminga$10/lbpricepointforwholedriedhops,$15/lbforpelletizedhops,and$9/lbreturnfromthe

valueshareprogram


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Whilethepotentialtogeneratenetincomeperacreishighestinscenariofour,inwhich

thegrowercreatesthevalueaddedfinishedproductonsite,theultimate

recommendationistoadoptscenarioone,inwhichgrowersparticipateinavalueshare

growingprogramwithAtlanticHops. Thisisbecausescenarioonerepresentstheleast

riskwhilestillpresentingastrongpotentialforfinancialreturn.

Inallinstances,inordertoreachareasonableincomeandrateofreturnoninvestment,

acommercialgrowerwillneedtoutilizemechanicalharvestingandsorting. Inorderto

minimizeriskfromcropfailure,andtostaggerharvesttimesforlogisticalease,itis

highlyrecommendedthatthegroweralsodividethehopyardintothirdsandadopta3

varietyplanting.

Background

NewEnglandwashometoavibranthoptradethroughthebeginningoftheTwentieth

Century. Infactin1900,NewYorkwasthelargestproducerofAmericanhops,

generating49%oftheentireU.S.yield. BytheendofProhibition,however,muchof

thehop

industry

had

migrated

to

the

Pacific

Northwest.

This

was

due

to

advances

in

mechanizationthatmadelargerscalefarmingareality,complementingWestCoast

geography,andthedecimationoftheEasterncropsbyadiseaseknownasdowny

mildew. Downymildewisacripplingdiseasebecauseitcancauseshortandlongterm

damage,impactingaspecificyearsharvest,andpotentiallykillingtheplants

themselves.1 Thepotentialtokilltheplantisasignificantissuewithacropsuchas

hops,becausetheyareaperennialplantandtakethreetofouryearstoestablish.

WhyisthereaninterestinthecommercialviabilityofgrowingNewEnglandhops,and

whynow?

1. Thebeerindustryisamatureindustrywithdemonstratedlongevityandstable

consumption. Thistranslatesintostablemarketdemandforrawingredients

suchashops. Eveninthemidstofoneoftheworstrecessionsinhistory,2009

U.S.beersalesonlydecreased2.2%.2

2. Inthe1970sasegmentofthebrewingindustry,craftbrewing,begantodevelop

popularityintheNortheast,particularlyinNewEnglandandQuebec. Craft

brewers,originallyconsideredfringe,arenowacceptedinthemainstreambeer

1Barth,H.J.,Klinke,C.,Schmidt,C. TheHopAtlas. 1994. Nuremberg,Germany. Joh,Barth&Sohn.pp12

14.

JasonPerrault.PerraultFarms. GuestSpeaker. 2010WinterHopsConference. UVMExtension.

3/26/2010.2http://www.brewersassociation.org/pages/businesstools/craftbrewingstatistics/facts


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industryandmakeup5%ofthetotalUSbeermarketshare.3 Notonlydoesthe

categorynowmakeuparespectableshareofoverallbeersales,itcontinuesto

riseastheshiftinconsumptiontrendsawayfromconsumingvolumequantities

ofmassmarketed,lowcostbeer,toselective,smallerquantitiesofhigher

qualityproducts.4

A2007

report

expressed

this

trend

as

follows:

TheBrewersAssociation,thetradeassociationthattabulatesindustrydatafor

craftbrewers,reportscraftbeersalesandgrowthcontinuetobreakrecords.

Thevolumeofcraftbeersoldinthefirsthalfof2007rose11%comparedtothis

sameperiodin2006anddollargrowthincreased14%.Forthefirsttimeever

craftbeerhasexceededmorethana5%dollarshareoftotalbeersales.

Overall,theU.S.beerindustrysoldonemillionmorebarrelsinthefirsthalfof

2007comparedto2006,with400,000ofthesenewbarrelsproducedbycraft

breweries.Thisequatesto3.768millionbarrelsofcraftbeersoldinthefirsttwo

quartersof2007comparedto3.368millionbarrelssoldinthefirsthalfof2006.

ScandatafromInformationResources,Inc.provideadditionaldatapointsthat

confirmstrengthforthesegment.Craftbeersalesinthesupermarketchannel

throughJuly15,2007showeda17.4%increaseindollarsalescomparedtothe

sameperiodin2006.Thisgrowthinsaleswashigherthananyotheralcohol

beveragecategory.

"The1,400small,independentandtraditionalcraftbrewersintheU.S.havehit

theirstride,"saidPaulGatza,DirectoroftheBrewersAssociation."United

Statescraftbrewersaremakingmanyoftheworld'sbestbeers,andthe

marketplaceisresponding."

Coupledwiththegrowthstatisticshasbeenatidalwaveofmediacoveragein

thefirsthalfof2007includingNBC'sTodayShowonJuly3stating,"Beeristhe

newwineandcangowithjustaboutanyfood."Additionally,Gallup,initslatest

pollonalcoholbeverages,announcedforthesecondstraightyearthat"Beer

AgainEdgesOutWineasAmericans'DrinkofChoice."

JuliaHerz,DirectorofCraftBeerMarketingfortheBrewersAssociation,

concluded,"Craftbeermarketshareissteadilyandconsistentlygrowing.A

grassrootsmovementisresponsibleforthissuccessasappreciatorscontinueto

tradeup."5

3http://www.thefreelibrary.com/Craft+Beer+Segment+Continues+to+Set+the+Pace+for+the+Beer+Categ

ory...a01676480254FranoisBiron. Agronomiste. MinistredelAgriculturedesPcheriesetdelAlimentationQubec.

GuestSpeaker. 2010WinterHopsConference. UVMExtension. 3/26/2010.5http://www.thefreelibrary.com/Craft+Beer+Segment+Continues+to+Set+the+Pace+for+the+Beer+Categ

ory...a0167648025


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2010

Tofurtherexpressthispoint,whileoverallbeersalesweredown2.2%in2009,

craftbeersalesrose10.3%.6

3. Thenatureofthecraftbeerindustryisbuiltonproductdifferentiation,tradition,

innovation,quality,integrity,andcommunity.7 Thesequalitiesalllend

themselvesto

supporting

alocal

commercial

hop

production

effort.

Craft

brewersdesireforfreshnessandquality,theirsupportoflocaleconomies,their

interestinuniquenessasopposedtoubiquityallhelpinfluencetheirpurchasing

decisionmaking,andthustheyarenotsolelybuyingonprice. Thissupporthas

beenresearchedandquantifiedthroughthisfeasibilitystudy.

4. Thesizeandscaleofthemicroandcraftbreweries(theymustproducelessthan

2millionbarrelsperyear8)placetheminapositiontobeabletoworkwith

smallerscalelocalcommercialhopproduction. Theycanmoreeasilyadaptto

incorporatinglocalhopsintotheirproductionandrecipes,andtheirvolume

needs,oraportionoftheirvolumeneeds,areofasizeandscalethatwouldbe

feasiblefor

New

England

producers

to

attain

and

supply

on

aconsistent

basis.

Whathasbeendonetodate?

In1988,theVermontDepartmentofAgricultureinitiatedhopproductiontrialswith

CatamountBrewingCo.ofWindsor,Vermont. ThosetrialswereexpandedbyDr.

LeonardPerryattheUniversityofVermont. Reportsonthosetrialsareavailableat

http://www.uvm.edu/~pass/perry/hops.html.

InSeptember2008,asmallteamfromVermontandMassachusettstraveledto

Germany,theCzechRepublicandBelgiumtolearnmoreaboutequipmentusedthere

forharvesting

and

processing

hops.

The

team

met

with

numerous

farmers

who

produced,harvested,andprocessedhopsandwithmanufacturersofhopharvesting

andprocessingequipment.9

In2009theVermontAgencyofAgricultureFoodandMarketsandtheMassachusetts

DepartmentofAgriculturalResourcessecuredUSDASpecialtyCropBlockgrantsforthis

feasibilitystudytobeconductedandforUVMExtensiontodevelopandestablishan

organichopyardtrialing20hopvarietiesanddifferentcovercroppingtechniques.

6http://www.brewersassociation.org/pages/businesstools/craftbrewingstatistics/facts

7http://www.brewersassociation.org/pages/businesstools/craftbrewingstatistics/craftbrewerdefined

8http://www.brewersassociation.org/pages/businesstools/craftbrewingstatistics/craftbrewerdefined

9InformationprovidedbySteveJustis,VermontAgencyofAgriculture,FoodandMarkets,August2009.


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Methodology

Tocompletethefeasibilitystudy,thefirststepwastoresearchmarketdemandand

productspecificationsforthefinishedproduct. Craftbrewers,brewpubsand

homebrewsupplystoresinME,MA,NH,andVTwereidentifiedasthedirect

prospectivetargetmarketforaNewEnglandgrownhop.

Asurveyquestionnairewasdeveloped(seeappendices). Thequestionnairewas

availablebySurveyMonkey,asanemailattachment,andasatelephoneinterview. 72

brewerswerecontactedandrequestedtoparticipate. Followupwasmadeby

telephoneandemail. 47responseswerereceived,a65%responserate.

Theintentofthesurveywas:

todeterminewhatvarietiesofhopsthesebrewersuse

whatvolumeofthesehopstheyuse

whattheypay

how

these

prices

fluctuate

whatpurchasingrelationshipstheyareengagedin

whattheparametersorlimitingfactorsoftheserelationshipsare

whattheywouldfindmostvaluableininfluencingtheirpurchasingdecisionfor

NewEnglandhops

whatthefinishedproductwouldneedtobeforthemtoconsiderusingaNew

Englandhop

whattheywouldconsiderafairpriceforaNewEnglandhop

Afterconductingthemarketresearch,thestudyturnedtohopproductionfeasibility.

CouldhopsgrowinNewEngland,whatarethebottleneckstocommercialproduction?

Bottlenecksresearched

included:

accesstoandcostofrawmaterialsforhopyardestablishment

accesstoandcostofmechanizedharvestingequipment

accesstoandcostofsecondaryprocessing

growingconditions

issuesaffectingcropyield

Followingresearchonthebottlenecks,productionmodelsfora1to10acrehopyard

wereexplored. Fourproductionmodelsweredevelopedthatcouldpresentafinancially

andlogisticallyfeasiblecommercialhopgrowingventure.

Theinformationwasthensummarizedintothisfinalreport.


