Technical Report 1: Assessing the Feasibility of Small Scale Hops Farming in British Columbia, Canada Part 2 of 4 for the project entitled: “The current feasibility and working business models for small-scale commercial hop farming in BC. Prepared for: Persephone Brewing Company Prepared By: Hop Yard Collective Mar 9, 2015
Acknowledgement:
Funding for this publication was funded in part by Agriculture and Agri-Food Canada and the B.C. Ministry of Agriculture through programs delivered by the Investment Agriculture Foundation of B.C.
Disclaimer:
Agriculture and Agri-Food Canada, the B.C. Ministry of Agriculture and the Investment Agriculture Foundation of BC, are pleased to participate in the production of this publication. We are committed to working with our industry partners to address issues of importance to the agriculture and agri-food industry in British Columbia. Opinions expressed in this publication are those of the authors and not necessarily those of the Investment Agriculture Foundation, the B.C. Ministry of Agriculture or Agriculture and Agri-Food Canada.
Table of Contents Purpose ................................................................................................. Error! Bookmark not defined. What are Hops? .................................................................................... Error! Bookmark not defined. History of Hops in BC ......................................................................... Error! Bookmark not defined. Current Trends ..................................................................................... Error! Bookmark not defined. Methodology ......................................................................................... Error! Bookmark not defined. Findings ................................................................................................. Error! Bookmark not defined. Growing Conditions ............................................................................ Error! Bookmark not defined. Hop Varieties ........................................................................................ Error! Bookmark not defined. Volume of Hops & Critical Mass ....................................................... Error! Bookmark not defined. Whole vs. Pelletized ............................................................................ Error! Bookmark not defined. Hop Yard Design and Trellising ........................................................ Error! Bookmark not defined. Harvesting ............................................................................................. Error! Bookmark not defined. Drying ..................................................................................................... Error! Bookmark not defined. Secondary Processing (Pelletizing & Packaging) ........................ Error! Bookmark not defined. Quality Assurance & Control ....................................................................................................... 23 Labour requirements and timing ................................................................................................ 23 Disease & Pests ............................................................................................................................. 25 Conventional vs. Organic Production ....................................................................................... 25 Scenario Definitions ...................................................................................................................... 26 Financial Feasibility ...................................................................................................................... 28 Conclusions .................................................................................................................................... 33 References ...................................................................................................................................... 35
Executive Summary This technical report is the second part of a four-part project entitled The Current Feasibility and Working Business Models for Small-Scale Commercial Hop Farming in BC. The four parts are: 1. Assessing the current market for BC grown hops 2. Assessing the feasibility of small scale hops farming in BC 3. Developing a business plan template for a small scale commercial hop yard 4. Performing outreach and communication of the findings from this project This project is funded in part by the Investment Agriculture Foundation, and attempts to build off of Left Fields Farm’s Small Scale and Organic Hops Production manual. The purpose of this report is to assess the feasibility of growing hops at a small-scale for sale to British Columbia’s craft breweries in order to inform prospective hops farmers in BC (Canada). This report will examine the marketing, production, technical, and financial feasibility for growing hops under three different scenarios for 1, 5, 10, and 20 acre farms. Under all scenarios, revenue is generated from the sale of hops. The three scenarios are:
1. Grower in a Collective Growers Program (CGP): A collective of farmers who grow and pool hops together under one brand. The collective is facilitated by an “enterprise” that is responsible for the processing, packaging, marketing and distribution of the hops through a revenue sharing agreement with the farmers.
2. Independent grower selling whole hops 3. Independent grower selling pelletized hops
With the rapid growth in the craft beer industry, research indicates a strong potential market for BC grown hops amongst BC’s craft breweries provided the quality of these hops meet brewers’ specifications. From the brewers’ perspectives, processed, or pelletized, hops are preferred for the brewing process. While several varieties of hops in high demand amongst breweries are proprietary and cannot be grown by farmers in BC at this time, several varieties including Cascade and Centennial are in demand and, among other varieties, are being grown successfully in BC. As quality and consistency are vital for hops farmers in securing long-term purchasing contracts, the production process must yield a product that meets brewers’ specifications. Small independent farms may not have the crop yields to meet even a single small brewery’s demand for hops, thereby limiting this prospective target market. By pooling hops of like varieties from multiple small scale hop farms, growers collectives or “value share” collectives have the potential to achieve the capacity necessary to meet brewers’ demands while smoothing out any inconsistencies in the hops through the
blending process to create a consistent product that better reflects the standard profile for that hop variety. Processing technology is available for hops farms of all scales. Picking, processing and packaging equipment is required for independent farmers selling pelletized hops, which means higher start-up capital costs when compared to farmers operating within a Collective Grower’s Program (CGP) or independent farmers selling whole hops. Of the scenarios examined, farms operating as an independently and selling pelletized hops and farms operating as part of a Collective Growers Program were considered the most financially feasible provided the farm is at least five acres in size. At this scale, it is estimated to take approximately seven years or less to become profitable. The revenue potential increases proportionately with the size of farms. The independent farmer selling pelletized hops has the potential to be the most profitable of the scenarios, but has the highest start-up capital requirements and financial risk. The financial feasibility of growing hops on a small-scale farm depends on the farmer’s objectives. If the farmer’s goal is to maintain a modest lifestyle with a modest income, then growing 5 or 10 acres in a collective growers program may make sense. For those with greater access to land and capital seeking a more lucrative venture, an independent 10 or 20-acre farm selling pellets directly to brewers is a more appealing scenario. Growing and selling whole hops only appears to be unfeasible given brewers’ preferences and low revenue potential. Regardless of the business model selected for growing hops, there is significant opportunity for the hops industry to grow in BC. As the projection for craft beer sales are expected to maintain rapid growth, the opportunity for growing hops will continue grow as well.
