The USDA released its annual hop acreage report for 2023, but a different story hides behind the numbers.
It’s June, meaning the United States Department of Agriculture has released its estimated acres strung report for the upcoming crop year. The report provides insights into the supply for the upcoming year and the current market as growers make planting decisions.
Mentions of a hop surplus surfaced in January at the American Hop Growers Convention when Alex Barth of John I. Haas noted the industry needed to reduce acreage by 10,000 acres.
Important Note: When Barth made this statement, he was referring to cutting or idling 10,000 acres of aroma varieties.
Between January and now, it was reported that several proprietary variety owners would reduce their variety’s acreage by 20-30%. Fast forward to June, after months of growers going back and forth on what to plant, if anything at all, the official report has come out.
U.S. hop acreage declined by 8% or 5,067 acres. Officially, 7,500 acres of aroma varieties were taken out for 2023 while growers planted about 2,500 acres of alpha varieties. But there’s more to those numbers than what the report shows on the surface level. Barring unforeseen weather events or other complications affecting yields, more reductions in aroma acreage is likely in 2024 in an effort to rebalance the market.
The pandemic, overplanting, and a shrinking craft beer market caused the hop industry to face another downturn. Despite the presence of nearly 9,500 BA-defined craft breweries, U.S. craft beer is experiencing slow to no growth. The beer and hop industries are closely linked, with hop growers typically experiencing market fluctuations 12-18 months after the beer industry.
Hop acreage consists of public and proprietary varieties. While proprietary varietal owners have control over their supply, public varieties are more responsive to supply and demand fluctuations. Variety owners can choose to idle, cut, or replace acreage, and this year is experiencing a combination of all three actions.
Before examining the numbers, it's important to note two categories in the report that can conceal some acreage changes: "Other" and "Experimental." "Other" is a comprehensive category where growers can allocate acreage without specifying the variety, while "Experimental" safeguards breeding programs by keeping the acreage dedicated to new varietal development undisclosed.
A change of +5% in "Experimental" and +2% in "Other" may not appear significant, but there was substantial activity in those categories. We estimate that 1,300 acres of aroma shifted out of the "Other" category, being replaced by new proprietary alpha varieties.
When accounting for the churn in the “Other” category, we believe the true number of idled or removed aroma acreage is closer to 8,000 to 9,000 with an increase of 3,800 to 4,000 alpha acres.
Aroma varieties made up the majority of acreage in 2022 at 82%. Here are some of the varieties with the largest cuts:
Citra -28% and Mosaic -21%: Both of these were expected and it’s likely they’ll face another round of reductions in 2024.
Cascade -15%: The size of this cut was unexpected but was likely due to a lack of contracts in place to back the acreage up.
Chinook -14%: It will likely need additional cuts as this is lower than expected.
Comet -34% and Cashmere -37%: Two public varieties that in hindsight became overplanted relative to their background demand. Unclear if they’re back in balance.
Sabro -66% and Talus -53%: Both varieties grew faster in acreage than brewer adoption could handle. Their unique aromas are taking time for brewers to learn how to properly use them and can be polarizing.
Other proprietary varieties that saw large reductions: Azacca -49%, El Dorado -32%, Strata -25%, Idaho 7 -18%
Before 2023, we anticipated an oversupply of El Dorado and made efforts in 2021 and 2022 to decrease its acreage. We expect this year to be closer to balance, or supply even slightly below the demand level.
Washington-grown Strata isn’t listed in the report due to individual grower discretion, so it’s likely the total Strata decline is larger because of the additional idle acreage in Washington. Similar situations likely occurred with other aroma varieties grown by individual producers or for those that do not meet the reporting threshold for acreage.
For example, Triumph shows zero acres grown, which is inaccurate. We grow a few acres of Triumph at our farm, but only because the entirety is contracted. Instead, those acres go into Other because it doesn’t meet the acreage threshold.
Eric Sannerud in his Hop Notes 05 broke down the reductions in aroma varieties further to show proprietary versus public acreage. He noted:
"Q: How did public hop acreage change compare to private acres?
A: 6,992 private acres were cut and 1,072 were added, a delta of -5,920. While 2,428 acres of public hops were added and 1,831 were removed, a delta of +597"
As mentioned previously, proprietary varieties are controlled by their owners while public varieties are closely aligned with market fluctuations. He explained that this breakdown is closer to understanding merchant versus farmer decision-making, though several growers own proprietary varieties.
What went up?
Centennial +5%: It had been imbalanced to slightly underplanted for the last couple of years, so this was expected, but flatter than anticipated.
HBC 682 (Pahto) +32%, CTZ +43%, Apollo +26%, Eurkea +16%: All alpha varieties. Similar to Strata’s coverage in Other, we know that there was a large influx of proprietary alpha acreage planted this year that is not represented in the report under a varietal category.
Amarillo +15%: Four to five years ago this variety saw a large acreage cut and now is coming back into balance.
Willamette +10%, Crystal +38%, Sterling +29%, Mt. Hood +65%: All older noble aroma varieties that had seen acreage declines for 10 years. This isn’t necessarily representative of increased demand but rather acreage being cut too far.
At this point, the majority of growers are only planting varieties that they can secure a contract to back up the volume, meaning that the alpha volume that was planted was needed. In January at the merchant panel, it appeared the alpha market only needed slight acreage increases. However, these significant increases in alpha acreage tell a different story. It is apparent now that there was a demand gap that needed filling.
In 2023, growers and merchants are much less speculative, likely resulting in a reduced availability of spot market hops for the 2023 crop year. While some spots may still be available, there will be significantly less volume compared to previous years. Older crop years are still a great option as long as they’re stored correctly. However, spot pricing will likely reflect the lower supply.
Responsibly contracting with merchants and growers continues to be important for securing volume, ensuring varieties remain planted, and giving brewers selection. Without contracts in place, acreage will continue to decrease.
If you have questions, reach out to Claire Desmarais at claire@clsfarms.com.