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Initialfindings

BrewerswhorespondedtothisstudywereuniversallyinterestedinbuyingNewEngland

hops: 94%,44outof47respondentsindicatedaninterestinpurchasingNewEngland

hops. Thisconclusionissupportedbyresearchconductedin2009byDuncanHilcheyof

NewLeafPublishingandConsulting,Ithaca,NY.10

Whilethebrewerswhorespondedtothisfeasibilitystudymaynotberepresentativeof

theentireNewEnglandbrewingcommunity,theirresponsesdidachievethemarket

researchgoalsofthestudywhichwereto

A. Determineifthereissufficientdemandtoabsorbaminimumof100,000

lbsofdried,NewEnglandaromahopsperyear,andatwhatpricepoint

B. Developahighlyqualifiedprospectlist

Thehighlyqualifiedprospectlistiscomposedofthosebrewerswhoaskedtoremain

involvedastheprojectasresearchanddevelopment,unfolds. Theyarehighlightedin

Boldunderthebrewersconsultedintheappendices.

Key

purchasing

decision

making

factors

Price

Brewersarehighlypricesensitive. Whiletheyareinterestedinbuyinglocal

hops,pricewillbeakeyfactor. Theprimarypricerangesconsideredas

acceptablepricepointsatwhichbrewerswouldpurchaselocalhopsiftheymet

theirotherrequirementswere:$5/lb,$810/lb,and$1015/lb. Atthe$510/lb

brewerswouldconsidersourcing100%oftheirhopsfromNewEngland

producersifthe

finished

product

was

interchangeable

with

their

existing

supply

intermsofproductdeliverable.

ProductQuality

Makingbeerisbothascienceandanartform. Therearemanynuancesthatcan

affectthefinalproduct. Becauseofthis,theultimateachievementofabreweris

whentheycanconsistentlyproducethesamefinishedproductintaste,aroma,

appearance,andmouthfeel,brewafterbrew,frombrewhousetobrewhouse.

Becausehopscreateasignaturearomaandflavorprofileforabeer,hopsarea

key

ingredient

in

any

beer

recipe.

Because

the

chemical

make

up

of

hops

may

changefromharvesttoharvestdependingongrowingconditionsand

geographicregion,themorethebrewerknowsaboutthemakeupofeach

10Hilchey,D. TheMarketPotentialforNortheasternGrownHops.NewLeafPublishingandConsulting,Inc.2009.


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11lbpouchesofvacuumsealed,nitrogen

flushedhoppellets.

Photocourtesyhttp://hopsextracts.com

shipmentofhopshereceivesthemorehecanadjusthisrecipesothattheend

resultwillbeconsistentwithpriorbrews.

Tomeetproductqualityrequirements,NewEnglandhopswillneedtobe

submittedtoalabforchemicalanalysisandachemicalanalysiswillneedto

accompanyeachhopshipment.

ProductSpecifications

Whilethebrewercantcontrolthechemicalmakeupofahopfromharvestto

harvest,hehascometoexpecthishopstolookandperformacertainway.

Inordertomeetproductspecificationstobeconsideredaviablealternative,a

NewEnglandhopwouldneedtobepelletizedtoaT90standard,packagedin

Nitrogenflushed,vacuumsealed,foillaminatedpouches,andencasedin

cardboardboxes. Therearetwostandardofferings,four11lbpouchestoa44lb

box,orone44lbpouchtoa44lbbox.

T90Pellets.

Photocourtesyhttp://hopunion.com


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PurchasingDecisionInfluencersinbuyinglocal(NewEnglandgrown)hops

Stablepricepoint

Brewersarefrustratedandincreasinglyvulnerabletovolatilepricepointsand

productscarcityofhopsonthespotmarket. Thisisespeciallydisconcertingto

themas

the

craft

beer

category

continues

to

grow

and

brewers

of

all

scale

and

sizecompeteforaccesstohopstomeettheirgrowingandexistingmarket

demand.

Personalrelationships

Brewers,similartobakersandchefs,taketheircraftseriouslyandpersonally.

Theyappreciatehavingconnectionstothoseprovidingtheiringredientsbecause

theyknowthatthequalityoftheingredientswillultimatelyimpactthequalityof

thefinishedproduct. Havinggrowersthattheycandevelopalonglasting,

personalrelationshipwithwillhelpsupersedepriceastheultimatepurchasing

decisionmaking

factor.

Environmentalawareness

NewEnglandscraftbrewersarewellawarethatthemajorityoftheinputsinto

theirproductscurrentlyoriginatefromtheMidWest,WestCoast,andEurope.

Anythingtheycandotohelpreducetheircarbonfootprintbybeingableto

purchaseinputsfromclosersourceswouldbeappreciated.

Localeconomicstimulation

NewEnglandcraftbrewersalsounderstandthenotionoflocaleconomy. Most

ofourcraftbrewersarelocalorregionalproducerswhoseproductsstayinNew

England,thereforekeepingtheirpurchasingdollarsinNewEnglandfurther

reinforcesthelikelihoodthattheirownproductswillbepurchased.

Marketing

Craftbrewersoftentightlywraptheirgeographiclocationsintotheircorporate

identity,leveragingasenseofplaceasadistinguishingattributeintheirsales

and

marketing.

By

purchasing

local

ingredients

they

can

further

strengthen

this

marketingmessage.


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MarketResearchSurveyDetails

Ofthe72brewers,brewpubs,andhomebrewsupplystoressurveyed,34responded,

foratotalresponserateof47%. Fromtheresponsesgiven,totalbarrels(bls)brewed

(from26respondents)cameto370,970blsperyear,withanaverageof14,268blsper

brewery.

Thesmallest

brewer

claimed

210

bls

per

year,

while

the

largest

brewer

cited

100,000blsperyear.

HopVarieties&Volume

ThemostprevalenthopusedbythebrewerswasCascade,followedbyHallertau,

Centennial,Golding,andWillamette,seechartbelow.

Totalvolumeofhopsusedannuallyby21breweriesreportingcameto126,482lbsof

driedhopsperyear,and2,600lbsofwethopsperyear.

NumberofBrewers


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ThetotalvolumeofCascadehopsusedby30reportingbreweriescameto81,860lbs

peryear. Volumesofthenextninemostprevalenthopswereasfollows:

Hallertau6,436lbs/yrfrom15respondents

Centennial5,400lbs/yrfrom16respondents

Golding5,250

lbs/yr

from

12

respondents

Willamette5,250lbs/yrfrom11respondents

Tettnang4,850lbs/yrfrom8respondents

Perle3,950lbs/yrfrom8respondents

Saaz3,550lbs/yrfrom9respondents

Magnum3,250lbs/yrfrom5respondents

Nugget:2,750lbslbs/yrfrom4respondents

NorthernBrewer2,650lbs/yrfrom9respondents

Columbus2,000lbs/yrfrom8respondents

Glacier1,850lbs/yrfrom3respondents

Inaddition

to

seeking

to

understand

the

brewers

current

hop

usage

and

volume,

the

studyaskedtheirpreferenceinwhatvarietiestheywouldbemoreinterestedinseeing

fromaNewEnglandsource,seechartonpage12.

Cascadetoppedthelistwith71%,22of31respondents,demonstratinganinterestina

NewEnglandCascade. Centennialwasthenextmostrequestedwith39%,12of31

respondents,askingforit. Thebrewerresponsespresentthemselvesfavorablyinterms

ofthelogisticalfeasibilityofbeingabletomeettheirvarietypreferencesbecause

CascadeandCentennialhappentobetwoofthevarietalsthatoutperformother

varietiesinNewEngland.11

11InformationderivedfromcurrentNewEnglandhopgrowersincludingEugeneLEtoile,1997UVM

ExtensionHopsTrials,andUVMExtensionGrowerSurvey.


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WholeLeafvsPelletizedHops

83%,25of30respondents,saidtheyrequiredpelletizedhops. 30%,9of30

respondents,said

they

use

or

could

use

dried

whole

hops.

23%,

7of

30

respondents,

saidtheycouldusewetwholehops. Thetotalvolumeofwet,wholeleafhopsused

annuallybythese7respondentscameto2,600lbs. Thetotalvolumeofdriedwholeleaf

hopsusedannuallybythese8respondentscameto3,750lbs,andthetotalvolumeof

pelletizedhopsusedbythe24respondentscameto122,732lbs(seechartonpage13).

Atthesevolumes,wethopscouldsupportlessthanoneacreofcommercialproduction,

drywholehopscouldsupportupto4acres,andpelletizedhopscouldsupportupto120

acres.


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AromavsBittering

ThefeasibilityofcommercialhopproductioninNewEnglandwillneedtofocuson

aromahops,ordualpurposehopsoverbitteringhopsfromNewEngland. Thisis

because:

1. Price:Bitteringhopsfunctionastheirnamesays,theyprovidebitternesstoa

beer,thebackboneuponwhicharomahopsthenlayercomplexity,flavorand

aroma. Becauseofthis,bitteringhopshaveevolvedintoahighlycommoditized

productwithanonelastic,pricepointaveraging$13/lb. Onlylargescale

operationsfocusedonefficienciesofscalecancompeteinthismarket. Aroma

hops,ontheotherhand,maintainproductdifferentiationcapabilitiesthatadd

valueandcancommandahigher,andmoreelastic,pricepoint. Aromahops

pricepointscanrangeashighas$25+/lb.

2.

Contracts:Brewerstypicallylockinmultiyearcontractsforbitteringhops. While

they

will

also

lock

in

contracts

for

certain

quantities

of

aroma

hops

they

know

theyneed,theytendtoreservesomeoftheirbudgetforunexpectedpurchases,

enablingthemflexibilitytoexperimentandinnovate. Thisopensthedoorfor

themtopurchaseaNewEnglandhop.

N

umberofBrewersResponding


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3. GrowingConditions:Bitteringhopsarehighalphaacidhopswhichareknownto

bedifficulttogrowinNewEngland. Havingahighalphaacidcontentisnota

prerequisitetoanaromahop.

4.

CraftBrewerAudience:Craftbrewersaremorelikelytoexplorewithnewbeer

offerings,andseekoutnew,differentorunusualaromahopvarieties. Craft

brewersaremorelikelytoappreciatethevalueofterroir,uniquetraitsinahop

thatare

derived

from

the

region

in

which

it

was

grown,

in

an

aroma

hop.

5.