Introduction What are Hops? Hops are one of the principle ingredients in the beer making process and provide the balance to the beer that often gives the beer its signature. These “spices” are responsible for providing the beer with hop aroma, bittering and hop flavour. Although many of the same varieties of hops are grown in different parts of the world, hops are often characterized by their location in addition to their variety, having what wine makers call “terroire”. Hops are a herbaceous perennial vine and are members of the plant family Cannabinaceae (Kneen, 2004). Hops are native to temperate zones of the northern hemisphere and are most commonly found between the 30th and 50th parallels (Kneen, 2004). These plants typically live over 25 years and take approximately 4 years to fully establish. An established hops plant can grow up to 6 m high and is able to produce upwards of 2 pounds of dried hops per plant in ideal growing conditions (Kneen, 2004). During the spring, the hops bines start growing at a fairly rapid rate, sometimes as much as 30 cm per day. Once the plant has reached it’s maximum height, it begins to produce clusters of hops that typically mature between late summer and early fall, which is when they are picked, processed, and ready to be used for making delicious craft beer. Hops can be used in their whole form or as pellets. Pellets are the most commonly used for commercial brewing, as many brew houses are not equipped to use whole hops in the brewing process. Rebecca Kneen’s Small Scale & Organic Hops Production1 provides a wealth of information and guidance on the practice of growing hops.
History of Hops in BC The earliest cultivation of hops in BC dates back to 1862 when farmers in Saanich, just north of Victoria, began growing hops to sell to local brewers. A shortage in other countries allowed big profits in BC, and interest spread to other parts of the province. In the Chilliwack area, the industry continued to grow until the 1940’s when nearly 2,000 acres were under cultivation, with 4,000 people employed during the harvest each year. At its peak the Fraser Valley represented the largest hop-growing region in the entire British Commonwealth. But after World War II, the industry began shrinking, and in the 1950’s, the farms began using mechanized pickers, which ended the need for large numbers of workers. Declining, too, was the actual size of the industry, which now had to face the competition of the massive hop production of the Yakima and Willamette Valleys, in Washington and Oregon to the south. The province’s major corporate-owned breweries were buying cheaper hops almost exclusively from Washington
State’s heavily subsidized hops industry. Fewer and fewer farmers chose to grow hops until the last of the great Fraser Valley hop farms closed down in 19971.
Current Trends Hop farming in BC was essentially non-existent in BC after 1997 until Left Fields Farm began growing hops organically in Sorrento BC. Since then it has been estimated that as many as 20 small scale commercial hop farms have either commenced or are soon to commence operations in BC2, including Eagle Valley Hops (Shuswap, BC), Bitterbine Hops (Lillooet, BC), Squamish Valley Hop Company (Squamish, BC), the Sartori Cedar Ranch and the Chilliwack Hops Company (Chilliwack, BC). Industry trends indicate a large and rapidly expanding market opportunity for BC grown hops. Within the last decade, the craft beer industry in North America has been booming. In 2013, the US experienced an 18% increase in craft beer sales despite a decrease in overall beer sales of 2%. In addition to growth in market share, craft beer prices also increased by 2.3% (DENCBC, 2014). Craft beer in BC has been booming as well. A recent article in the Vancouver Sun stated:
“B.C. has been adding about a dozen new craft breweries a year during the past five years, growth that is mirrored south of the border, where at least 1,000 craft breweries have opened across the United States in that period”3
In BC, craft beer’s market share accounts for nearly 15% of all beer sold according to the Craft Brewers Association of British Columbia (now BC Brewers Guild), who maintain that brewers are experiencing sales growth between 15 and 20% per year. Since 2007, breweries that produce less than 160,000 HL per year have experienced a 140% increase in sales4, as sales have almost tripled from approximately $60.5 million to $169.6 million (Figure 1). Coupled with the boom in craft beer sales, the number of microbreweries in BC has boomed as well. In 2012, there were roughly 55 microbreweries breweries in BC, in 2013 that number grew to 64, and this year already there are 22 more breweries in BC, bringing the total number of breweries to more than 855. By the time this report is published that number will likely have changed.
Market Research Methodology
Research was conducted to investigate the market opportunity for selling BC grown directly to BC craft breweries using a combination of desktop research, online surveys and telephone interviews. Detailed methodologies and findings are presented in Technical Memo #1: The Current Market For BC Grown Hops2.
Findings
For complete research findings see Technical Memo #1: The Current Market For BC Grown Hops2.
Summary of Desktop Research Desktop research shows tremendous growth in BC’s craft beer industry (see Introduction – Current Trends). New start-up craft breweries continue to come online every year in BC. In his book “Craft Beer Revolution – The Insider’s Guide to BC Breweries”, author Joe Wiebe admits that his 2013 book was “out-of-date the moment it was published”. Summary of Interview Results All of the interviewees, except one, indicated that they would support locally grown hops and pay a premium for BC hops if specifications and quality requirements were met. Many of the responses on “local hops” were in relation to the local food movement and supporting local BC farmers. One respondent noted that their support for local products was based on enhancing the resiliency of local economies. For price, there was a general consensus from all brewers that they would pay a premium for BC grown hops. It was estimated that the current prices of imported hops range from $5 to $17 per pound. One respondent noted that they would pay double the price for Cascade hops grown in and another noted that they would pay $15 per lb (also for Cascade). In general, quality of hops and meeting brewers’ specifications was the top priority for brewers. One respondent noted that brewers needed to be consistent with their beer, thus, require a consistent quality in their hops. Another respondent noted that the quality of hops previously sourced from a small scale hops farm in BC has been an issue, however, they would still purchase local hops if quality specifications were met. On the subject of varieties, a number of brewers noted “the big C’s” (Cascade, Centennial, Columbus and Chinook) as varieties of interest. Organic hops appeared to
be not as important as interviewees noted that organic beer or hops are not a major selling point for their product. Summary of Survey Results 64% of respondents had brewed with BC grown hops at a commercial scale, and 100% of these would do it again if the quality of hops was the same or better. 45% currently do not have access to a source of good quality, BC grown hops. Of those respondents that currently do have access to a source of good quality BC grown hops, 67% indicated suppliers are not able to consistently meet their demand for the product. Of breweries that source their hops directly from a BC farmer or from their own farm operation, 67% of respondents indicated this represented 0-5% of their annual supply of hops. 82% of breweries currently purchase pelletized hops, while only 9% purchase only whole dried hops, and another 9% purchase both pelletized and whole dried hops. In terms of what breweries are looking for, breweries were asked to rate a number of factors on a five-point scale (5 being “most important” and 1 being “least important”). Results are summarized in the table below.
Table 1. Brewers' responses to survey questions regarding consistency, pellets, securing BC hops and price of BC grown hops.
