Unique va­ri­eties key in hops in­dus­try

A dairy farmer, a for­mer merino farmer and black­cur­rant grow­ers are among the new en­trants to Nel­son’s buoy­ant hop in­dus­try, fu­elled by the growth of craft beer around the world.

The Orchardist - - In Focus - By Anne Hardie

Af­ter sev­eral gen­er­a­tions of growing hops and a roller­coaster ride in prof­itabil­ity, un­til re­cently only 18 mostly fam­ily-owned hop gar­dens re­mained in the in­dus­try and the high cost of set­ting up gar­dens, kilns and ma­chin­ery was pro­hib­i­tive for out­siders.

But the in­dus­try’s de­ter­mi­na­tion to move away from com­mod­ity prices by fo­cus­ing on unique va­ri­eties, cou­pled with the growth in craft beer around the globe, has re­sulted in re­turns that av­er­age $45,000/ha which has en­ticed new­com­ers and the in­dus­try is in ex­pan­sion mode.

Nel­son hop grow­ers now pro­duce 17 hop va­ri­eties that are unique to New Zealand and are the type of spe­cialty aroma hops sought af­ter by craft brew­eries. The in­dus­try also grows sev­eral north­ern hemi­sphere va­ri­eties to spread the har­vest win­dow and pro­vide a broad mix.

New Zealand Hops is the co­op­er­a­tive that mar­kets the en­tire crop and chief ex­ec­u­tive Doug Donelan says the $25 mil­lion in­dus­try is ex­pected to ex­pand from 442ha to

650ha dur­ing the next few years as new plant­ings from new en­trants and ex­ist­ing grow­ers come on stream and ma­ture.

That will still amount to only 1% of the world crop, but apart from unique va­ri­eties, New Zealand has the added bonus of be­ing able to sell 90% of its crop cer­ti­fied spray-free. Nel­son’s hops grow with­out the pests and dis­eases that plague north­ern hemi­sphere crops and New Zealand Hops has an in­te­grated pest man­age­ment sys­tem for grow­ers to fol­low.

De­spite the an­tic­i­pated growth in the next few years, this sea­son fell short of its pre­dicted crop af­ter an ex­tremely wet spring was fol­lowed by a cool sum­mer and re­lent­less winds that dam­aged plants. A late sum­mer re­prieve helped plants fill out and pro­duce flow­ers be­fore a “baf­fling” har­vest where sev­eral va­ri­eties shifted their har­vest win­dow habits and hung on longer.

“Hop plant­ings are such that pick­ing is sched­uled as in­di­vid­ual va­ri­eties reach ma­tu­rity within a spe­cific har­vest win­dow and gar­dens are de­signed and laid out to achieve a staged pick­ing or­der,” Doug ex­plains.

The end re­sult was 760,529kg of hops, in­clud­ing 20,705kg of cer­ti­fied or­ganic hops, with some 20% of that sold do­mes­ti­cally and the bulk ex­ported to brew­eries around the world. The United States takes the big­gest chunk for its ex­pand­ing craft beer mar­ket and Doug says the trend there is brew pubs where beer is brewed and sold at the same out­let.

New Zealand has al­ways had the rep­u­ta­tion of a beer-drink­ing na­tion, but like other coun­tries around the world it has had ma­jor growth in small brew­eries as con­sumers move away from tra­di­tional, cheaper beer and to­ward craft brews. That’s why, as Doug points out, brew­ery gi­ants such as DB and Lion are now pro­duc­ing their own craft beer brands.

He re­cently re­turned from the Craft Brew­ing Con­fer­ence in the United States and says the to­tal beer vol­ume is not growing, but craft beer has taken a big­ger seg­ment in re­cent years. Though he says that growth ap­pears to be slow­ing down now.

The trend to­ward craft beer has been a boost for the Nel­son in­dus­try which has its range of unique va­ri­eties which are mostly aroma hops that pro­vide the in­di­vid­ual char­ac­ter­is­tics of the brew. Re­search is a ma­jor fo­cus of the in­dus­try through a part­ner­ship with New Zealand Plant & Food Re­search, and de­vel­op­ing unique hop va­ri­eties is at the fore­front of the pro­gramme. Doug Donelan says two more promis­ing cul­ti­vars

are in growing tri­als af­ter be­ing iden­ti­fied through brew­ing tri­als.

That en­thu­si­asm for craft beer is felt at grower level as well and Doug says those get­ting into the in­dus­try and the younger gen­er­a­tion now run­ning the hop op­er­a­tions tend to be ex­cited about beer as well as the busi­ness prospects.

