Trouble Microbrewing

Few inventions have withstood the test of time as well as beer. Sipped by ancient pharaohs and Sumerian rulers over 6,000 years ago, the concoction has survived the Dark Ages, the Renaissance, Industrial Revolution and Prohibition. Many things go into beer’s complex creation, including malt, water and yeast, but it is arguably hops – the green, cone-shaped offspring of the female hop plant, containing 200 active essential oils – that are most vital. Hops balance the sweetness of the malt while adding clarity and enhancing preservation. Since 2007, however, accessing that green gold of ales has become increasingly difficult, especially for B.C.’s microbreweries, the 21 operations scattered across the province that produce less than 1.8 million litres annually. Unpredictable global weather patterns, declining acreage in major hops-producing regions and a worldwide agricultural shift toward more profitable biodiesel crops have made hops scarce and expensive. Adding to the problem has been beer’s increasing popularity: between 1996 and 2006, as worldwide acreage and total hops production dropped 36 per cent, beer production rose 58 per cent. Because many of the world’s large beverage conglomerates such as SabMiller PLC and InBev STT now secure their hops through forward contracting – negotiating a set price regardless of market fluctuations – small microbreweries have been left to duke it out over the scraps, trading leftovers between themselves and experimenting with untried hops in hopes of finding consistent taste patterns to match established products. To keep up with rising ingredient costs, B.C.’s brewers have hiked beer prices an average of seven per cent since November 2007, with another jump of similar proportions imminent.

B.C. was a commercial hops-producing province throughout most of the 20th century, but in the late ’90s it bowed to rapidly expanding competition in Washington’s Yakima Valley, which now grows 24 per cent of the world’s hops supply. Now, a decade later, hops farming is back in B.C. – in a modest but growing way. Heartened by strong market prices, and encouraged by microbrewery owners across the province looking to preserve their supply of hops, B.C. farmers are again sinking the valuable vines into their soil.

“There was this kind of rumbling in the underground that something was wrong with hops and nobody was really forthcoming as to what it was, and then all of a sudden the prices shot through the roof,” says 34-year-old Matt Phillips of Victoria’s Phillips Brewing Co. “And it’s not just price, it’s availability. For a company like ours that prides itself in a hoppy beer, we’re kind of concerned as supplies dry up that we can get the quantities we’re looking for.”

Stepping over buckets of orange pumpkin purée and a maze of rubber hoses in his gleaming new 12,000-square-foot brewery on Government Street in Victoria, Phillips explains the basics of brewing. The Nova Scotia native landed on B.C. soil over a decade ago, working his way up the lager ladder before establishing his eponymous microbrewery in 2001. Today Phillips sells to some 200 restaurants, pubs, cold beer and wine outlets, and liquor stores around the province, and is working with local farmer Alec Johnston, who planted half an acre of Phillips’s favourite hops to ensure accessibility in upcoming years.

Phillips had considered buying land to grow his own hops, but the idea was too costly and complicated, so instead he got involved with an informal B.C. movement to kick-start hops production around the province. In the driver’s seat was Rebecca Kneen, a Sorrento-based brewer and hops farmer who had been active in re-establishing B.C. as a hops-producing province, beginning in 2000.

“When any industry is centralized to that degree, you know that it’s rather wobbly,” explains Kneen over the phone between brewing batches of ale in her organic microbrewery, Crannóg Ales. “You can only stand on one foot for so long before you fall over, and essentially the hops industry in North America was built entirely around the Yakima Valley and a few other spots in Oregon. It’s a highly centralized industry in the U.S., with no local production anywhere else in North America. That seemed to me to be a recipe for disaster.”

Helping to rebuild B.C.’s hops wasn’t a stretch for Kneen, whose astute understanding of agriculture comes from a lifetime of farming. Her idea is straightforward: self-sufficiency and diversification are necessary to ease B.C. growers’ and brewers’ dependency on the external hops market. Since B.C. used to have nine hops-producing regions – the Saanich Peninsula, Squamish, Chilliwack, Mission, Lillooet, Kamloops, Vernon, Creston and Kelowna – she knew the plant would take well to most microclimates in the southern regions of the province. Between 1920 and 1950, when Europe’s hops industry was still recovering from the devastations of war, Chilliwack became the single largest hops-growing area in the Commonwealth, with close to 800 hectares of farmland dedicated to the crop. By 1997 its remaining fields had shrunk to 120 hectares. Often locked into these forward-contracting agreements, B.C. farmers found themselves selling hops for as little as $1.50 per pound – less than the cost of production – so they stopped growing it. “There were other crops coming along that were way more lucrative, pretty much everything except for wheat, which is still at 1937 prices,” says Kneen. “There was pressure from bio­diesel, so people were taking land out of hops production and putting it into bio­diesel crops.” [pagebreak]

When world prices shot up 400 per cent in 2007 and the product became hard to source, Kneen and Phillips found themselves armed with the right information to help farmers put hops back in the ground. Kneen and her partner (in both life and business) Brian MacIsaac, planted their first quarter acre of the crop in 2001, before the organic movement had grown legs. In 2004 Kneen secured funding from the Investment Agriculture Foundation to create a manual on small-scale and organic hops production, with the goal of restarting hops farming in B.C., and the pair has since become the movement’s unofficial vanguard.