Factor % of Breweries Who Rated This
a 5/5
% of Breweries Who Rated This
a 4/5
Average Rating
How important is it that hops must be
consistently of high quality?
91% 9% 4.9/5
How important is it that hops be
processed into pellets?
64% 9% 4.2/5
How interested are you in securing a
source of BC grown hops that
meet quality specifications?
45% 36% 4.3/5
How important to you is price point? 9% 36% 3/5
Breweries were asked what hop varieties they would be interested in purchasing from local BC growers. The varieties that generated the most interest from breweries were
Amarillo, Citra, Simcoe, and Cascade, followed by Centennial and Magnum, Columbus and Mosaic. A complete list of responses is provided in the table below. Production of certain proprietary hop varieties like Amarillo, Citra, Simcoe and Mosaic is licensed to a limited number of farms outside Canada and hop rhizomes cannot be purchased for growers in BC at this time. To idenitfy hop varieties that can be grown in BC at this time and that are of interest to breweries in BC, breweries were asked to select their top 2 picks for locally grown hops from a list of varieties potentially available to BC growers. Cascade was the top choice, followed by Centennial.
Table 2. Brewers responses to survey question on preferred varieties of hops if they were available from BC farmers.
Variety # Responses Variety
# Response
s Cascade 10 Willamette 3
Citra 10 Northern Brewer 3
Centennial 9 Calypso 3 Amarillo 9 Summit 3 Simcoe 9 Challenger 2
Columbus 7 Crystal 2 Magnum 7 Other 2
Mosaic 7 Bramling Cross 1
Chinook 6 Liberty 1 Fuggles 4 Nugget 0 Sterling 4 Galena 0
US Goldings 3 Most breweries (64%) prefer to contract for their hops, citing reasons that include security of supply, ease of planning, price certainty, and cash flow implications (pay as you draw on contract vs. purchase all at once on spot market). Most (80%) do not employ any formal tender process when purchasing hops, but may seek multiple quotes, shop around or use other less formal selection processes. When asked to rate the importance of multiple factors in selecting where to purchase hops, quality and variety were among the most popular factors. Detailed results are provided in the table below.
Table 3. Brewers responses to survey questions on the importance of multiple factors when deciding where to purchase their hops.
Factor % of Breweries
Who Rated This a 5/5
% of Breweries Who Rated This a 4/5
Average Rating
Product Quality 73% 18% 4.6/5 Available Varieties
& Selection 64% 18% 4.5/5
Customer Service 36% 36% 4.1/5 Buying Local 18% 45% 3.7/5 Product Price 9% 36% 3.3/5
All else being equal (e.g. product quality, variety, etc.) 100% of survey respondents indicated they would consider switching to local BC grown hops for some or all of their supply if the option was available. Of these, 91% indicated they would consider switching to local BC grown hops if the option was available and if it meant paying a price premium. When asked how much of a premium breweries would be willing to pay for BC grown hops, responses varied considerably, with 50% of respondents indicating they would pay 5-15% more, and 50% of respondents indicating they would pay 25% or greater than 25% more. Breweries were asked how much they would be willing to pay per dry pound for BC grown, high quality pelletized hops. Responses varied, but generally ranged from $8-$10/lb to $14-$16/lb. When asked how much they would be willing to pay for BC grown, high quality whole dried hops, a majority of breweries (57%) indicated $8-$10/lb. Market Research Conclusions
The interview and survey responses presented in Technical Memo #1: The Current Market For BC Grown Hops2 showed a general consensus that BC breweries would switch to BC grown hops if quality and brewers specifications were consistently met. A number of breweries already have access to a source of locally grown hops, however most noted challenges with inconsistent quality or supply. Brewers indicated a willingness to pay a premium for BC hops, although purchasing decisions would still be based on multiple factors including the quality of the product, varieties, and product price. Breweries appear willing to pay prices of up to $14-16 per pound for high quality pelletized hops and up to $12 per pound for high quality whole dried hops.
This study indicates a market opportunity for BC growers to supply the province’s craft breweries with hops provided their product can meet brewers’ specifications for quality, form and varieties while remaining relatively price competitive with modest pricing premiums. There was general consensus amongst all breweries consulted that they would switch to a BC grown supply for all or a portion of their hops provided these
conditions could be consistently met. The total size of the market for hops represented by BC’s craft breweries and brewpubs is equivalent at 450-500 acres under full production, with these numbers increasing as does the craft beer industry in BC. This far surpasses the province’s current production which is limited to a small number of farms operating at relatively small scales (the largest of these being the Sartori Hops Farm at 13 acres and Chilliwack Hops Company at 20 acres). When asked to comment on what interested them about BC grown hops, brewers responses indicated a desire to source interesting ingredients that help brewers make interesting beers, interest in hops with a unique to BC character that would help distinguish their beers, and a desire to support a hops industry for British Columbia.
Production/Technical Feasibility Growing Conditions
According to the Hops Atlas6 optimal conditions for growing hops are as follows:
• a latitude between 35‐55 degrees • average temperature from April through September between 10‐19 oC • average precipitation from April through September of 6‐569 mm • average daylight during these months between 10‐19 hrs/day
These findings were derived by taking the climate data for top hop growing regions in the world: George, South Africa; Tasmania and Victoria Australia; Rio Negro Argentina; Oregon and Yakima, US; Hallertau, Germany; Saaz, Czech; and Wye England.
So how does British Columbia compare? Most of arable land in province between 49 and 55 degrees latitude and average temperatures, precipitation, and daylight are within optimal conditions across many parts of BC7 within these latitudes. The following table provides a summary of latitudes, temperatures and precipitation data for the province. Daylight hours for each location are available online (e.g. http://www.timebie.com/sun/).