ProductSpecifications:Becausearomahopscanbeaddedatdifferentstages

duringthebrewingprocess,thereareopportunitiesfornonpelletizedhopsso

evensmallscalecommercialgrowersinterestedinsellingwholedriedorwet

hopscouldparticipate.

6.

CertainaromahopvarietiesareparticularlywellsuitedtogrowinginNew

Englandandarealsoinhighdemandfromthecraftbrewingcommunity. These

includeCascade,Centennial,Willamette,Chinook,andNugget.

PricePoints

Interms

of

pricing

the

issue

is

complex.

The

historical

average

price

for

dried

hops

from

19912006was$1.80/lb,seechartbelow. However,in2007,failedEuropeancrops,

decliningacreageworldwide,aYakimawarehousefireandotherfactorsconspiredto

sendspotpricessoaringfrom$2and$3apoundto$30ormore.12

12Fayston,J. The2007hopsshortageisover,theglutof'09ishere...TheOregonian.10/28/2009.

(source:NASS)


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Brewersreactedbyenteringintomultiyearcontractsattheheightofthecrisissimply

toensuretheywouldbeguaranteedasupplyofhops. Insomecasesthishastied

brewersinto35yearcontractsata$1530/lbpricepoint,notnecessarilyincluding

shipping,eventhoughtheshortageisnowoverandthespotmarketpricingisback

downto$5/lb.

Becauseoftheseverevolatilityincommoditypricingandproductshortagethatthe

brewingindustryexperienced,themajorityofbrewerssurveyedreportedthatthey

wouldelectlongtermcommitmentswithlocalgrowersovercommoditycontractsand

spotmarketpurchasing,andwouldbewillingtopayaconsistentpriceforthisto

happenevenifthepricewerehigherthanthespotmarketprice,aslongasbothparties

felttheywerebeingwellserved.

Followingisachartdemonstratingwhatbrewershavesuggestedtheywouldconsidera

fairpriceforNewEnglandhops. Notethatthecurrentspotmarketpriceisaveraging

$58/lb.

Nu

mberofBrewers


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Afewofthebrewersconsidered$5/lbafairpricepointandbelievedthatwasstill

favorableeventhoughitsequivalenttocurrentspotmarketpricingbecausehistorically

spotmarketpricinghasaveraged$1.80/lbandthespotmarketcouldeasilyslipbackto

thislevel. Themajorityfeltthat$810/lbforNewEnglandhopswouldbereasonable.

NumberofBrewers


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2010

Atthepricepointbrewersidentifiedasapricetheyfeltfairforlocalhops,thestudy

thenaskedhowmuchofthetotalpercentageoftheirhopneedstheywouldsource

locallyifitwereavailable. Themajorityofbrewerssaidtheywouldbeinterestedin

sourcing100%oftheirhopneedslocallyifthequalitymatchedtheirexpectationsand

theprice

point

fell

within

$5

10/lb.

Above

this

price

point

brewers

would

still

consider

buyinglocalhopsbutonlyasapercentageoftheirtotalhopneeds.

Percentageofabrewerstotalhopneedstheywouldconsidersourcinglocally

NumberofBrewers


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ProductionFeasibility

Thefirstquestiontoaskregardingproductionfeasibilityis,canaNewEnglandgrower

growwhatthebrewerswant? Asnotedearlierintheresearch,theanswertothisis:

yes. Cascadeisthemostrequestedhop,andisavarietythatgrowswellinNew

England.

Inaddition

to

Cascade

there

are

several

other

varieties

that

could

grow

well

hereandwouldbeofinteresttothebrewingcommunity. Brewershavealsoexpressed

aninterestinexperimentingwithanynew,uniquecultivarstheregioncancomeup

with. Havingahopuniquetoourregioncouldstrengthentheelementofterroir,

piquingglobalindustryinterest,andprovidingareasontojustifyapremiumpricepoint.

GrowingConditions

AccordingtotheHopsAtlas13

optimalconditionsforgrowinghopsareasfollows:

alatitudebetween3555degrees

averagetemperaturefromAprilthroughSeptemberbetween1019C

averageprecipitationfromAprilthroughSeptemberof64569mm

averagedaylightduringthesemonthsbetween1019hrs/day

Thesefindingswerederivedbytakingtheclimatedatafortophopgrowingregionsin

theworld:George,SouthAfrica;TasmaniaandVictoriaAustralia;RioNegroArgentina;

OregonandYakima,US;Hallertau,Germany;Saaz,Czech;andWyeEngland.

Inaddition,theatlasidentifiedwelldrainingsandyloamasthebestsoilforgrowing

hops.

Giventheseparameters,itlookslikeNewEnglandhaseverycapabilitytocompetefor

commercialhopgrowing. Fromaverybasicfeasibilitycapacity,therightgrowing

conditionsdoexist:

theaveragelatitudeisinthe40's

theaveragetemperaturefromAprilthroughSeptember15.5C(60F)

theaverageprecipitationfromAprilthroughSeptemberis525550mm

theaveragehoursofdaylightfromAprilthroughSeptemberis13.5hrs/day

theFarmlandClassificationsSystemforVTSoilshighlightsFranklin,Addison

andRutland

counties

as

counties

with

sandy

loam

soils.

Massachusetts

soils

inFranklinandWorcesterCountiesarealsoknowntobewelldrained,sandy

loamsoils.

13Barth, Joh Heinrich, Klinke, Christiane, Schmidt, Claus. The Hop Atlas. Joh Barth & Sohn, Nuremberg,

Germany. 1994.


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AkeycaveatforgrowinghopsinNewEngland,however,willbetheissueofbedrock.

Toerectthehopyardtrellis,thepolesneedtobeseatedatleast34intheground,

whichmeansoneneeds34oftopsoilbeforehittingbedrock. InmuchofNewEngland

thebedrocklieslessthan3belowthesurface. Whileitispossibletoadaptand

improveapoorgrowingmedium,itisnotsoeasyorcosteffectivetoblastthrough

bedrock.

Socare

will

need

to

be

given

to

evaluating

the

bedrock

situation

for

each

prospectivesitepriortoanydecisionbeingmadeondesiretoestablishahopyard.

Nowthatparametersrequiredforgrowinghopshavebeenestablished,whatwillitcost

tobuildahopyardandgrowhops,andisitcosteffective?

Infrastructure

AscommercialhopgrowingmovedWestintheearly20th

century,infrastructurefor

valueaddedprocessingofhopsintheNortheastdied. Inordertodeveloparesurgence

ofacommerciallyviablehopcrop,tools,techniques,equipment,andserviceswillbe

requiredto

help

growers

establish

their

hopyards

cost

effectively,

and

provide

them

withtheabilitytotransformtheirrawhopsintothefinishedproductbrewersneed.

Atpresent,therearefewhopyardsuppliersgrowerscanturntoforsmallscale

commercialoperations. Growersareoftenforcedtopayretailpricesforsuppliessuch

asrhizomes,cables,andthesimplethoughtofbeingabletosourceuptoonehundred

2224polescanbedaunting. Whileaccessibilityisalreadyaweakness,itcanbe

exacerbatedbytheissueofquality. Thesourcingofqualityrhizomesinparticularcan

beverydifficult,evenwhenbuyingfromsupposedlytrustedsources. Bothlocal

growersandUVMExtensionhavereceivedhopsthatwerediseased,infestedor

otherwiseof

less

than

ideal

quality.

14

Inadditiontothedifficultiesinvolvedinlocatingmaterialsandsupplies,thecostof

establishingahopyardcanvarydramaticallybasedonthedesignbeingused. Different

designswillrequiremoreorlesspoles,moreorlessrhizomes,andsoon. Toprovidean

exampleofthis,pleaserefertotheappendicesforacomparisonofthesupplies

requiredandcosttoestablishasamplingofdifferenthopyarddesigns.

InfrastructureSolution

GorstValleyHops,wasestablishedin2005inWisconsintoalleviatebarrierstoentryfor

small

scale

hop

growers.

The

business

has

focused

on

identifying

and

solving

the

bottlenecks,anddevelopingbestpracticesforsmallscalehopgrowerstoemployso

thattheycanbecommerciallysuccessful. GorstValleyHopshasbecomeareputable

sourcesmallmidwestgrowersinterestedincommerciallygrowinghopscanturnto.

14PhoneconversationswithGeneLEtoile,FourStarFarm,andRosalieMadden,UVMExtension,August,

2010.


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2010

ThecommercialmodelGorstValleyhasdevelopedworkssuchthatallthreeparties the

brewer,theprocessor,andthegrower benefit.15

TheGorstValleymodelisbasedona

valuesharechartergrowerprogram,inwhichthegrowersagreetosendtheirannual

hopsharvesttoGorstValley. Inreturn,GorstValleyprovidesthemwiththeir

researchedandtestedhighdensityhopyarddesign,technicalassistancetoimplement

it,ongoingtechnicalsupportduringthegrowingseasonforthefirstfouryears,direct

sourcingand

wholesale

pricing

of

all

the

source

materials

required

to

establish

their

hopyard,accesstoequipmentinnovationsandresearchanddevelopment,anda

marketingoutletthatstrivesforafairandprofitablepricefor100%oftheirharvest. In

thismodelGorstValleysharestheproceedsofthehopsales6040with60%goingback

tothegrowers.

Theabilityforgrowerstohaveaccesstoareplicable,provendesignforoptimalyield

andproductivityforasmallscalecommercialhopyard,completewithaccessto

commerciallyavailablesourcematerialsatwholesalepricing,withqualityassured

rhizomesisthefirstrequirementtocreatingacommerciallyviablehopcrop. Tothis

end,AtlanticHops,anewventurebeinglaunchedbyMichaelRoffman,inpartnership

withGorst

Valley

Hops

will

be

opening

in

the

Northeast

in

2011.

Atlantic

Hops

intends

toestablishaNortheastvaluesharegrowerprogramandactasadistributorofGorst

ValleyproductsandservicestoNewEnglandcommercialhopgrowers.16

SecondaryProcessing

Evenwithbarrierstoentryremovedfromthegrowingoperation,issuespersist. Access

tosecondaryprocessingisthenexthurdle. BrewersarelookingforaT90pellet

product,packagedinvacuumsealed,nitrogenflushedfoillaminatedpouches.

Whatis

aT90

Pellet,

how

is

it

made,

and

how

is

it

packaged?

