Hops in Alberta…. the next crop diversification idea


Craft beer breweries have been sprouting up all over Alberta thanks to provincial government incentives and automated small-scale brewing equipment. Some of it is so compact it serves a single retail restaurant or pub outlet, a sort of micro-brewery. Part of the allure is a belief that manufacturing and selling alcohol directly to the consumer is a license to print money. There is probably some truth to that but the only real license to print money is held by the government through fees and taxes inflicted on those in the beer business. The previous NDP government was particularly enthusiastic about encouraging new craft brewery development through incentive programs and tax breaks. But like incentives to encourage more well drilling the former government gave you money on the one hand, but if you made any money, they quickly taxed it back and then some.
At a recent count there are 117 craft breweries in Alberta. But even with that many the market is still dominated by two big dog brewery giants, Anheuser-Busch and Molson-Coors both foreign-owned behemoths who between them control about 60% of the Canadian market. Still it wasn’t too many years ago that you could count small Alberta-based brewers on one hand – that being Big Rock in Calgary and Uncle Ben’s in Red Deer. It was tough starting a brewery back then as government regulations and liquor board marketing favoured the big players. When that was loosed up the craft brewing business took off.
Much of the expansion was also based on the notion that smaller local breweries produced more flavourful beer from local ingredients. That was certainly true for the malt barley used in beer making being Alberta is renowned for growing such legendary varieties as Harrington which was exported to breweries all over the world. But locally-grown malt barley is not a marketing advantage if every brewer including the big dogs are using the same product. Because of their massive buying power, the big brewers can access malting barley cheaper than craft breweries. Which is part of the economic reality for the smaller players, that has led some of them to encourage the growing of hops in Alberta. Hops are a major flavour part of beer brewing. Therein lies a new crop diversification opportunity. But first some hop growing history.
At one time there was a significant commercial hop growing business in the BC Fraser Valley and around Kamloops. That all disappeared by the 1990s mainly because the big brewers began to buy their hop requirements from cheaper foreign sources in Washington state and Australia. However small brewers would rather buy local so a demand has developed that has seen a revival of hop production in traditional BC growing areas with over 200 acres already under development. But BC hops are not local enough for Alberta craft brewers, hence the growing interest in growing hops in this province. To date about 20 acres in various parts of central and southern Alberta are in various stages of development.
The problem is there is no history of large-scale commercial hop growing in Alberta. It means potential growers are confronted with understanding the basic agronomics of hop growing – weather, frost, heat, soil, etc. All of those are quite different from growing conditions in the Fraser Valley. Olds College has endeavoured to research and develop the agronomy and economics of hop growing in this province but its all in its infancy at this point in Alberta. The economics can be formidable – commercial hop growing requires 30-foot trellises using telephone poles and it takes 4 years to achieve production. That alone can cost $12,000 to $20,000 per acre. Its been suggested that it will take 50 plus acres to have a small economic operation. That would work if brewers were willing to pay a premium for Alberta-grown hops – but therein lies the concern. Big brewers will have the advantage by importing cheaper hops from Washington state or elsewhere. Past observations have shown that consumers have a price threshold of pain when it comes to local food or beverages – its somewhere between 10 to 20% of a premium- after that consumers will opt for the cheaper product no matter where it comes from. Sure, there are always folks who will support premium priced products but there is a limit and with a volume-based business like craft brewing, that can make or break a business. More next time on crop diversification. Will Verboven is an ag opinion writer and ag policy advisor.