Table 4. Summary of latitudes, temperatures, and precipitation for climate stations throughout British Columbia
Location Latitude Avg. Temp. (Apr–Sept)
Avg. Precip. (Apr–Sept)
Campbell River 49O57’ N 13.75 OC 362.6 mm Castlegar 49 O17’ N 15.63 OC 322.8 mm Chilliwack 49 O10’ N 15.63 OC 481.1 mm Comox 49 O43’ N 14.52 OC 250.7 mm Creston 49 O05’ N 15.32 OC 294.3 mm Dawson City 64O02’ N 9.32 OC 203.6 mm Delta 49 O00’ N 15.15 OC 261.7 mm Gibsons 49 O23’ N 14.97 OC 412.8 mm Grand Forks 49 O01’ N 15.47 OC 264.8 mm Kamloops 50 O42’ N 15.42 OC 163.4 mm Nanaimo 49 O03’ N 14.72OC 254.7 mm Penticton 49 O27’ N 16.20 OC 193.2 mm Powell River 49 O52’ N 15.17OC 329.3 mm Prince George 53 O53’ N 11.68 OC 320.2 mm Quesnel 53 O01’ N 12.82 OC 295.5 mm Saanich 48 O37’ N 14.18 OC 204.3 mm Smithers 54 O49’ N 11.15 OC 260.3 mm
Squamish 49 O53’ N 14.62 OC 539.0 mm Surrey 49 O08’ N 15.03 OC 420.5 mm Williams Lake 52 O10’ N 11.62 OC 260.5 mm
Soil Requirements Hops grow best in well draining soils. For optimal soil conditions, soils textures should consist of sand/silt loam (coarse textured soils), in order to promote good drainage and rapid entry of air between soil particles.8 The upper soil horizons should also consist of organic materials to promote water retention. Mounding your plant areas and incorporating organic material into the topsoil layers can help in meeting your optimal soil conditions. Soil pH is responsible for a number of functions that affect plant growth, some of which include the uptake of nutrients, resistance to bacteria, and other chemical9. Hops plants can tolerate somewhat of a range in soil pH. According to a University of Vermont hops study, hops can tolerate soil pH ranging from 5.7 to 7. The application of certain fertilizers can decrease soil pH over time. For instance, some nitrogen fertilizers, release hydrogen ions through a nitrification process (converting ammonium (NH4) into nitrate (N03)), which can lower the pH, resulting in more acidic conditions. Therefore, it’s really important to have an annual soil-testing program in order to maintain a balance in the chemical properties. If the soils become too acidic, amending the soil with limestone is a common practice for neutralizing pH. Nutrient requirements Hops plants require a significant amount of nitrogen to meet their growing requirements. According to a fertility guideline for hops produced by the University of Vermont, a high yielding hop yard can require between 100 to 150 lbs of nitrogen per acre. Hops plants remove nitrogen from the soil, so it is important to continuously add nitrogen to your soils on an annual basis.10 The application of nitrogen into the soil depends on the current nitrogen content of the soil and the amount added should be verified by a qualified agrologist. Phosphorous is also required for optimimzing hops yields. Hops require higher phosphorous needs (20 to 30 lbs per acre) during the latter stages of the growing season, when the plant is putting all of it’s energy into producing the crowns.10 It is important to remember that over application of phosphorous (and nitrogen) can result in algae blooms (eutrophication) and oxygen loss in aquatic habitats. Potassium requirements can range between 80 to 150 lbs per acre for a commercial hop yard. Most of the potassium is taken up into the leaves and stems of the hops plants and is returned to the soil by returning the hops plants back into the hop yard in a
compost mix. This recycling of the plant replenishes the potassium levels in the soils which can minimize the amount of potassium inputs.10 If potassium levels need to be replenished, Potash is commonly used. For more information on nutrient requirements for growing hops, refer to Fertility Guidelines for Growing Hops in the Northeast developed by the University of Vermont. Watering Requirements Hops plants require a steady amount of watering, especially because the plants grow best in well draining soils. According to a Sustainable Hop Production bulletin for the Great Lakes region11, hop plants require approximately 16 gallons per week during the hottest driest periods of the summer. It is important not to overwater hops plants as their root systems can be impacted by root rot and the incidence of disease, which is caused by being surrounded by too much water. For this reason, it is also important to avoid pooling water conditions. Drip irrigation is one of the more common practices used for growing hops.
Hop Varieties
There are more than 100 varieties of hops. Higher alpha acid varieties are often used primarily for bittering and referred to as “bittering hops”. Other varieties, often lower in alpha acids, possess desirable aromatic qualities and are used primarily to achieve the flavour and aroma character of the beer and are referred to as “aroma hops”.
Results of the market research indicate a stronger interest among BC breweries in aroma hops vs. bittering hops.2 Production of aroma hops – those used to achieve specific flavour and aromatic properties in the beer rather than to achieve bitterness – and dual purpose (bittering/aroma) hops may provide the greatest opportunity for commercial hops farming in BC. While some of the costs and conditions cited are somewhat dated or regionally specific, the 2009‐2010 Feasibility and Market Research Study For Commercial Hop Production in New England12 summarizes the merits of aroma vs. bittering hops production:
1. Price: Bittering hops function as their name says, they provide bitterness to a beer, the backbone upon which aroma hops then layer complexity, flavor and aroma. Because of this, bittering hops have evolved into a highly commoditized product with a non‐elastic, price point averaging $1‐3/lb. Only large scale operations focused on efficiencies of scale can compete in this market. Aroma hops, on the other hand, maintain product differentiation capabilities that add value and can command a higher, and more elastic, price point. Aroma hops price points can range as high as $25+/lb.
2. Contracts: Brewers typically lock in multi‐year contracts for bittering hops. While they will also lock in contracts for certain quantities of
aroma hops they know they need, they tend to reserve some of their budget for unexpected purchases, enabling them flexibility to experiment and innovate. This opens the door for them to purchase a New England hop.
3. Growing Conditions: Bittering hops are high alpha acid hops which are known to be difficult to grow in New England. Having a high alpha acid content is not a prerequisite to an aroma hop.
4. Craft Brewer Audience: Craft brewers are more likely to explore with new beer offerings, and seek out new, different or unusual aroma hop varieties. Craft brewers are more likely to appreciate the value of terroir, unique traits in a hop that are derived from the region in which it was grown, in an aroma hop.
5. Product Specifications: Because aroma hops can be added at different stages during the brewing process, there are opportunities for non‐pelletized hops so even small scale commercial growers interested in selling whole dried or wet hops could participate.
Breweries expressed a strong interest in a number of licensed, proprietary varieties of hops including Amarillo, Citra, Simcoe and Mosaic2. These varieties are the result of breeding programs aimed at developing new strains with new and interesting flavour and aroma characteristics that appeal to brewers. Unfortunately, at this time access to these varieties and the legal right to grow them is highly controlled through licensing to a select number of farms outside Canada, and commercial production of these varieties in BC is not feasible at this time.