T90Pellets(are)amilledandpelletizedpreparationfromwholeleafhopsT90hop

pelletsarepreparedfromleafhopswhichhavebeenhammermilledintoapowderand

thepowdersubsequentlypelletizedbypassingthroughaconventionalpelletdie. They

containallthevegetativeandlupulinmaterialofrawleafhopsandcanbeusedasafull

replacementforleafhopsinthebrewingprocess. Baledhopsarebrokenupandpassed

intoanairstreamwhichdeliversthemtoahammermill.Heavyforeignmaterialsdrop

outandmetalfragmentsareremovedusingmagnets.Theconehopsaremilleduntil

theypassthroughasievewhichiscommonlyofa912mmmesh.Thepowderfrom

manybalesismixedandhomogenizedinablenderandthenconveyedtoapelletdie,

mostcommonly

4or

6mm

in

diameter.

The

pellets

are

immediately

cooled,

normally

to

atemperatureofbetween1 7C. Cooledpelletspassoverashakerwheredustis

removedandrecirculatedthroughtheplant. The"clean"pelletsarepackagedin

15PhoneconversationwithJamesAltwies,founder,GorstValleyHops,September7,2010.

16PhoneconversationwithMichaelRoffman,founder,AtlanticHops,August,2010.


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2010

laminated,plastic/aluminumfoilpouches,evacuatedandboxed. Thepacksmaybe

backflushedwithcarbondioxideornitrogengastoproduceasoftpackcontainer.17

Whileitispossibletoconductthissecondaryprocessingonfarm,manyfarmsmaynot

beinterestedindoingmorethangrowingthecrop,andmanyarefindingitdifficultto

sourceandobtainsatisfactoryresultswiththeirsecondaryprocessingequipment.18

AtlanticHops

will

provide

commercial

processing

of

New

England

hops

that

will

ensure

secondaryprocessingisnolongerabarriertoentry,andthatNewEnglandcanproduce

aconsistent,professionalgradefinishedproduct. AtlanticHopswillofferitsvalueshare

growerprogramforgrowerswhoaresimplyinterestedingrowingthecrop,itwillalso

offersitservicesforhiretogrowerswhowouldliketogrowandselltheirownhopsbut

wouldliketopayforthesecondaryprocessingservices.

CriticalMass

EvenifeachfarmproducesitsownT90pelletizedproductthathasbeenchemically

analyzed,andpackagedinanitrogenflushed,vacuumsealedfoillaminatedpouch,the

factremainsthatmostgrowerswillbelookingatanaveragesizeofaoneacrehopyard,

atleastinitially. Aoneacrehopyardisexpectedtoyieldanaverageof1,500dried

poundsoffinishedproduct. Thisyieldwilllimittheprospectivetargetmarketbecause

largercraftbrewerswillrequiremoreproductthanasinglefarmercanproduce. Given

theproductofasinglevarietalwilldifferfromfarmtofarm,abrewercannoteasily

combinethem,evenifheadaptshisrecipe. AccordingtoMichaelGerhart,headbrewer

atOtterCreekBrewing,Wetrytobuyallourhopsatonetimeandfromthesamecrop

soweknowtheinformationperhopswillbestandardforthewholecropwearebuying

andtherecipewewillbemakingforthatyear.19

Bycombining

hops

from

multiple

New

England

farms

together,

Atlantic

Hops

will

be

abletodevelopcriticalvolumeofeachvarietalitofferssothatcraftbrewersofallsize

andscalecanpurchasefromahomogeneousproduct. Incombiningmultiplefarms

hopstogether,idiosyncrasiesfromeachgrowerarealsominimized,thuscreatinga

productthatismoreconsistentlyinlinewiththestandardprofileforthathopvariety.

Byhavingcriticalmass,andaregionalproductthatbrandstheregionfirstandforemost,

AtlanticHopscanattractawarenessfortheregionsefforts,whichintheendwill

facilitatethemarketingeffortsofindividualproducers.

17http://www.hopunion.com/hoppowderpellets.html

18ConferenceCallwithRogerRainville,BorderviewFarmandAgResearchFacility,9/17/2010.

19ConferenceCallwithMichaelGerhart,HeadBrewer,OtterCreekBrewingCompany,7/6/2010.


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Cashflow

Thefinalrequirementiscashflow. Oncetheinfrastructureisinplace,canthehopyards

operateinamannerthatisfinanciallyfeasible?

Toassistitsgrowersinbecomingfinanciallyviable,GorstValleyHops,hasresearched

growingand

harvesting

techniques

to

optimize

yield,

and

is

developing

equipment

for

smallscaleacreagethatoptimizesefficiency. Inthesummerof2010,forexample,Gorst

ValleyHopsconductedharvestingstudiestodeterminethemostadvantageous

techniquesforhandharvestingonacommercialscale. Theyalsobegantestinga

mechanicalpickertheydesigned.

AccordingtoestimatesprovidedbylocalNewEnglandgrowers,UVMExtension,anda

commercialgrowerinWashington,manualharvestingonaverageyields1lbofdried

hopsperhour,20

seetablebelow.

Manualharvestingestimatesgiven

RickPedersen,

Pedersen

Farms,

NY

1lb

dried

hops

(1

bine)

per

hour

(1lb/hr)

JasonPerrault,PerraultFarms,Inc,WA 100people,30days,13acres(1.08lbs/hr)

GeneLEtoile,FourStarFarm,MA 1lbdriedhops(1bine)perhour(1lb/hr)

LeonardPerry,UVMExtension,VT 24manhourstopick5lbsofdriedhops,

(0.21lbs/hour)

Atarateof1lbofdriedhopsperhour,itwillbeneartoimpossibletogeneratea

positivecashflowforacommercialhopventure.

IntheGorstValleyHopstrials,however,theydeterminedthatifthegrowercutthe

entirebine

but

only

harvested

the

top

one

third

of

the

bine,

where

94%

of

the

hop

conesresided,thegrowerwouldreducepickingtimeby42%,to35minutesperdried

lb. Bygoingastepfurtherandstrippingthebine,andsortingtheconesonamesh

screen,thegrowercouldreducepickingtimeto20minutesperdriedlb. Usinga

mechanizedpickerandmechanizedsorter,thegrowercanreducethetimeto3

minutesperdriedlb,a95%efficiencygain.21

IfagrowerweretoemployGorstValleyHopsharvestingtechniques,andutilizea

mechanicalharvesterandsorter,thehopfeasibilityequationcanbetransformedinto

afinanciallyrewardingoutlookforcommercialhopgrowinginNewEngland. Please

referto

the

attached

cash

flows

for

details.

20InformationprovidedbyRickPedersen,PedersonFarm,NY,3/26/2010,JasonPerrault,PerraultFarms,

WA,3/26/2010,GeneLEtoile,FourStarFarms,MA,8/20/2010,and

http://www.uvm.edu/~pass/perry/hops.html.21

EmailcommunicationfromJamesAltwies,founder,GorstValleyHops,9/14/2010.


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2010

Notethatinallfourscenariosofsalesanddistribution(participatinginthevalueshare

program;sellingwholedriedhops;usingAtlanticHopsprocessingservices;ordoing

onfarmpelletizing),onlythecashflowmodelsthatemploystrippingandsortingand

mechanizedharvestingofferapositivereturnoninvestment,andonlythe

mechanizedharvestingcashflowmodelsofferthepossibilityofasubstantialannual

netincome.

Todevelopthecashflows,thestudyassumedthefollowing:

Income

pricepointsfordriedwholehops:$10/lb

pricepointforpelletizedhops:$15/lb

incometogrowerfromvalueshareprogram:$9/lb(60%of$15/lb)

Expense

operatingexpensesnotincludinglaborandprocessing:$2,500/acreperyear22

InfrastructureExpense

Growersinvolvedinthevalueshareprogramcanexpecttopayapproximately$10,000

toestablishaoneacrehopyard. Growersnotinthevalueshareprogramcanexpectto

payapproximately$12,000toestablishaoneacrehopyard,seeappendicesforsample

hopyardinfrastructurebudgets.

Yield

Ayieldof1,500driedpoundsperacrewasusedastheaverageexpectedyield. This

numberwasderivedfromhistoricaverageyieldsfromGorstValleyHopsgrowersfrom

averageyieldingvarieties.

22ConservativeestimatedderivedfromhistoricactualdatafromGorstValleyHopsgrowers


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OtherIssuesAffectingGrowingCapabilityandCommercialProduction

Accordingtoexperiencedgrower,RickPedersen,PedersenFarms,NY,whilehopsmay

beahighmaintenancecrop,thisistrueofanyfieldcrop. InRicksexperience,hops

aresimilartofieldcorn. Ifyouknowhowtogrowfieldcornsuccessfully,youshouldbe

ableto

do

well

with

hops.

23

Following

are

certain

specific

elements

of

the

operation

thatcanaffectthesuccessofcommercialhopgrowers.

Disease&Pests

Hopshavebeennotoriousasacropthatgrowswellinthewildbutwhosecommercial

cultivarstendtobeproblematic. Hopsareeasilysusceptibletodownymildew,

powderymildew,aphids,andspidermites. Arigorouspestanddiseasemanagement

regimewillbearequiredelementofanycommercialgrowingoperation.

Nutrients

Nutrientsandsoilamendmentscanbothboostaplantsproductivityandalleviate

diseaseandpestpressure. HopspreferapHof6.06.2,oramildlyacidicsoil.

Growersshouldtesttheirfieldsannuallyandamendtheirsoilstoprovidetheideal

growingmediumfortheirplants. Notethatamendingsoilsbasedontheirspecific

needsiscriticalbecauseoverapplicationofNitrogenbasedfertilizerwillcausesappy

growththatisparticularlysusceptibletodiseaseandpests.24

Inadditiontoamendingthesoilforfertility,therearealsoamendmentsbeing

designedtoassistwithdiseaseandpestcontrol. AnewproductfromGermanyfor

example,Biplantol

Mykos

V,

is

an

organic

amendment

that

is

absorbed

by

the

capillary

rootsystemandfortifiesaplantsresistancetobacteriaandfungalinfestation

includingpowderyanddownymildew. Theresultisahealthyandvitalplant,which

canmorereadilywithstandpestanddiseasepressure.25

UVMExtensionistrialing

othersoilamendmentsandgroundcoverstobeabletoprovidefurther

recommendationsforNewEnglandhopgrowers.

