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Worldwide hops shortage could raise price of beer

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CTV Newsnet: Price of beer on it's way up
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Date: Sat. Feb. 2 2008 9:30 PM ET

Brewer Ken Woods has a simple plea for farmers considering growing something other than hops: please don't.

As the president of the Black Oak Brewing Company, based in Oakville, Ont., he's one of many brewers around that world that have had to contend with a hop shortage that isn't going to end anytime soon.

Caused by a low yield crop year, increased demand for beer in high-population places like China and a trend among hop farmers to grow other crops that demand higher prices, the shortage has proved troublesome for brewers around the world, particularly those working from smaller inventories like Woods.

Costs are way up

"The price of hops has gone up by 400 per cent," Woods told CTV.ca on Saturday. "It has caused us to change our way of doing things... We used to do a lot of hoppy cask beers, but now we're just trying to make sure we have enough for our regular beers."

It's not just hops that are costing more. The price of barley, one of the most commonly used malt ingredients, is also on the rise.

"As we change from one season's crop to another on the malt recently, our price of a bag of malt went from $30 to $40," Rick Dellow of the R & B Brewing Company told CTV British Columbia. "We put about 15 in a batch so it hits our bottom line quite severely."

For now, R & B is absorbing the added cost as best they can. It's something they won't be able to do forever, said Dellow, nothing the company has suffered a 10 per cent loss in profit as a result.

"Most of our customers are small local businesses like we are," he said. "They're struggling with increased costs of fuel and all kind of stuff, so we're right now we're eating it and we'll keep doing that as long as we can."

Woods said he was lucky enough to buy all of his suppliers' hops just before prices went up in October. That was when it became clear how dismal the year's harvest had been. Beer makers worldwide began snapping up what was left at a significantly increased price.

Waiting for new crop

Hops are mainly grown in Europe and North America, where the growing season ends annually in the fall.  It will be then that brewers will be able to tell whether the shortage was a one time thing or part of a new reality in beer making.

But with the demand skyrocketing and supply decreasing, Woods thinks it could be in everyone's best interest for farmers to jump (back) on the bandwagon as soon as possible.

"If farmers have ripped the hops out that means at least three years to grow new ones we can use," said Woods, noting many have switched to crops like corn and soy, which are both seeing a steady increase in demand. "Some pretty senior beer people are out there trying to convince farmers that there's still good money in hops."

If fall comes around and yields the same troubles as this year, then Woods -- who is also an accountant -- will have to count on selling for a higher price. This will lead retailers to raise their selling prices, although probably no more than a dollar per pint, something beer drinkers interviewed by CTV British Columbia said they'd be willing to accept.

"If it went to $6 a pint it's not that big of a difference," said one B.C. bar patron. "I enjoy my beer and if it costs an extra dollar to have one or two, then so be it."

With a report from CTV British Columbia's Stephen Smart

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