With respect to the current varieties that can be grown in BC, Cascade and Centennial were of greatest interest to breweries2. Both varieties are being grown successfully at Persephone Brewing Co. and used in 2014 to brew the popular Persephone Harvest IPA. Driftwood Brewing Company has sourced high quality Centennial hops from Sartori Cedar Ranch for a number of years to brew their highly sought after Sartori Harvest India Pale Ale. The following table provides a list of some of the hop varieties currently in commercial production in BC:
Table 5. Examples of hop varieties currently in production in BC. (Source: sartorihops.com, eaglevalleyhops.com, crannogales.com)
• Cascade • Centennial • Magnum • Nugget • Newport • Sterling • Willamette
• Golding • Fuggle • Mt. Hood • Challenger • Hallertau • Northern Brewer • Crystal
Volume of Hops & Critical Mass
Hops of the same variety can vary significantly from farm to farm in terms of their alpha acid content and the flavour and aroma character they impart to the beer. For this reason, most breweries will prefer to purchase all their hops for a particular style of beer from one consistent source. Small independent farms may be hard pressed to meet even a single small brewery’s demand for hops, thereby limiting this prospective target market.
For example, a small-scale (e.g. < 5000 HL per year production) microbrewery could easily use 100 dry pounds of hops to brew a single batch of hoppy India Pale Ale. If that same brewery wishes to secure enough hops to brew this beer 20 times in the year, they’ll be looking to place a single order for 2000 dry pounds of those hops. Assuming the average hop yard yields approximately 1500 dry pounds per year, a hop farmer would need to have at least 1.3 mature acres in full production of that single variety to supply the brewery.
By pooling hops of like varieties from multiple small scale hop farms, growers collectives or “value share” collectives can smooth out any inconsistencies in the hops through the blending process to create a consistent product that better reflects the standard profile for that hop variety. Furthermore, in this way the critical mass necessary to service the demand for hops represented by craft breweries in BC can be achieved by multiple smaller farms.
Whole vs. Pelletized
Whole dried hops are the simplest form of hops for a farm to produce, however hops in this form are much less marketable to BC breweries. Market survey and interview results indicated breweries have a strong preference for pelletized hops. Brewers’ reasons include ease of use in the brewing and cleaning processes and ease of storage. The survey of BC breweries also indicated the potential for the market to pay a higher price for pelletized hops (e.g. $14-16/lb) than for whole dried hops ($8-10/lb) 2. Brewers’ preference for pelletized hops common across the industry. A survey of New England breweries in 2010 indicated that 83% required pelletized hops12.
Both whole and pelletized hops require processing. Whole hops, once picked, must be dried in a kiln or “oast”, then compressed and baled into gas-proof bags, ideally with a gas purging step to expel oxygen from the bale using Nitrogen or Carbon Dioxide. Pelletized hops must also first be dried in a kiln or “oast” and are then milled into a finer material before being processed into pellets using a pelletizing machine. Note that to achieve a high quality hop pellet, pelletizing requires the use of specialized equipment to control the temperature of the milling and pelletizing processes to avoid the undesirable loss of aromatic oils in the hops. The secondary processing required for pelletized hops represents a significant increase in capital costs over whole hops.
Infrastructure & Processing
This section provides a brief description of infrastructure and equipment requirements for growing, harvesting, drying, secondary processing (e.g. milling and pelletizing) and packaging of hops for direct sale.
Hop Yard Design and Trellising
Hop yards should be designed with a number of factors in mind, including:
• Maximum exposure to sun • Minimum exposure to prevailing winds • Vehicle and equipment access • Proximity to a water source
The standard form of modern hops trellising is described in R. Kneen’s Small Scale & Organic Hops Production:
The standard trellising worldwide now is a system of tall poles supporting horizontal cross-wires running in both directions across the yard. Two strings are run from each crown up to the wires. Poles are 16-18' high, and are set one every 5 plants or so (depending on plant spacing). Heavy wires or cables run the length of the hopy- ard, supported by the poles. Lighter wires or cables are run cross-wise, anchored to the outside cables. In most larger yards, the poles are set in a checkerboard pattern, so that the load of the plants is distributed most evenly. The outside poles are slanted outwards, to help equalize the strain of the cables, and are anchored by a simple but solid system of guy wires.1
Spacing between poles will depend on the desired width between rows of hops which in turn is dictated by the equipment to be used maintaining the hop yard and harvesting the hop bines. At Persephone Brewing Co. alleys are 11’ wide and poles are spaced in a 22’x30’ grid (30’ apart within rows of hops and 22’ apart between rows), allowing a
compact tractor to drive along the alleys between rows of hops. Hops are planted 3-4’ apart in rows. Root crowns can get up to four feet in diameter, so allowances should be made for this when spacing between plants in the same row and between rows1. Poles, steel cable, hardware and ground anchors represent the basic material requirements of any hops trellis. Poles will represent a significant cost unless they can be harvested, found or reclaimed, and must be replaced as often as every 5 years depending on the material. Some (non organic) hop yards opt to purchase treated poles which increases longevity. Older growth cedar poles may also be available for purchase in BC but usually at a premium cost. 5/16” or 3/8” diameter braided steel wire (aircraft cable) should be used for the main support wires connecting poles in both directions. The braided steel wire is strong, experiences minimal stretching, and is easy to work with. Smaller hop yards (e.g. < 1 acre) or yards sheltered from prevailing winds may find 1/4” steel wire to be sufficient. Growers in the Lillooet valley have had success using 9 gauge high tensile wire for the cross wires (from which hops twine will be strung), however 3/16” braided steel wire is also an option and, while more expensive, is much easier to work with. Hardware to connect wires together, connect wires to poles, and wires to ground anchors come in many forms and can generally be purchased from your braided wire supplier or local hardware (but be warned – you’ll probably need more than they keep in stock). Key to any system is the use of a cable cutter, come-along and haven grip (a special tool used to grip wire for tensioning) to tighten the trellis wires. You’ll also find a cordless impact wrench/driver essential for quickly tightening wire clips. Ground anchors come in different forms. At the University of Vermont (UVM Extension) Hops Research Project, screw in ground anchors were used and installed using a special power auger attachment13. Screw in anchors can also be installed manually by 1-2 people. At Persephone Brewing Co., simple ground anchors were fabricated from 8” square pieces of ¼” steel plate welded in the center to a 4’ rod of ½” steel bent at one end to form an eye. Holes were augured in the ground and the anchors inserted and backfilled. At Leftfields Farm, a similar design was used but
the plate was cut and bent to allow anchors to be screwed in by hand1. Practically speaking, ground anchors can be anything durable that remain solidly planted in the ground when under tension.
