Why Illinois farmers are slow to hop on the hops bandwagon, despite the craft beer boom
Inflation and the war in Ukraine are packing a one-two wallop when it comes to prices paid for agricultural commodities and consumer goods — including alcohol. Together, Ukraine and Russia produce around 30% of the barley in the world, and Ukraine alone produces 16% of the world’s corn supply. With craft brewers reporting up to 100% price increases on barley, local artisans are struggling to keep prices low while retaining their niche in the local dining and entertainment market.
Add in a lack of available, locally-grown malted barley and hops, and the financial and logistical challenges facing local craft brewers like Mike Anderson of Industry Brewing in Peoria keep mounting.
“The four biggest basic ingredients that go into most of my beers are water, malted grain, hops and yeast,” said Anderson, who brought several years of specialty brewing experience with him from craft breweries in Iowa when he took over as brewmaster for Industry Brewing in 2019.
“The Peoria city water is actually very good for brewing, though we do filter and soften it. As far as malted grain, we use primarily malted barley and flaked oats though we do use some wheat, corn and rice. The malted grain we get from a couple of sources in Minnesota, and they source malted grain from all over the world. The regular-two row barley I use in almost all of our beer also comes from Minnesota,” he added.
Anderson said the reason he doesn’t order the bulk of his beer ingredients from local farmers is because they do not produce them in large enough volume to satisfy the needs of the many craft breweries located in Illinois, where the craft brewing craze had grown by 2021 to include 299 registered brewers and provide around $3 million in economic impact, according to the Independent Craft Brewers Association.
“We get our malted grain from one company outside of Illinois that pretty much provides it for everyone in our industry,” said Anderson. “When it comes to hops, there are some local farms around here that produce them. But as far as sourcing hops, there are some real big hops farms located in the northwest that most brewers use.”
Illinois hops acreage not meeting demand
Hops are considered a niche or craft-grower crop in Illinois, with very few acres registered with the USDA’s Farm Service Agency (FSA). According to Illinois State Statistician Mark Schleusner of USDA’s National Agricultural Statistics Service, there are currently 31.7 acres of hops on record as being grown annually in the state. This amounts to an increase of more than 100% over the 13.4 acres of hops production registered in Illinois during the prior year, but still falls far short of the amount of production that would be necessary to supply the state’s 284 craft breweries (according to 2022 data from Statistica.com) with enough hops to sate their customers’ thirst. In addition, Illinois’ small growers can’t match or beat the price point the larger growers in Washington, Oregon and Idaho, where around 50,000 acres of hops are harvested each year, can offer brewers who place their orders online.
The reasons Illinois specialty farmers are slow to embrace hops production include a high risk for crop failure — no federal crop insurance is offered to cover hops production in Illinois — and an underdeveloped statewide market for their harvested crop. This is according to University of Illinois Extension’s David McCarty, a local food and small farm educator who acted as a point of contact for Midwest hops growers from 2015 until 2019.
“One of the challenges with hops is finding your buyers and markets while recognizing that all of the breweries near you may not want to buy your cones,” McCarty said. “It’s also a crop that can be affected strongly by insect pests-diseases (and get hit hard) and also needs water (a drought year is tough) in which cone quality suffers. For inexperienced growers/individuals without growing experience, this can be hard to translate from learning about in a classroom to actually seeing in your field.”
McCarty pulled back on hops education and outreach in 2019 due to what he called “turnover in new growers and noticeable decline in stakeholder interest” in the perennial crop.
“Some of the decline is what naturally happens where stakeholders, new farmers or businesses reach out for information on new and emerging crops, and then gather all the information they need to decide the crop just isn’t for them,” he said.
“Certainly some did invest in the crop, add acres, and then pulled them out. Some also invested and are still growing. Those that have made it have developed their market and balanced it with good growing practices.”
Cousins growing hops an acre at a time
A portion of Illinois’ scant hops production comes from Sharp Mountain Hops, a family owned and operated farming operation in West Central Illinois that Anderson has called on to provide hops for Industry Brewing. Another specialty hops operation, Live Wire Hops in Amboy, is operated by cousins and business partners Anthony Welty and Brian Dallam.
"We’ve proven that we can grow certain varieties really well,” said Welty, who began growing hops in 2017 with Dallam on an acre of Dallam’s family farmland. “We’re confident with the quality and confident in the local and regional craft brewing community’s willingness to work with local hops growers. The question comes down to how big of a base of business there is. Even though we’re a small, one-acre yard right now growing three varieties, we have room for a lot of growth capacity.”
Inherent weather challenges present a major challenge to hops growers in Illinois, Dallam noted.
“We’re in the corn belt, and we have the right climate for that. The reason you see about 98% of all U.S. hops grown in the Pacific northwest is climate and soil type. Those guys don’t have a lot of humidity out there, and humidity can breed all kinds of mildew and disease pressure in hops,” he said.
“They also have very arable soil and a sandier-type ground out there, and hops stalks don’t like to have soaking wet root masses. So the more arable the soil is the better they will do. Illinois is known for its thick black dirt, which is great for row crops but not as conducive to (hops).”
What makes hops production possible in Illinois has a lot to do with latitude, according to Dallam.
“We’re at a point not too far off (in latitude) from the Pacific northwest, where we get a maximum amount of sunlight each year. Sunlight is a key part of the hops growing cycle,” he said. “We’re at the right spot to be on the globe for sunlight, but (growing hops) definitely has challenges with our humidity, moisture and soil type here in the Midwest.”
Startup costs can also be a major hurdle for young or beginning farmers who want to invest in hops to overcome. A single acre of hops can require an investment of $10,000 to $12,000 per acre, according to some hops farmers.
“We talk about it a lot in the craft beer industry — if you want to be a grower or a brewer, both are very capital and labor intensive,” said Welty. “We find that the start up costs are within that range, and that is definitely a barrier to entry into the industry.”
Most of the hops grown at Live Wire Hops are sold after harvest to buyers located in Wisconsin, where the cones are processed and pelletized for sale to brewers, the cousins said. While they are currently producing a limited amount, there is room for expanding Live Wire Hops’ production and acreage as demand for their varieties build.
Diversification key to industry’s longevity
For brewers like Anderson and brew pubs like Industry Brewing, diversification of products and services has been the key to survival as prices for beer ingredients continue to rise with inflation.
“We have a full-service kitchen and extensive menu. We smoke everything — ribs, chicken and brisket. Big outdoor beer garden, outdoor bar — we’ve got a lot of stuff going on,” said Anderson, without mentioning the bar’s ax-throwing booth, game room, events stage, cocktail lounge and “barking lot” that offers a “dog’s paradise” for the brewery’s pooch-loving patrons.
In an effort to keep prices for customers low, Anderson relies on the convenience and stability of ordering hops from all over the world through one large, out-of-state wholesaler. Still, if more Illinois farmers were growing successful and affordable hops varieties in enough volume to compete with the big distributors, he would prefer to purchase them from local producers.
“I would love to,” Anderson said. “Even if it were a few more dollars expensive to get locally grown ones, I would be willing to pay that just for freshness quality alone. Freshness is key to (quality) hops, not the price.”
He agreed that while it may be possible for certain varieties of hops to thrive in central Illinois soils under the right conditions, the start-up costs, labor, processing and marketing of the crop are what holds many potential growers back.
“(Hops) grow out in the wild and they are native to the Midwest. It’s just a matter of cultivating them, pelletizing them, bagging and packaging, and all that. And, (competing) with the really big hops farms in the northwest and in Europe would be really difficult,” said Anderson.