Irrigation

Hops,similartoCucurbitaceaeenjoy,andrequire,watering,butoverheadwatering

will

encourage

and

spread

disease.

Therefore

installation

and

use

of

drip

irrigation

is

recommendedforcommercialgrowers. Thebinesalsoneedgoodairflowandspacing

betweenthemtoencourageadry,diseasefreeenvironment. Hoprootspreferawell

23HoppingtoIt!Conference,RickPedersenPresentation,March26,2010.

24Kneen,Rebecca.SmallScaleOrganicHopProduction. LeftFieldsBC.2004.

25https://www.biplantol.com/produkte.php?content=3


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drainedsoil. Ifagrowerhasheavysoil,installingadrainagesystemwillbean

importantfactortohelpensureasuccessfulhopyard.

TimingofEventsintheGrowingSeason

Hopsrequirespecifictimelyattentiontoplantpruning,irrigation,andharvesting.

Hopsmust

be

picked

when

fully

ripe.

Early

harvesting

can

hinder

lupulin

development

andloweralphaacidcontentbyupto20%. Lateharvestingcanlowerthembyas

muchas10%.26

Inessencethisistypicalofanyfieldcrop. Experiencedgrowerslearn

tounderstandthenuancesofeachcroptheygrow,andwithalittleexperienceand

effort,especiallybeingabletobenefitfromtheknowledgeofothersmallscalehop

growingexpertswhohaveundergonerecenttrialanderrorsuchasthegrowersfrom

GorstValley,bringingourNewEnglandgrowersuptospeedispossible.

Yield

Yieldcanvarygreatlybyvariety,byweatherconditions,andbyindividualfarm

growingpractices,

philosophies,

and

goals.

As

an

example,

aplants

individual

yield

canvarybyasmuchas40%dependingonwhattimetheirrigationwasrunpriorto

harvest. Becauseofthis,James,atGorstValleyHops,hasfounditbeneficialforfarms

todevelopproductiongoalsandproductionmetricsbasedonindividualplant

productivityinsteadofoverallyieldperacre. Whenfarmsfocusonhelpingeach

plantreachitsfullpotential,theyseeanincreaseinoverallyieldbecausethey

identifiedwitheachplantgrowthstage,workingtomaximizethepotentialateach

step,whichinturnequatestomoreconsistentyield. Whengrowersmeasurecrop

inputsandproductionbasedonpoundsperacretheytendtooverlookthenuancesof

productivity. Atoursizeandscale,afocusonefficiencyoverproductivitynegatively

impactsfinancial

return.

27

AtGorstValleyHops,anaverageproducinghopvarietycanproducealowyieldof

1,000lbsofdriedhops;anaverageyieldof1,500lbsofdriedhops,andastrongyield

of2,000lbsofdriedhops. UsingtheGorstValleyHopshopyarddesignand

participatingintheAtlanticHopsvaluesharegrowerprogramitislikelyNewEngland

growerscanachievesimilarresults.28

ExistingNortherngrowerRickPedersen,

PedersenFarm,NYaverages8001,200lbsofdriedhopsperacre(4,0006,000wet

hops),howeverheacknowledgedthathisgrowingsystemisnotfullyoptimizedand

hehasnotbeenabletoprovideindividualizedplantattention.29

GeneLEtoile

26Virant,Majda,Majer,Dusica. HopStorageIndexIndicationofaBrewingQuality.InstituteofHop

ResearchandBrewingZalec.January2006.27EmailcommunicationwithJamesAltwies,founder,GorstValleyHops,9/27/2010.28ConferenceCallwithJamesAltwies,founder,GorstValleyHops,9/7/2010.29HoppingtoIt!Conference,RickPedersenPresentation,March26,2010.


27/325

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2010

harvested100lbsofdriedhopsfrom70plants.30

Ifthisisextrapolatedtothe1,283

plantsperacrethatGorstValleyHopsrecommends,thiswouldextrapolatetoayield

of1,832driedpoundsperacre,whichisinlinewithGorstValleyHopsyield

projections.

Inestimatingwettodryyields,expectashrinkageratioof1:5,thereforeeverywetlb

harvestedwill

yield

1/5

th

of

apound

of

dried

hops.

31

TimetoMaturity

Whenwillhopplantsreachfullmaturity?

Ittakesapproximatelyfouryearsforahopbinetoreachfullmaturity. Inthefirstyear

expectnoharvest,inthesecondyearexpect40%ofafullharvest,inthethirdyear

expect90%,andinthe4th

yearplanonfullproduction.32

1styear = 0%harvest

2nd

year = 40%harvest

3rdyear

=

90%harvest

4th

year = 100%harvest

LowTrellisSystems/CurbAppeal

Anotheranglethisresearchwastoinvestigatewastheinterestorneedforgrowing

lowtrellishopsandthefeasibilityofdoingso.

Traditionallygrownhopsaretrainedupstrandsoftwineriggedacrossan18foothigh

trellissystemandthenhandtiedatthetoptoaseriesofoverheadcrosswires. Come

harvest,the

hop

bearing

vines

are

cut

and

hauled

to

picking

and

cleaning

stations.

Withlowtrellissystems,plantstrainthemselvesupandacrossplasticmesh,or

netting,ona10foothightrellissystem. Hopsareharvestedinthefieldbyhandor

usingamobilelowtrellishoppicker. Thevinesareleftonthemeshwheretheydie

offoverthewinterandregrowthenextspring.

Thepotentialbenefitsofalowtrellissysteminclude:

1. Bettercurbappealespeciallyforfarmslocatedinmoreurbanenvironments

suchasMassachusetts. Alowtrellissystemwouldbelessvisiblefroma

distance

and,

being

shorter

in

height,

any

spraying

activities

would

draw

less

attention.

30ConferenceCallwithGeneLEtoile,FourStarFarm,7/13/2010.

31HoppingtoIt!Conference,RickPedersenPresentation,March26,2010.32

EmailcorrespondencefromJamesAltwies,founder,GorstValleyHops,9/23/2010.


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2010

2. Loweroperatingexpenses. Lowertrelliseseliminatetheneedforstringing,in

whichtwineistiedtothetrelliswires,andtraining,inwhichthestrongest

shootsofeachhopplantaretrainedupthestring. Theycanalsobeeasierto

harvest. Thesechangescouldreduceannuallaborexpensebyupto30%per

year.33

Annualsuppliesexpensecanalsobediminishedbecausethemesh

netsremainintactfromyeartoyearwitha10yearlifespan,unlikecoirtwine

whichneeds

to

be

replaced

each

year

at

an

average

cost

of

$125/acre.

34

Low

trellisproductionsystemsalsoenablegrowerstoapplypesticideswith

directedorcoveredsprayersthatlowertheamountofpesticidesrequired,and

theyuselessfertilizer,furtherreducingoperatingcosts.35

3. Environmentalbenefits. Giventhepesticidescanbeappliedinamore

targetedanddirecteffort,aloweramountofpesticidesisrequired,thus

lesseningtheamountofpesticideaddedtotheenvironmentandtheriskfor

pesticidedrift.36

Conversely,however,thistheoryisquestionedbyEdward

Pagewhonotesthathigherchemicaluseisrequiredfortillingandpruning.37

4. Lowerstartupexpenses/easiertoestablish. Itiseasierandlessexpensiveto

sourceandinstall1012polesandnylonmeshthantopurchaseandinstall20

24poles

and

steel

cabling.

According

to

Edward

Page,

who

did

acost

comparisonbetweenhightrellisandlowtrellis,itcostsabouthalfasmuchto

setupalowtrellishopyard,$6,000/acre.38

Despitetheseexcellentbenefitsthereareseveralissuesaffectingthecommercial

feasibilityofgrowinglowtrellishopsinNewEnglandatthistime.

1.

Commerciallowtrellisharvestingequipmentiscostprohibitive,ranging

between$200,000$400,000perharvester.

2. Increasedincidenceofdisease. AccordingtoJulienVenne,ProjectManagerat

QubecsCentre

de

Recherche

et

de

Dveloppement

Technologique

Agricole

deLOutaouais,thereisstrongconcernthatintheNortheastsrainy,humid,

anddiseaseproneclimate,havingbinesoverwinterwouldencouragedisease

ifthesporesoffungaldiseasesoverwinteronhopcrownsandligneous

tissues. Thiscouldkeephighlevelsofdiseaseinoculumsinthefieldand

exacerbatethediseasecontrolprocess.39

InthePacificNorthWesttheyare

33USDAARS.LowerHopTrellisesforHigherProfits. CropManagement. 21January2008.

34Ward,L.YakimaHeraldRepublic. Someplasticmeshcouldsavestatehopfarms. Newtechniquehas

potentialforthebeermakingcrop.May30,2005.35

USDA

ARS.

Lower

Hop

Trellises

for

Higher

Profits.

Crop

Management.

21

January

2008.

36http://www.ars.usda.gov/is/AR/archive/jan08/hops0108.htm

37Page,E.B.HopTrellising&Budgets.7/26/2008.

38Page,E.B.HopTrellising&Budgets.7/26/2008.

39EmailCommunicationJulienVenne,ProjectManageratQubecsCentredeRechercheetde

DveloppementTechnologiqueAgricoledeLOutaouais,5/25/2010.


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2010

experimentingwithusingdiseaseresistantvarietiesandbeatingthebinesoff

themeshoncetheyhavefrozenoverinwintertocounterthisissue.

3.

Limitedvarieties. Notallhopsaresuitedtolowtrellismanagementandmany

ofthelowtrellisvarietiesthatdoexistarenotinhighdemandbythe

brewers.40

4. Patents. Manylowtrellissystemandhopvarietiesarepatented. Thismay

presentmore

difficulties

and

expense

in

sourcing

varieties

and

hopyard

supplies.

5.

LowerYields. AccordingtoresearchconductedbyJasonPerrault,Godin&

Page,andJohnHenning,hopsgrownonalowtrellissystemwillhavealower

yieldthanhightrellisedhops. Yieldscouldrangeanywherefrom2050%less.

4142 Becauseofthis,geneticistJohnHenningisresearchingwhatgeneorgenes

areresponsibleforshortergrowthtoaidinselectionofhopsvarietiesthatmay

respondmorefavorablytolowtrellissystems.43

Theconclusionregardinglowtrellissystemsisthatwhileitwouldbeinterestingto

investigate,theclearpathtowardsanimmediatecommerciallyviablehopcropwould

beto

continue

down

the

traditional

high

trellis

hops

path.

