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.
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.