Construction of the trellis system is a big job, and generally requires the use of mechanize equipment to auger holes, lift, move, and place poles and to access the top of the trellis poles in order to install and tension wires (a 20’ orchard ladder comes in handy too). Operation of the hop yard will require accessing the top of the trellis when stringing twine, harvesting the bines, and tensioning and maintaining trellis wires. At a commercial scale, growers will quickly find that a truck or tractor outfitted to assist with these tasks is essential.
Harvesting
The timing of the harvest will vary depending on location, hop variety (some mature earlier than others) and growing conditions. Generally harvest time falls between late August and late September. Timing of the harvest is vitally important as harvesting too early will result in hops with underdeveloped alpha/beta acids and essential oils resulting in “weak” hop character while harvesting too late will result in a loss in alpha/beta acid and essential oils quality14. At Persephone Brewing Co., two year old Golding and Centennial hops harvested past their peak began to turn yellowish brown and developed undesirable aromatic qualities (e.g. notes of garlic and onion) relative to hops from the same yard harvested 1 week earlier.
Knowing when to harvest hops takes practice. Hops are generally mature and ready to be harvested when they reach 80% moisture by weight and have a “springy” texture when lightly squeezed and are sticky to the touch. They should also have a pungent hop odour and visible lupulin when broken open (yellow pollen-like powder)1,14.
Harvesting hops can be done either manually or mechanically. Manual picking often involves a work party of many people working around a picking table for extended periods of time. The entire bine is cut down from the hop yard and
Figure 1. A cherry picker used to string twine, harvest hop bines and to access to work at tall heights.
Figure 2. Lupulin in a hop cone ready for harvest.
brought to the picking table where hop cones are manually picked and placed in sacks or baskets to be transferred onto drying racks. At a commercial scale, manual harvesting of the hop cones is considered unfeasible unless the grower has access to a tremendous number of willing volunteers.
Drying
Details on the hops drying process and techniques are provided in Small Scale and Organic Hops Production. Once harvested, hops must be dried in low temperature kiln from approximately 80% moisture down to 8% moisture as quickly as possible at 50-60oC
The kiln must be constructed in a weatherproof and well enclosed area. It can be constructed to suite different scales of operation.
For a smaller operation (e.g. 1 acre hop yard), racking may be used with large wood or metal frames with slats (e.g. 4’ x 8’ x 6”) covered with mesh or burlap. The racks are suspended over a heated area below with fans generating airflow through the racks.
For a larger operation a larger building may be required with a raised slatted floor over an enclosed heated space or room beneath. The slatted floor is covered in burlap over which the hops are spread 6” deep and dried. Fans or blowers may be used to improve air circulation. Pre-manufactured kilns are also available (e.g. Wolf hops dryer) that may provide greater drying capacity with a smaller footprint.
As soon as the hops are dried they must either immediately undergo secondary processing (i.e. ground and pelletized) or be baled in a piece of equipment that can compress the hops as much as possible into a large gas proof bag to expel unwanted oxygen from the hops. Hops balers are commercially available. As with the kiln, a quick internet search will yield several examples of do-it-yourself options15.
Secondary Processing (Pelletizing & Packaging)
Properly dried whole hops, whether baled or right off the drying racks, can be turned into industry standard T-90 pellets by grinding the hops in a mill and then running them through a ring die to form pellets. To avoid burning off the essential oils, alpha and beta acids it is essential that the pelletizing process not expose the hops to temperatures above 60oC.
Wet Hopping Hops may be used in the brew kettle fresh from the bine in a process know as “wet hopping”, but the window of opportunity is short. Brewers must use the product within a day or two of being harvested to capture the freshest flavours and aromas from the hops. This may be a way for new and existing growers to sell their crop with minimal processing (harvesting only). This study did not attempt to identify a market price in BC for wet hops.
As such, to produce a high quality product equipment must be specialized to minimize heat build-up across the interface between the metal hammers and die surface. Techniques include dies designed to minimize temperatures by dissipating heat and the use of liquid nitrogen injected cooling systems. The cost of temperature controlled equipment can be prohibitively expensive for smaller to medium sized operations, however smaller systems designed specifically for hops are increasingly available and range from $15,000 - $50,000 CAN (see images below). For the mechanically inclined grower it may be possible to customize a less expensive wood pelletizer to manage processing temperatures as a means of reducing startup costs.
Once pelletized the hops must be vacuum packaged in gas proof bags. If marketing to breweries, standard package sizes are 5kg (11lbs) and 20kg (44lbs), so packaging equipment should be sized accordingly. In order to maximize the shelf stability of the packaged hops, and in turn the long term quality of the hops, packaging equipment should include the capability to purge unwanted oxygen from the hops. This is generally accomplished by injecting a neutral gas such as Nitrogen into the package of hops to expel any air prior to it being vacuum sealed. This “gas flush” option is commonly available on commercial grade vacuum sealers such as that shown below. Once sealed into bags, the hops can be boxed and labelled for shipping.
Figure 3. From left to right, Lawson Mills hops processing package (includes low temp and fines removal system), Lawson Mills Bonsai 4HP hops pelletizer, vacuum sealer with gas flush capability.
Quality Assurance & Control It doesn’t matter how much hops you manage to grow. If they don’t measure up to brewers’ quality expectations they simply won’t sell. Whether hops are being marketed and sold as whole dried hops or packaged pelletized hops, once processing is complete samples of the finished product must be collected and submitted to an accredited laboratory for analysis of key quality parameters brewers will look at to assure themselves of the quality of the product. These include alpha and beta acids content (a determinant of the bittering potential of the hops), essential oils content, and volatile oil profiles (volatile oils such as Humulene, Caryophyllene, Myrcene, Farnesene, Linalool, Geraniol, and Pinene contribute significantly to the nuiance of hop aromas and flavours achieved in the brewing process). Product should also be tested by the lab for shelf stability. Lab results should be summarized and included in marketing and sales materials targeted to brewers.