The

advent

of

more

commerciallyavailablemobileharvestingmachinerycoupledwithmoreresearchinto

lowtrellishopvarietiesandthevalidationorrefutationwithrespecttodiseaseissues

giventheoverwinteringofhopcrownsandligneoustissuesinNewEnglandwinterswill

helpfurtherthediscussiononthelongtermpotentialofalowtrellissystem. Inthe

appendicesisanexpiredpatentforamobile,lowtrellisharvester.

OnFarm/DoItYourselfTechniques

GivengrowersinNewEnglandhavehadtorelyontheirowningenuity,trialanderror,

andpersonal

expense

to

grow,

harvest,

and

process

hops

in

recent

decades,

several

do

ityourself,lowcostsolutionshavebeendevelopedtosolveproductionbottlenecks.

DoItYourselfHopPickers

Atpresenttherearenocommerciallyavailablehoppickersfor110acrehopyards.

SomefarmshavetriedimportingoldermachinesfromEasternEurope,butaccessto

partsandreliabilityareanissue. Because1 10acrecommercialhopyardswere

commonintheearlytwentiethcentury,Germanyalonehad80,000100,000hopyards

thatwereoneacreorless,andNewYorkandOregonoperationsofthetimewere

40EmailcommunicationwithRosalieMadden,UVMExtension,5/25/2010.

41Page,E.B.,Godin,R.HopyardConstruction:BudgetingandEconomics. CSUAgExp.Station.

42EmailcommunicationwithRosalieMadden,UVMExtension,5/25/2010.

43http://www.ars.usda.gov/is/AR/archive/jan08/hops0108.htm.


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comparableinsize,yield,andproductiontothesefarms,44

severalpatentsformachines

doexistforthesescaleoperations. Thisstudyresearchedandrecirculatedthese

patentsinhopesnewdesignsormachinistswouldbeinterestedinbuildingprototype

machinesthatcouldbetested,andifeffective,replicatedandsoldtoday. Copiesof

thesepatentsareattachedasappendicestothisreport. Threedesignsdidemergefrom

thiseffort,twobylocalfabricatorHugoGervais,andathirdbyJefferyCox. These

designswould

range

in

price

from

$3,900

to

$27,000,

the

lower

cost

models

handling

approximately1/3ofanacreandthemoreexpensivemodelsbeingabletohandle

multipleacres. GorstValleyHopsisalsodesigningandtestingasmallscalepickerthat

willbeabletomanageuptoanacreperhopvariety,thereforeatotalofthreeacresif

followingthethreevarietyhopplanting. Theyplantohavethehoppickerandahop

sortercombinationavailableforsalethroughAtlanticHopsby2012for$15,000orless.

Alloftheseoptionsarewellunderthe$250,000expenseofapickerdesignedforthe

largefieldsoutWest,andallabletoprovideareasonabletimeframeforreturnon

investment,of5yearsorless.

Note: Whenevaluatinghoppickersitisessentialtosearchforadesignthatwill

minimizeshatter

or

damage

to

the

hop.

The

average

rate

of

damage

experienced

duringhandharvestinghoversaround2%. Ideallyonewouldwantamechanizedpicker

toequalorimproveonthatrate. TheGorstValleyHopspickeriscurrentlyexperiencing

ashatterrateofbelow2%.45

DoItYourselfOasts

Oastscanbebuilteconomicallyfrommaterialsaroundthefarm. Afivegallonpailwith

a3diametercomputerfanandameshscreencandryuptoahalfpoundofdriedhops

atatime(~2hoursworthofhandpicking). A30gallonbarrelgarbagecanwitha6fan

wouldfurther

increase

the

volume

of

drying

capacity;

and

a16x24x8

rectangle

built

outofwoodorothermaterials,withan18to2fanandanylonmeshsecuredmidway

downcoulddryuptoofanacreatatime.46

Inadditiontoselfmadeoptions,AtlanticHopswillofferGorstValleyHopsoastdesigns

andoastkitsforNewEnglandhopgrowers. ThecostofaGorstValleyHopsOastwillbe

highlydependentonthefansizeneededastheirdesignusesaninverseblowing

technique,ratherthanblowingairintothehops,itissuckingairthroughthehops. An

oastforaoneacrehopyardoastwillrunapproximately$5,000,anoastfor25acreswill

runapproximately$10,000andanoastfor5+acreswillrunapproximately$17,500.

44Barth,JohHeinrich,Klinke,Christiane,Schmidt,Claus. TheHopAtlas. JohBarth&Sohn,Nuremberg,

Germany.1994.45

PhoneConversationwithJamesAltwies,founder,GorstValleyHops,9/7/2010.46

PhoneConversationwithNewEnglandhopgrowerJonathanBlumberg,August8,2010.


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Insideofahomemadeoast,notethemeshscreeninstalledpartwayuptoallow

airtocirculatebelowandabovethehops. Notetheseriesofoastsinthe

background,enablingmorevolumetobedryingsimultaneously. Pictureof

GeneLEtoilesFourStarFarms,MA. Photocreditr.wilson

Exteriorviewofahomemadeoast. Suppliesaresimple2x4stocreatetheframe,

1x2stoaffixthescreen,a4x8screen,tyvektoformthewalls,andacircularfan.

PictureofGeneLEtoilesFourStarFarms,MA. Photocreditr.wilson


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DoItYourselfSorting

Sortingmechanismsenableagrowertogofromhandpickinghopsonebyoneoffthe

bineto

stripping

them

into

apile

on

asorting

table

and

quickly

extricating

the

hops

from

thechaff. Sortingisanareaoftheharvestingprocessthatcangreatlyincreasea

growersefficiency. JamesAltwies,founderofGorstValleyHops,notesthattobe

commerciallyviable,growerscantoverlyconcernthemselveswithremoving100%of

thestemsandleaves. AccordingtoAltwies,thenationalindustrystandardsallowforup

to2.5%ofstemandleafsubstancetoremainattachedtoahopandstillbecalledhops.

Soonecanleaveuptoaninchofstemattachedtoahopandhaveitstillapprovedasa

hop. Ahomemadesortingsystemcanbeachievedthroughcreatingaseriesofsorting

tablesoutofmeshedscreensaffixedtoarectangularframe. A1screenwouldbeused

firsttosortoutbigleaves,allowingthehopstofallontoasecond.25meshscreenthat

canthenbeusedtosortoutfinaldebrisandallowasortertoremoveanyexcess

detritusfrom

ahop

before

ushering

the

cones

into

boxes

that

can

then

be

sent

to

dry.

Foroptimalefficiency,mechanizingonessortingsystemisadvised. GorstValleyHops

offersamechanized,angled,oscillatingsortingsystemthathascapacityforoneacreper

hopvariety. TheGorstValleyHopssortercombinedwiththeGorstValleyHopshop

pickerisexpectedtobeavailablefromAtlanticHopsin2012atatotalpricepointof

$15,000orless.47

DoItYourselfCompacting

Ideallyhops

should

be

compacted

down

to

10lbs

per

cubic

foot

and

bailed.

This

will

makethemeasiertotransportandhelpretaintheirstoragequality.48

Oncecompacted

andbailedthehopscanremaininrefrigeratedstorageuntilsoldorpelletized. At

presenttherearenoknowncommerciallyavailablecompressorsspecificallydesigned

forsmallscalehopgrowers. Existinggrowershavesuggestedusingatrashcompactor,

orpressingdownonabagofhopsusingascrewaugerplate,asrelativelyeffective

meanstocompresstheirhops.49

GorstValleyHopsiscurrentlyinvestigatingtheneedforcompressingmechanismsfor

smallscalehopgrowers.

47ConferencecallwithJamesAltwies,Founder,GorstValleyHops,9/7/2010.

48PhoneConversationwithNewEnglandhopgrowerJonathanBlumberg,August8,2010.

49PhoneConversationwithNewEnglandhopgrowerJonathanBlumberg,August8,2010.


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DoItYourselfPelletizing

Asdemonstratedinthemarketresearch,anoverwhelmingnumberofbrewerspreferor

canonlyusepelletizedhops. Alowcostsolutiontocreatingonesownpelletsisto

grindhopsintoapowderusingakitchenmeatgrinder,50

orideally,ahammermill,and

sendingthemintoasmallscalepelletmillequippedwithadie. Adiewillproduce

the6mm

(T

90)

pellet

that

brewers

are

accustomed

to.

Smallsizedhammermillscanbepurchasedfor$1,700orless,andsmallscalepellet

millscanbefoundforunder$2,400,seePelletProsunderadditionalpersonsconsulted

formoreinformation.5152

50ConferencecallwithRogerRainville,UVMExtensionhopresearchfarm,9/17/2010.

51http://www.pleasanthillgrain.com/hammer_mill_pulverizer.aspx;

http://www.meadowsmills.com/forsalehm.htm 52

http://www.pelletpros.com/id68.html

SmallScalePelletProsHammermill. 130lb/hrcapacity


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Note:Thekeyconcerntorememberwhenpelletizingisthatheatcreatedduringthe

processcandamagethehops. Takecaretoprocessslowlyandstopasoftenasneeded

toallowthemachinestocooldown. Thehopsandhoppelletsshouldnotreacha

temperaturehigherthan112F. Tokeepaneyeonthetemperatureyoucanusean

infraredthermometer,

which

can

be

found

at

most

hardware

stores,

for

approximately

$20. Youcanalsoalleviatehowquicklythepelletsheatupbypouringfewerhopsinata

time. AccordingtoRogerRainville,ifyoukeepthefeedslowyoucankeepthe

temperaturedownandprocessanaverageof10poundseveryfewminutes.53

DoItYourselfChemicalLabAnalysis

Severallaboratoriesofferchemicalanalysisservices,aninexhaustivelistisprovidedin

theappendices. Ataminimum,growerswillneedtohaveananalysisforalphaandbeta

acidscompletedontheirhops. Informationonmoistureandoilcontent,willalsobea

requirement

from

some

brewers.

Gorst

Valley

also

does

a

physical

exam

of

their

hops

usingtheguidelinesprovidedbytheAmericanSocietyofBrewingChemistsandthe

USDA. Acopyofthecompletedanalysisshouldaccompanyeachpackageofhopssold.

53ConferencecallwithRogerRainville,UVMExtensionhopresearchfarm,9/17/2010.