Few are expecting an easy transition to a more sustainable model of brewing. “It’s going to be rocky for the next year or so, but already there are little hops farms springing up all over,” says Victoria’s Gerry Hieter, founder of the Whistler Brewing Co., co-founder of the Great Canadian Beer Festival and the Lighthouse Brewing Co., and a certified North American beer judge. “It’s pretty normal that breweries would start working closely with the farmers. Both sides like to be hands-on – it’s all a part of the history and spirit of the microbrewing industry.”

The relationship between brewer Matt Phillips and farmer Alec Johnston exemplifies that spirit. With a $5,000 loan from Phillips to be paid back in product over the next three years, Johnston planted half an acre of hops amid the fig and apple orchards on his seven-hectare property near Elk Lake, north of Victoria. The 18-foot trellises, many with bark still clinging to their sides, cut sharp lines across the middle of the gently sloping land. Small green vines of varying heights and robustness spiral skyward up the twine tied tight to the trellis tops. A few of the shoots have turned yellow and sag under the weight of their own leaves, but the rest have taken to the rich black earth and if they thrive, Johnston will plant another two hectares over the next three years. Such ambitious plans bode well for Phillips Brewery, which is growing at a rate of 50 per cent each year.

“I’ve read Rebecca’s manual front to back a couple of times. As I looked into it more, I liked the idea. It’s a really cool looking plant – they look pretty funky on the landscape, like an alien vine – so I wanted to try it out and will see how it goes,” says the 28-year-old Johnston, who started growing hops exclusively for Phillips after meeting him at a summer festival in 2007. “He was interested in being able to source his hops locally and he had done a lot of research, which he passed on to me. And with the price going up so much, it had become a worthwhile crop to grow financially. We had some extra land that we weren’t really using, and I love beer, and I really like Phillips’s beer and Matt’s a good guy – so we did it.”

After initial infrastructure costs, which run at about $10,000 per acre to establish the tall trellises, hops are relatively inexpensive and uncomplicated to grow. The crop takes three years to reach its full potential and generally requires 120 frost-free days to bloom, yet has also been known to mature north of Edmonton in a 90-day window. Subject to mildew, hops generally prefer a drier climate but can handle the cold and will thrive in a variety of soils. “It’s going to take us a while to prove that it’s economically viable for farmers,” admits Kneen, “because of the trellising and because you need drying and packing facilities and so on and because we don’t have an established industry. But it’s already starting and collectively, with a co-operative approach, it’s entirely possible.”

Barry Benson, co-owner of Vancouver’s R&B Brewing Co., secured 360 kilograms of hops from Yakima through forward contracting last year – enough to keep his operation going. Still, he says he would prefer to buy local in future years, once the supply is there, and supports the new varieties of hops being planted in B.C. “There is a lot of trading going on between the small breweries. Within the community, if someone has an extra style of hops, they’ll trade them for a style that another brewer needs,” says Benson. “People’s palates are changing. You don’t see them buying the six-packs of Molson Canadian as much anymore. People are spending their money more wisely and when they do, if they want to buy a glass of beer, they’ll buy a glass for flavour.”

B.C. microbreweries have forged their reputations based on trademark tastes, creating close to 100 different varieties of beer. And more flavours mean more hops. Kneen estimates seven new B.C. growers planted hops this year and another eight are in the planning stages for 2009, which will give brewers ample selection to play with. A typical yield is 640 kilograms of hops per acre, enough to make 1.7 million bottles of beer. The next three years will see a major shift from dependency on imported hops to local sustainability. Backers of the plan foresee B.C. becoming a small but steady player in the regional hops game, though it is unlikely to ever regain its previous status as one of the world’s leading growers.

If market prices stay relatively high, as hops consultant and 40-year industry veteran Rick Knight predicts, these farmers will be applauded for their foresight. “To start a 300-acre hops farm it would cost you somewhere around $28 million to $29 million, but if the price stays the way it is right now and the crops were good, you could pay that back in 10 years,” says Knight. “If you do 300 acres at eight bales per acre, which is average, and a bale is 200 pounds, if you charge that at $15 per pound, you’re probably looking at in excess of $7 million per year. You just have to have a big chunk to get going. What business could you buy into and spend that kind of money and get all your money back within seven years? Not many.”