Labour requirements and timing
Labour requirements were 65 person hours and 48 tractor hours to install a 1 acre hop yard at Borderview Research Farm in Vermont using a full sized tractor with a custom lift cage welded to a spare loader bucket for accessing tops of poles and a separate bobcat with auger attachment for drilling post holes. Labour requirements were higher at Persephone Brewing Co. at approximately 160 person hours and 55 tractor hours employing student labour and volunteer assistance. A compact tractor without a lift cage was used to augur holes and install poles and less efficient systems to access the trellis top were used, including orchard ladders and scaffolding moved about the yard on the bed of a trailer.
Spring Activities
• Soil sampling to determine fertility requirements
• Application of fertilizers and amendments
• Pruning of hop crowns • Cleaning up materials from previous
year • Set training wires or coir fiber lines • Train shoots (wrap clockwise) two per
wire + one spare (left middle)
Summer Activities
• Weed control & mowing • Application of fertilizers and
amendments • Scouting for pests and disease • Tissue/leaf analysis testing • Disease control measures • Irrigation management
Fall Activities
• Weed control & mowing • September harvest • Remove cones from vines • Clean up hop year debris for winter • Winterize irrigation lines • Fall pest and disease management
Winter Activities
• Cold storage • Hop processing • Hop marketing and sales
Figure 4. Source: Nova Scotia Hop Growers' Guide 2013 (hrrp://novascotia.ca/thinkfarm/documents/hop-grower-guide2013.pdf)
Labour requirements in a hop yard are described in Small Scale and Organic Hops Production1. Spring and summer labour requirements have been estimated at 500 hours per acre. Harvest labour involves cutting down the bines and picking the hop cones off the bines either manually or using some form of mechanized harverster. Manual harvesting has been estimated by growers in New England and Washington at approximately 1lb of dried hops per hour (1lb/hr), however some growers have reported “optimized” manual harvesting techniques that involve picking the cones from only the top 1-2 thirds of the bine. While this may reduce overall yield, harvesting rates of 1lb of dried hops per 35 minutes were achieved. Using mechanized harvesting equipment, labour requirements drop to approximately 1lb of dried hops per 3 minutes12. Even at optimized manual harvesting rates, without a significant contribution from volunteer pickers labour costs are prohibitively high and make this option generally unfeasible for a commercial operation (e.g. it would take 800-1500 hours to harvest a 1 acre hop yard producing 1500lbs of dried hops. For hop yards larger than a few acres, manual harvesting becomes impractical for another simple reason…either you need a small army of pickers or the hops will over-age on the bines before they can all be picked resulting in off flavours and reduced quality).
Additional labour is required to spread hops on a drying surface and then bale the dried hops for storage (if the desired product is a whole-leaf hop) or mill the dried hops and turn them into pellets.
If hops are to undergo secondary processing and be turned into pellets, all milling and pelletizing equipment must undergo a thorough cleaning before processing each variety of hops or leftover oils may contaminate the flavour and aroma character of the hops being processed. Once cleaned, all bailed hops of the variety to be processed are broken open and, if harvested from different farms, are thoroughly mixed together before being fed through the milling and pelletizing machines. The processed pellets must then be weighed into either 11lb or 44lb portions and vacuum packaged into gas proof foil lined bags, preferably using equipment capable of purging any oxygen from the packaged hops in order to maximize freshness and shelf life. As with drying and bailing little information is available in published literature on the labour requirements for secondary processing of hops.
Other Issues Affecting Growing Capability and Commercial Production
Disease & Pests
A thorough examination of diseases and pests affecting hops and management strategies is beyond the scope of this study. Common pests affecting hop yards in the Pacific Northwest include aphids and spider mites, while diseases such as powdery mildew and downy mildew have resulted in tremendous crop losses in some years. Careful and regular monitoring of crops for signs of pests and disease is critical to identify problems early and ensure corrective action is taken. This activity represents a significant contributor to summer labour requirements in the hop yard.
An invaluable resource on this topic is the Field Guide for Integrated Pest Management in Hops published in 2009 by Oregon State University, the University of Idaho, U.S. Department of Agriculture – Agricultural Research Service, and University of Washington16. The field guide also provides useful information on pest control, beneficial insects in the hop yard, week control and nutrient management.
Conventional vs. Organic Production
As with any agricultural product, hop growers must decide what growing practices will be employed in the cultivation of their crops. Conventionally, hops are grown using non-organic chemical fertilizers, herbicides and pesticides. Some of the hop farms in BC currently employ only organic growing practices (e.g. Left Fields Farm, Bitterbine Hops, Persephone Brewing Co.), while some others employ more conventional practices.
While the number of breweries in BC is exploding, the number of breweries producing organic beers remains small. As indicated in the Summary of Interviews contained in the Market Research section above, purchasing organic hops appeared to be of low importance as brewers noted that organic beer or hops are not a major selling point for their product. While there are many reasons to opt for organic growing practices (e.g. to maintain certification for other crops, long term ecosystem health), growers expecting to capitalize on an organic product for branding purposes should carefully consider the market demand for this product, particularly if the grower plans to attach a premium price to the product. This study does not provide an assessment of the market for organic hops.
Economic Feasibility This section examines the economic feasibility of 1 acre, 5 acre, 10 acre, and 20 acre farms operating under 3 different farming scenarios: a growers selling to breweries through a collective growers program or “value share” collective; independent farmers selling whole hops direct to breweries, and; independent farmers selling pelletized hops direct to breweries. Details on the challenges and opportunities for each scenario are discussed below.
Scenario Definitions Collective Growers Program The Collective Growers Program (CGP) consists of a collective of farmers who grow their hops independently, where the hops are pooled together for processing, distribution and marketing. This is facilitated by an enterprise that is responsible for the processing, packaging, marketing and distribution of the hops through a revenue sharing agreement with the farmers. The collective grower would only be responsible for growing, picking, drying, baling, and delivering them for processing, packaging, and distribution. Under a CGP the collective farmer could have access to information and expertise in hops farming and also have the opportunity of having shared access to equipment specific for farming hops, such as a hops picker. Added benefits of the CGP include the opportunities to work with other farmers to provide and receive farming support, establish best practices and bulk order supplies and materials. There is also the opportunity to co-own or share large equipment, such as tractors, with other farmers. Challenges for the CGP including sharing equipment amongst a group of farmers at crucial times of the year when windows for certain activities may be small, such as during harvest season. During processing, all of the like varieties would be combined and processed together for distribution. One challenge with combining all like varieties are that poor quality in hops from different farms may reduce the overall quality of the hops, making the dependence on other farmers to produce quality hops very important for maintaining quality and specifications. Depending on the nature of the collective growers program, the grower may be expected to contract their supply to the collective thereby limiting their opportunity to distribute their hops independently for the term of the contract.