SmallScalePelletProsPelletMill. 80lb/hrcapacity


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2010

FujiImpulseVG402/602SeriesMicro

Computer

Controlled

Nozzle

type

Vacuum

andGasFlushingImpulseSealer. Indvacnozzletypeflushingandsealingmachine.

DoItYourselfVacuumSealPackaging

Whileitwillbedifficulttoachieveanitrogenflushonabudget,onecanataminimum

vacuumsealtheirpelletizedandwholedriedhopsathomewithsimpletoolssuchasthe

FoodSaver,homeusefoodgradevacuumsealsystems,thatcostunder$200,54

orby

usingvacuum

seal

Space

Bags

that

are

alarger

solution

and

could

meet

the

brewers

requestsfor11lband44lbpackages.55

Note:Packagingandequipmentneedstobefoodsafe.

DoItYourselfNitrogen/CO2flushingandVacuumSealing

Foramoreprofessionalandcommercialoperationonecaninvestinafoodgrade

nitrogenflushing,vacuumsealingmachineforlessthan$30,000. Severalmodelsof

smallscalemachinesthatcombineflushingwithnitrogenandvacuumsealingare

availablefromIndia,suchasthetwoshownherebyFujiImpulseAmerica56

and

Indvac57.

Theproviders

of

the

machines

can

also

supply

the

foil

laminated

pouches

requiredforpackaging. TheFujiImpulseVG602whichcanprovideuptoa600mm

lengthseal,rangesfrom$21,00024,000andasetof200foillaminatedpouchesthat

wouldfit11lb/pouchrun$330/order. ThecompleteproductspecificationsfortheFuji

ImpulseVG402/602seriesarelocatedintheappendices.

54http://www.foodsaver.com/Category.aspx?id=c&cid=87

55https://www.spacebag.com/10/PriceList.dtm

56http://fujiimpulseamerica.thomasnet.com/viewitems/impulsesealersvacuumgasflushsealing/

controllednozzletypevacuumgasflushingsealer57

http://www.indvacindia.com/nozzle typeflushingsealingmachines.htm


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2010

DoItYourselfClimateControl

Hops need to be kept between 2632F. This can be achieved through any regular

household

freezer,

or

growers

can

invest

in

walk

in

freezer/cooler

storage

units.

Growerscanalso leasespace fromcommercialclimatecontrolledwarehousessuchas

VermontRefrigeratedStorage.58

Conclusions

ThisreporthasdeterminedthatisfeasibletogrowacommercialhopcropinNew

England. Thereissufficientdemand,thereissufficientpriceelasticity,andthereisnow

theinformation,technology,supplies,andequipmentavailabletomeettheneedsofa

110acrecommercialhopyard.

Thereare

four

ways

that

appear

commercially

feasible

for

growing

hops

in

New

England:

Scenario1: ParticipatinginavaluesharegrowingprogramwithAtlanticHops

Scenario2: Sellingwholehops,minimallyprocesseddirecttobrewers

Scenario3: UsingAtlanticHopsforprocessingservicesandsellingpelletized

hopsdirecttobrewers

Scenario4:

Selling

do

it

yourself

pelletized

hops

direct

to

brewers

Inallinstances,thebestpotentialforreturnoninvestmentandnetincomeexistswhen

thegrowerutilizesmechanicalharvestingandsorting.

58For contact info see Barney Hodges, Vermont Refrigerated Storage, under additional persons consulted.


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Page36


2010

IncomePotentialandReturnOnInvestment

Scenario1 Scenario2 Scenario3 Scenario4

AverageYield

PerAcre

1,500driedlbs 1,500driedlbs 1,500driedlbs 1,500driedlbs

AverageNet

IncomePer

Acre

$4,640

$5,090

$5,090

$12,910

AverageReturn

OnInvestment

for1stAcre*

5years 5years 6years 4years

Levelof

IndividualRisk Low Moderate Moderate High

Whilethepotentialtogeneratenetincomeperacreishighestinscenariofour,inwhich

thegrowercreatesthevalueaddedfinishedproductonsite,theultimate

recommendationistoadoptscenarioone,inwhichgrowersparticipateinavalueshare

growingprogramwithAtlanticHops. Thisisbecausescenarioonerepresentstheleast

riskwhilestillpresentingastrongpotentialforfinancialreturn.

1.

BestSolution:ParticipateinAtlanticHopsvaluesharegrowingprogram

Benefits:

LeastInfrastructureExpense

UnlimitedaccesstoGorstValleyHopsTechnicalAssistanceandResources

ApplicabletoAllGrowers

Nosecondary

processing

or

sales

and

marketing

required

of

the

grower

LowestRisk

EncouragegrowerstoparticipateintheAtlanticHopsvaluesharegrower

program. TheAtlanticHopsValueShareGrowerprogramwillseektominimize

risktoitsgrowersateverystageinthegrowing,production,andsalesand

marketingprocessbyprovidingthemwithtechnical,logistical,andinfrastructure

support. Farmsinthevalueshareprogramwillbenefitfromwholesalepricing

onhopyardsupplies,complimentarytechnicalassistance,triedandtested

hopyarddesignsandproductiontechniquestheseeffortsasdesignedtoassist

inoptimizing

production

efficiency

and

yield.

Then

Atlantic

Hops

will

use

its

expertiseandequipmenttoprocessahighqualityfinishedproductthatmeets

theproductspecificationandvolumeneedsofthebrewingcommunity,and

marketandselltheproductatapricethatreturnsafairprofittoitsgrowers.


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2010

Hopyard:

Recommendstartingwithoneacreandexpandinguptotenacres. Usea3

varietyplanting,with1/3ofhopyardpervarietytostaggerharvesttimesand

minimizethreattoentirecropfromweather,pestordiseaseissuesthatmay

affectaparticularvariety.

Economicfeasibility:

Anticipatedhopyardinfrastructureexpenseperacre: $10,000

Anticipatedharvestinginfrastructureexpense:

Oast(Year2): $5,000for1stacre

$10,000for25acres

$17,500for5+acres

MechanicalPicker(Year3) $5,000forupto3acres

MechanicalSorter(Year3) $5,000forupto3acres

TotalInfrastructureExpenseforFirstAcre: $25,000

TotalOperatingExpensePerAcre: $8,860

TotalGrossIncomeat100%Production: $13,500

(assumingreceiving$9/lbforwholedriedhopsfromAtlanticHops)

NetIncomePerAcre: $4,640

ReturnonInvestmentforFirstAcre: 5years

2. GoodSolution:Sellwholehops,minimallyprocesseddirecttobrewers

Concerns:

LimitedaccesstoGorstValleyHopsknowledgeandresources

Marketdemandcanonlysustainafewgrowers

Growerswillneedoutgoingsalespersonality

Growerswillneedtomaketimeforsalesandmarketing

Lackofsufficientclimatecontrolledstorage spacecouldbeanissue.

Moderaterisk

Encouragegrowerstoinvestinmechanicalharvestingandsorting,useahigh

hoptrellissystem,sendhopstoalabforchemicalanalysisandselldried,whole

hopsdirectlytobrewers. Thissolutiondoespresentasolidpotentialforprofit

andreturnoninvestmentwithminimalsecondaryprocessingrequired. The


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Page38


2010

issueswillbepotentialissueswithqualityofthefinishedproduct;limited

demandforawholehopproduct;limitedstoragespaceunlesstheproductis

compacted,orsignificantclimatecontrolledwarehousespacecanbeleased;and

relianceonthegrowersabilitytosecuresalesofhisproduct.

Hopyard:

Recommendstarting

with

one

acre

and

expanding

up

to

ten

acres.

Use

a3varietyplanting,with1/3ofhopyardpervarietytostaggerharvesttimesand







$10,000for25acres

$17,500for

5+

acres





TotalGross

Income

at

100%

Production:

$15,000

(assumingsellingwholedriedhopsat$10/lb)




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Page39


2010

3. GoodSolution:UseAtlanticHopsprocessingservices,sellpelletizedhopsdirect

tobrewers

Concerns:


Individualfarmvolumecouldbealimitationonmarketdemand

Growerswill

need

outgoing

sales

personality

Growerswillneedtomaketimeforsalesandmarketing

Moderaterisk

Encouragegrowerstoadoptmechanicalharvestingandsorting,utilizeahigh

trellishopssystem,andcontractprocessingandpackagingoftheirhopsfrom

AtlanticHops. Retrievethefinishedproductandsellindividualfarmhops

directlytobrewers. Inthissolutiongrowerscantakeadvantageofprocessing

servicestoproducethefinishedproductbrewersarelooking. Thisenablesthe

growertofocushisattentiononhiscorecompetency growingtherawproduct,

and

engaging

others

for

their

core

competencies.

This

helps

ensure

everyones

timeisbestused,andthatrisktoqualityofthefinishedproductisminimized.

Hopyard:







Anticipatedharvesting

infrastructure

expense:


$10,000for25acres

$17,500for5+acres



Anticipatedprocessinginfrastructureexpense:

2Chest

freezers

(Year

2):

$2,000




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Page40


2010


(assumingsellingpelletizedhopsat$15/lb)



4.

RiskySolution:

Selling

do

it

yourself

pelletized

hops

direct

to

brewers

Concerns:


Issueswithprocessingcouldimpactsuccess

Volumeandproductqualitycouldbealimitationonmarketdemand

Growerswillneedoutgoingsalespersonality

Growerswillneedtomaketimeforprocessing,salesandmarketing

Highrisk

Encourage

growers

to

adopt

mechanical

harvesting

and

sorting,

utilize

a

high

trellishopssystem,purchaseahammermill,pelletmillandvacuum,nitrogen

flushsealingmachine. Thissolutionrepresentsthegreatestpotentialfor

incomeandreturnoninvestment,andalsothegreatestrisktothegrower. The

growerwillbeonhisownforallaspectsofgrowing,harvesting,producing,and

sellingafinishedproductthatmeetstheproductspecificationsofthebrewing

community,atavolumeandpricepointthatgeneratesapositivereturn. Ifthe

growercanmaintainanaverageyieldof1,500lbsofdriedfinishedproduct,

achievethequalitystandardsofthebrewingindustry,anddevelopthesalesand

marketingskillstomarkettheproduct,thegrowercanstandtogenerateupto

$12,910innetincomeperacre.

