CANNON TOWNSHIP, Mich. (WOOD) — West Michigan loves craft beer, but the fad has faded in some respects, putting local hop farmers in a tough position.
The pandemic shutdowns played a role, but at least one local farmer says it was just one of several factors.
“It was kind of the nail in the coffin, I guess,” Nicole Johnson said of the state-mandated closures.
Johnson and her family run Egypt Valley Hop Yards in Ada, east of Grand Rapids. The family established the farm on the site of the old Hartwell Angus Ranch, putting hops in the ground in 2013. At the time, the craft beer industry was in full swing and hops were selling at a premium price.
Last fall, they decided it was time to liquidate and shut down.
“We decided to grow hops because (at that time) growing hops was a really good business. People were doing pretty well to support all these breweries,” Johnson said. “And if all of these (breweries) were going to be opening, we’re going to need more hops. And so I think a lot of people, there was a lot of, I guess, hope in the industry.”
SUPPLY VS. DEMAND
Hops are a long-term investment. Plants take three years before they are mature enough to provide a full harvest of cones. When Egypt Valley Hop Yards put its first plants in the ground, the farmers were eyeing 2016 and 2017 as their first big harvests. But when those seasons came around, the hops market was saturated and selling the product for a profitable price became much harder.
Rob Sirrine is an agriculture expert with the Michigan State University Extension. He suspects some hop farmers entered the market with the expectations that the prices they were seeing were the standard, when really it was a crop shortage that pushed prices higher.
“Fifteen years ago, when (a lot of farmers) were starting, they were getting $15, $20 bucks a pound for hops because there was a shortage. That’s not the case anymore,” Sirrine told News 8.
According to the Hop Growers of America, in 2012, about 29,000 acres of hops were harvested across the country, almost all of it in Washington, Oregon and Idaho. Michigan had no hops harvest to report but reported 300 acres of hops harvest in 2013. Michigan’s hop harvest peaked in 2017 at 810 acres, but at that point, the hop harvest nationwide had nearly doubled to 55,700 acres.
Slumping prices, partnered with the pandemic shutdowns that affected a lot of smaller breweries, forced hops farmers to hold onto much of their product and hope for a stronger market. But it’s still not there.
“We have two main varieties that are still in our freezer at this point,” Johnson said. “And we’re actually in the process of maybe setting a huge sale. I mean, we’re talking like $4 a pound when our business model is hoping for above $10 a pound.”
Another local farm, Pure Mitten Hops in Coopersville, announced it is shutting down, as well. It ran into the same problem as Egypt Valley, struggling to find a price point that could turn a profit.
Mary Dieleman, one of the founders of Pure Mitten Hops, told News 8 that they had to destroy much of their harvest last year because they ran out of storage space and needed to make room for the next one. The hops market was so competitive and driving down prices that some brewers became leery of the low cost, worried that they were buying an inferior product.
Egypt Valley and Pure Mitten aren’t the only hop farms to shut down. Across the state, Michigan’s hop harvest has been cut in half over the last four years, dropping from 810 acres in 2017 to just 375 acres in 2021.
THEN CAME COVID-19
With prices lagging and the future of the hops market uncertain, a new problem popped up: COVID-19. Gov. Gretchen Whitmer and state health officials shut down restaurants, bars and several other businesses to try to limit the spread of the virus. While it kept cases low in Michigan for a while, not every business was able to adapt to the new normal.
“It was already a struggle to sell hops because there were so many hats and so many options, and then COVID hit and our main customer is going to be your smaller brewer,” Johnson said.
Small breweries, which are the main supporter of local hops farmers, make most of their money from over-the-bar sales. Some were able to switch business models and start canning or bottling beer, but others were forced to close.
“We saw less people buying hops because there just wasn’t as much production,” Johnson said.
According to the National Beer Wholesalers Association, beer manufacturing is back up to its pre-pandemic numbers. While there are thousands of small brewers across the country, most of them have goals to grow and expand their business. That means looking for ways to improve profits, possibly connecting with a larger farm that has more assets or flexibility.
“If we want to take the spirit of distribution, we got to bring those numbers down because distribution, if you really do the numbers, if you go to the conferences and you listen to the distribution panels, it’s a very, very fine line of where those margins are,” said Mike Moran, the president of MI Local Hops. “A lot of those breweries that are in the 1,000-barrel to 10,000-barrel range. They don’t make that much money in distribution. And once they get the distribution, it’s extremely competitive.”
Johnson says the liquidation process for Egypt Valley is already underway. The farm has already sold its picker and pelletizing system and is working to finish selling off equipment. Johnson’s team is also working to sell off the last of the product before shutting down and selling the freezer.
Johnson suspects all Michigan hop farmers are frustrated by the state of the market. She has some ideas on how to make the hop trade more beneficial for both farmers and brewers.
“I think what we really need is for each farm (to have) three or five brewery partners,” Johnson said. “If there were brewers that would just commit to buying hops from one farm, like say they use 500 or 1,000 pounds of hops a year. We grow maybe 3,000 pounds a year. We had one really solid partner, a couple other contracts. And then we sold a ton on Lupulin Exchange, which is like an online marketplace for hops.”
In the end, Johnson and the team behind Egypt Valley Hop Yards say they are proud of their work, especially the team’s Chinook hops harvest in 2019 and 2020, which were named second-best in the state by the Hops Growers of Michigan.
“We grew some great hops,” Johnson said. “We had so much fun doing it and we learned a lot and we’re really proud of the hops that we grew.”
The Johnsons leave the business on good terms and wish their fellow farmers the best.
“I hope that hop industry does well,” Johnson said. “And I think there’s a lot of really good people who, I mean, we’re all doing the best that we can and I’m sure breweries are, too. It’s a hard time.”