School of Economic Sciences > Hop Economics Working Group

Hop Economics Working Group

The Working Group addresses relevant and timely issues on the economics of hop supply and demand with focus on Washington and the Pacific Northwest.  The intent is to improve the economic knowledge about demand, supply, market structure, and trade, while providing outreach to industry and policymakers.  Project funding from USDA, WA Hop Commission, and the WSU IMPACT Center.

Information Sources

Trends and Statistics (Figures)

The Yakima Valley in the state of Washington contains approximately 75 percent of the total United States hop acreage, accounting for over 77 percent of the total United States hop crop. The majority of the hops produced in Washington however are alpha and super alpha varieties. About two-thirds of the hops produced in the Yakima Valley are exported worldwide. The figures below provide historical production and market information.

2010 Estimated Cost of Producing Hops in the Yakima Valley, Washington State

The enterprise budget provides estimates of production costs for a well-managed hop enterprise in Yakima Valley, Washington as of 2010. Three producer scenarios are presented to demonstrate how the enterprise budget can be used to evaluate situations in which the producer may find him/herself. An interactive Excel Workbook is developed and detailed instructions are provided to allow users to input their own data or make changes to the existing spreadsheets.

Detailed Version

Producer Version

Domestic and Export Price Formation of U.S. Hops

The objective of the current study is to identify and quantify factors that determine
domestic and international (i.e., export) hop prices. For example, we hypothesize that stocks,
production and lagged variables affect domestic prices, while exported quantities affect U.S.
export prices of hops. Understanding the nature of hop pricing may increase efficiency of
contracting between growers and dealers, assist growers to define and implement the strategies
that mitigate price shocks during periods of under or over supply.

Price Formation (pdf) paper for presentation at the Agricultural and Applied Economics Association meeting 2012 in Seattle

Beer, Wine and Spirit Consumption in the U.S.

Annual aggregate ethanol consumption data is obtained both from the OECD Health Data 2007, and the National Institute of Alcohol Abuse and Alcoholism. Aggregate countrywide data dates from 1934-2005 while regional data ranges from 1970- 2002. We use ethanol (pure alcohol) consumption, as opposed to beverage consumption, to better isolate the intertemporal differences between beverages.

Figure 1 (link below) shows total ethanol consumption in the United States since prohibition.The most obvious observation made from Figure 1 is that the majority of alcohol consumed in the United States is imbibed in the form of beer. This is not surprising as this is the case for a majority of countries throughout the world (Fogarty 2008). Only during the height of spirits consumption in 1969 did Americans drink the majority of their alcohol in some form other than beer. Since then, spirit consumption steadily declined to reach a seventy-year low, until the late 1990s when it began a steady recovery. Wine consumption; on the other hand, over the sample period has experienced a slow but steady increase.  More information are provided in the links below.

Grower Survey on Hops Production and Risk (DRAFT)

Integrated pest management systems are expected to provide greater biological stability and reduce long-term economic and environmental risks. However, IPM implementation at the farm level has been slow in many instances due in part to grower perceptions and economic risk, and other fundamentally social issues. These are critical barriers to greater adoption of IPM that have not been addressed adequately in most biological and pest management research endeavors. In this project we seek to understand and quantify how growers’ subjective perceptions of risk and risk aversion within the context of crop marketing agreements influence their pest management decision making and trust of IPM. We will utilize powdery mildew and two-spotted spider mite of hop as representative host-pest systems where market factors may drive risk avoidance and perhaps IPM implementation.

Draft Survey (pdf) (key contributors Ruojin Zhang, Greg Galinato, and Thomas Marsh)
– covers production practices
management practices
general information
risk experiment

(comments welcome; direct to Dr. Thomas L. Marsh at TL_MARSH@WSU.edu)