Hopyard:








Oast(Year

2):

$5,000

for

1

st

acre

$10,000for25acres

$17,500for5+acres



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Page41


2010


Anticipatedprocessinginfrastructureexpense:

2Chestfreezers(Year2): $2,000

VacuumNitrogenFlushSealer(Year2): $24,000

PelletMill(Year2): $2,400

HammerMill(Year2): $1,700




(assumingsellingpelletizedhopsat$15/lb)




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Page42


2010

NextSteps

Itisevidentthereisstrongdemandforlocalhops,andgoodpotentialfortheabilityto

growhopsprofitablyinNewEngland. Theinfrastructure,whichwasoriginallyakey

barriertomarket,isnowbeingdevelopedtosupportsmallscalecommercialgrowersin

NewEngland.

Ifproducersgothroughtheeffortofinvestingtimeandcapitalintostartinga

commercialhopventure,butlackthesupporttheyneedtodeveloptheirbusinessplan

andgainaccesstonecessarytechnicalexpertise,theeffortmaywellbelost.

FollowingisarecommendationforhowVermontAgencyofAgriculture,Foodand

MarketsandtheMassachusettsDepartmentofAgriculturalResourcescouldensurethat

suchanendeavorisgivenitsbestopportunityforsuccess:

1. AssistAtlanticHopsinestablishingitsoperation.

NewEnglandneedstheprocessingcapabilitiestoproduceaprofessionalproduct

thatwillmeetmarketexpectations. Italsoneedsaccesstotheequipment,andtechnicalexpertiseGorstValleyHopshasalreadydevelopedandtestedforits

smallscaleMidWestfarmers. Havingaprocessingfacilitythatiswillingto

processtheproductandpartnerwiththefarmswithamissionofprovidinga

goodproductatafairvaluetobrewersandreturningafair,profitableincometo

theproducersisawinwin.

2.

Outreachtoexistinggrowers/farmers

Theagencieswillneedtoreachouttoexistinggrowers. Someofthemany

reasonshopsarecitedasdifficulttogrowarebecausetheyarebeinggrownby

peoplewhodontgrowcropsforaliving. Mostofthebasicissueswithhopsarethesamebasicissuesyouwillfindwithanyothercrop(theyneedwelldrained

soil,theyneedfertilizer,theyneedpestcontrol,theyneeddedicatedtiming the

harvestiseverything). Producerswhogrowacresofcorn,vegetables,and

grainsalreadyknowandunderstandthefundamentalelementsofwhatittakes

togrowacropsuccessfully. Existingandexperiencedgrowersandfarmersneed

tobethetargetaudienceifgrowinghopsistodedevelopedasacommercial

enterprise.

3.

BusinessPlanning&CoordinationwiththestateFarmViabilityPrograms.

Witheach

farm,

given

this

is

anew

venture

and

unexplored

territory

for

them,

andalsoanewcropfortheregion,havingthemgothroughthebusiness

planningprocessforimplementingthenewcropandevaluatingitsimpacton

thefarmbusinessandfamilyqualityoflifewillbeessential. Thiswillhelpensure

thateachfarmcanmapoutonpaperhowtheywouldgoaboutimplementing


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Page43


2010

thenewcrop,understandwhatitwouldtakeontheirparticularfarm,whatit

wouldcost,andwhatthepotentialreturnwouldbe. Theymustbeableto

understandandevaluatehowitmightimpactotherareasofthefarmand

whetherthenetreturnwouldbebetterthancontinuingwiththeircurrent

productionornot. Itisimportantthatthisstepbedonewhilestillinplanning

mode,soadecisiononwhetherimplementingtheplanisintheirbestinterestor

notis

made

before

any

additional

resources,

time,

and

effort

have

been

allocated.

4. ImplementationandBusinessPlanningTechnicalAssistance

Provideongoingsupportforthefarmsfor4yearsafterinitialimplementationto

helpassistwithanalyzing,planning,anddecisionmakingforthenewventure

andtheoverallfarmoperation. Thisincludesbusinessplanreview,analysisand

updating,andtechnicalexpertisespecifictoareasofconcern production,

processing,salesandmarketing,etc. Thisthirdparty,objectivesupportwillhelp

ensureconcernsareaddressedproactivelythusprovidingalargerdegreeof

likelihoodof

success

for

each

farm,

and

their

long

term

commitment

to

the

project.

ActionItems

1.

Identify10growersinMA&VTwhowouldbeinterestedinparticipatingin

AtlanticHopsValueShareGrowerProgram

2. Vetfarmsites

a. Conductasitevisittoevaluatethelogisticalfeasibilityofeachfarm. Ata

minimumthesitewillneed3oftopsoilbeforereachingbedrock.

AtlanticHops

will

also

assess

each

farms

site

for

additional

attributes

suchassoilstructure,waterholdingcapacity,andseasonalwindloads.

3.

Workwiththegrowerstoexplaintheopportunity,andenrolltheminthe

program. Thiswillrequireacommitmentofestablishingaoneacrehopyardat

anexpenseof$10,000andthepurchaseofapicker,sorter,andoast,foran

additionalexpenseof$15,000overyearstwoandthree.

4. Potentiallyfindingfundingtooffsetcostofcapitalinfrastructureexpenseforthe

firsttengrowers,orfordairyfarmerswishingtoparticipate.

5.

BeginFarm

Viability

business

planning

and

Atlantic

Hops

Value

Share

Growing

Programtechnicalassistancewitheachfarm.

6. AtlanticHopswillprovideoversightandguidancewithTechnicalAssistance

duringestablishmentofthehopyard,andgrowingandharvestforfirstfour

years.


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7. Maintaincommunicationloopwiththebrewingcommunity. Letthebrewersin

thehighlyqualifiedprospectlist(seebrewersinBoldintheappendices)know

oftheplan,engagethemintheR&Dphase,andleveragetheirinputand

feedbacktodevelopafinishedproductthatwillmeettheirapprovalandbe

readyforsalebyyear3.

8. ProvideongoingFarmViabilitybusinessplanningandtechnicalassistance

services

a. Provideanannualbusinessplanreview,analysisandplanforthe

upcomingyear. Forfirstfouryears

b.

ProvideongoingannualTechnicalAssistanceinspecificareasofexpertise

asneededforeachfarm. Forfirstfouryears

Budget

10farms

Year1 PerFarm #Farms Total

HopyardInfrastructure $10,000 10 $100,000

BusinessPlan $4000 10 $40,000

TechnicalAssistance

inAreasofExpertise $3000 10 $30,000

TotalBudgetYear1 $170,000

Years24 PerFarm/Year#Farms Years Total

Harvest/DryingInfrastructure $15,000 10 $150,000

AnnualBusinessPlanReview

andAnalysis $2000 10 3 $60,000

AnnualTechnicalAssistance

InAreasofExpertise $2000 10 3 $60,000

TotalBudgetNextThreeYears $270,000($90,000/year)


46/325

AppendixA SourcesofInformation

Barth,H.J.,Klinke,C.,Schmidt,C. TheHopAtlas. 1994. Nuremberg,Germany. Joh,Barth&Sohn.

Fayston,

J.

The

2007

hops

shortage

is

over,

the

glut

of

'09

is

here...

The

Oregonian.

10/28/2009.

Hilchey,D. TheMarketPotentialforNortheasternGrownHops.NewLeafPublishingandConsulting,Inc.2009.

Kneen,Rebecca.SmallScaleOrganicHopProduction. LeftFieldsBC.2004.

Neve,R.A.Hops.Champman&Hall.1991.

Page,E.B.HopTrellising&Budgets.7/26/2008.

Page,E.B.,Godin,Ron.HopyardConstruction:BudgetingandEconomics. CSUAgExp.Station.

Tomlan,M.TingedWithGoldHopCultureInTheunitedStates.UniversityofGeorgiaPress. Georgia. 1992

USDAARS.LowerHopTrellisesforHigherProfits. CropManagement. 21January2008.

Virant,Majda,Majer,Dusica. HopStorageIndexIndicationofaBrewingQuality.

Instituteof

Hop

Research

and

Brewing

Zalec.

January

2006.

Ward,L.YakimaHeraldRepublic. Someplasticmeshcouldsavestatehopfarms. Newtechniquehaspotentialforthebeermakingcrop.May30,2005.

InternetResources

http://www.brewersassociation.org/http://www.thefreelibrary.com/Craft+Beer+Segment+Continues+to+Set+the+Pace+for+the+Beer+Category...a0167648025http://hopsextracts.comhttp://hopunion.comhttp://www.uvm.edu/~pass/perry/hops.html.http://fujiimpulseamerica.thomasnet.com/viewitems/impulsesealersvacuumgasflushsealing/controllednozzletypevacuumgasflushingsealerhttp://www.indvacindia.com/nozzletypeflushingsealingmachines.htm


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Commercial Feasibility of Local Hops2010

https://www.biplantol.com/produkte.php?content=3http://www.ars.usda.gov/is/AR/archive/jan08/hops0108.htmhttp://www.pleasanthillgrain.com/hammer_mill_pulverizer.aspx;http://www.meadowsmills.com/forsalehm.htmhttp://www.pelletpros.com/id68.htmlhttp://www.foodsaver.com/Category.aspx?id=c&cid=87

https://www.spacebag.com/10/PriceList.dtmhttp://blog.foothillhops.com/2009/01/01/foothill_hops_20091114521flv.aspx

http://www.centralvt.com/climate/climate.htmhttp://www.lindemanarchives.com/LA%20History.htmlhttp://www.rssweather.com/climate/Vermont/Burlington/http://maps.google.com/maps/ms?hl=en&ie=UTF8&msa=0&msid=114006202269755079477.00048524ed0b04bf595d6&ll=42.366662,71.235352&spn=2.840979,5.767822&z=7&source=embedhttp://www.massbrewersguild.org/craftbeer/index.php/memberbreweries/http://groups.google.com/group/vermonthops/topicshttp://www.indiehops.com/http://www.freshops.com/

http://www.gorstvalleyhops.com/http://www.examiner.com/hopsinmadison/hopsgrowingbusiness2007shortagerevisitedhttp://www.examiner.com/beerinnational/toptenhopvarietiesusedbyamericancraftbrewershttp://vermontbrewers.com/http://www.lewbryson.com/nyprogress.htmhttp://www.freepatentsonline.com/http://www.czhops.cz/tc/bibliography/bibliography10.html

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