“There’s money to be made and when things are good peo­ple are in­ter­ested in get­ting into it,” he says. “But the guys who are ex­cited about it are also ex­cited about beer.”

Nel­son’s lat­i­tude and cli­mate makes it the only re­gion that can grow a de­cent hop crop and Doug says grow­ers en­ter­ing the in­dus­try need at least 30ha to achieve a good re­turn on their in­vest­ment.

“It’s def­i­nitely a long-term in­vest­ment and a lot of them are look­ing at it as an in­ter-gen­er­a­tional busi­ness.”

About seven new grow­ers have been es­tab­lish­ing hop gar­dens and fa­cil­i­ties with the goal of pro­duc­ing their first crops from the 2018 har­vest and vol­ume will in­crease with more plant­ings and higher yield as they ma­ture.

One of those new hop grow­ers is the Ealam fam­ily near Wake­field who have been milk­ing up to 260 cows on land that has been farmed by the fam­ily since 1856. At one time in that long his­tory they grew hops and now they are re­duc­ing cow num­bers on the 110ha farm, putting poles in the ground and plant­ing 35ha of the aro­matic crop again.

Along­side the dairy shed where they will milk fewer cows, they are build­ing the hop kiln com­plex that will be part of a di­ver­si­fied op­er­a­tion of hops, dairy and beef.A move Cameron Ealam says has been de­signed to sup­port gen­er­a­tions for the next 150 years or so.

“The volatil­ity of dairy­ing was go­ing to be chal­leng­ing re­gard­less of how we looked at it and the good thing about hops is the long-term con­tracts in place. We thought hops was a way to fu­ture proof this farm for fu­ture gen­er­a­tions.”

Com­pared with dairy­ing that brings in a to­tal in­come around $6,000/ha, Cameron says they will be able to achieve an in­come in the vicin­ity of $50,000/ha from hops which will give them a re­turn on in­vest­ment of be­tween 15% and 20%. The cap­i­tal cost of their in­vest­ment in hops will have a pay­back of about five years.

He says the long-term pric­ing model of con­tracts for New Zealand hops had reached a point that made it vi­able for new en­trants to in­vest in the in­dus­try.

Ex­pan­sion in the field has prompted New Zealand Hops to ex­pand its fa­cil­i­ties as well. The Ap­pleby plant near Rich­mond pro­cesses the dried hops into pel­lets that are pressed into bales or repack­aged as whole hops. In the past three years it has had to build new cool stor­age and now it has bought more land next door with plans to build fur­ther cool stor­age, ware­hous­ing and dis­tri­bu­tion fa­cil­i­ties.

“It’s been our vi­sion that we would con­tinue to grow and it’s on the back of the fact we have some pretty unique va­ri­eties that we can grow. That will be the key to main­tain our po­si­tion in the mar­ket and sup­port our com­mit­ment go­ing for­ward. “It’s pretty ex­cit­ing be­cause it’s been the strat­egy we’ve de­vel­oped and taken into the mar­ket and we’re see­ing it pay off. Things were pretty grim back then and we had to do some­thing.”

New Zealand had been a price taker in the com­mod­ity mar­ket and though coun­tries such as Ger­many could pro­duce high enough yields to do well in that mar­ket, the crop here was lower yield­ing and tiny, so needed to pro­duce a higher-value prod­uct to be sus­tain­able.

“When we talk about an in­dus­try of 1,200 met­ric tonnes, it’s sig­nif­i­cant here, but on the in­ter­na­tional mar­ket it is still only about 1% of the to­tal mar­ket.The Amer­i­cans have sin­gle farms big­ger than our en­tire crop here.”

Doug says New Zealand now needs a good sea­son – a cold win­ter, sta­ble spring and a hot sum­mer – to get a good crop for grow­ers and fill for­ward con­tracts.

“It’s def­i­nitely a long-term in­vest­ment and a lot of them are look­ing at it as an in­ter­gen­er­a­tional busi­ness.”

The aro­matic hop.

Late har­vest in a Nel­son hop gar­den.

Vines head into the picker to have the flow­ers (cones) stripped off. Bales of kiln-dried hops at a Nel­son hop gar­den.

The price of hops makes it worth­while col­lect­ing plant ma­te­rial left be­hind by the har­vester.

New Zealand Hops chief ex­ec­u­tive Doug Donelan says unique va­ri­eties

are key to the in­dus­try.

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