Independent Farmers Independent farmers are farmers that grow, market and distribute their hops as an independent business. Operating a hops business independently eliminates the middleman, allowing full control over the business and a simple organizational structure compared to the Collective Growers Program. The independent farmer would be able to offer unique characteristics that may be specific to that farm, which may allow them to secure contracts with a select number of breweries. There is also the opportunity to partner with other independent farmers for marketing and sales. Independent farmers have the option of growing and selling whole hops or pelletized hops. The independent farmer must ensure they are able to maintain quality and consistency in their product as brewers need to rely on the hops in order to maintain consistency in their products. Also, the size of the hops farming operation may be too small to meet brewers’ needs. Independent farmers selling whole hops Selling whole hops independently is the simplest option for the aspiring hops farmer wishing to grow hops independently, but it is not the most feasible. Although selling whole hops has the lowest start-up costs, as there is no requirement to purchase processing and packaging equipment, there may be a limited market for whole hops as not all breweries are equipped to brew with whole hops and whole hops tend to be 15% to 40% cheaper than pelletized hops. Opportunities for hops farmers selling whole hops include penetrating niche markets for whole hops, such as candle and soap producers. There is also the option to expand the facility to include pelletizing at a later date. Challenges with whole hops include the amount of cold storage space required as compared with pelletized hops. Independent farmers selling pelletized hops Pelletized hops are the most in-demand form of hops and have the highest revenue potential. Compared to whole hops, pelletized hops require much less storage space, which can equate to relatively small electrical bills due to having to control temperature in smaller space. Farmers equipped with their own pelletizing and packaging equipment have the opportunity to generate an additional revenue stream through renting hops processing services to other hops farmers. One of the biggest challenges with growing and selling pelletized hops independently is the high start-up and capital costs required to purchase pelletizing and packaging equipment that will not compromise the quality of the hops during processing. Some farmers may be financially pressured to purchase smaller and cheaper equipment at the
expense of quality, which may compromise their ability to meet brewers’ quality specifications.
Financial Feasibility Assumptions The assumptions that were made in assessing the financial feasibility of farming hops in BC are as follows:
• Farmland is available for growing hops – No cost has been included for purchasing or leasing farmland
• Personal contributions will be 30% of total start-up costs • Farmer is starting from scratch with respect to vehicles and equipment • Farmers in the CGP will have access to, and will not have to purchase,
harvesting/picking equipment or pelletizing and packaging equipment. • The hops plants will yeild 0% of maximum yields in year 1, 40% in year 2, 90% in
year 3 and 100% in year 4 • One acre of hops at full production will yield 1,500 lbs of dried and processed
hops • The market price for pelletized BC hops will be $15/lb • The market price for whole BC hops will be $10/lb • The cost of labour for hops farming is $12/hour • Revenue received by the farmer for hops grown through the collective growers
program will be $9/lb and is based on a 60/40 revenue share with the collective enterprise
• Farmers operating independently and in the CGP must dry their hops on site and provide their own kiln and enclosed space for drying hops and packaging dried whole hops. Independent farmers must also provide their own harvesting, pelletizing and pelleted hops packaging equipment
Start-up costs Start up capital investments will be made over one to three years, and the equipment will be phased in as the production of hops increases over time (1 year CGP, 2 years independent grower whole and 3 years independent grower pellets). Year 1 Capital The initial start up capital will include everything required to construct the hop yard and, for independent growers, initiate brand development. A truck and trailer will be purchased and used to pick up materials and supplies for the assembly of the hop yard and used for general management of the yard once it’s in operation. The assembly of
the hop yard will include all of the supplies and materials for soil amendments, structure, planting, and irrigation. Year 2 Capital By the second year, the hops will need to be picked, dried and stored and the capital incurred by independent growers only will include a picker, oast house, cold storage, and construction of a thermo regulated building to house equipment and store the hops. Pelletized operations may also require a pelletizer, especially for the 10 to 20 acres farms. Year 3 Capital By the third year the pelletized operations would all require pelletizing and packaging equipment in order to process the hops and distribute to market.
Table 6. Start up capital costs for each scenario (ranges of numbers indicate range in start up costs between a 1 acre farm and a 20 acre farm)
Item
Start Up Costs CGP
(in 1000s) Ind. Whole (in $1000s)
Ind. Pellet (in $1000s)
Truck $10 $10 $10 Trailer $4 $4 $4 Tractor $0 - $2K $25 $25 Picker - $15 - $60 $15 - $60 Oast $1- $15 $1 - $15 $1 - $15
Grinder/Pelletizer - - $20 - $60 Packaging Machine - - $10
Refrigeration & Storage - $10 to $40 $10 - $40 Buildings/Structures $25 $25 - $45 $25 – $45
Services $2 $2 $2 Branding, Web & Print - $2 - $5 $2 - $5
Fertilizer/compost $2.5 - $50 $2.5 - $50 $2.5 - $50 Hop yard Assembly $12 - $240 $12 - $240 $12 - $240
Total $56 - $371 $99 - $496 $139 - $566 Personal Contributions Personal contributions are estimated to be 30% of the start-up capital costs and can range from $18,150 for 1 acre in the CGP to $169,800 for 20 acres as an independent grower selling pelletized hops.
Start up working capital Estimated working capital for each scenario (Table 7) is based on the total amount of working funds required until the farm is earning a profit. An assumption is made that working capital is funded from a loan drawn down on an annual basis. The availability of loan financing to pay for farm working capital will depend on the lending institution, as will the terms of such financing. Gross Revenues, Net Income and Years to Profit Individual scenarios do not include growth projections for increasing the size of the farm (i.e. all scenarios assume farms start at their maximum size and do not scale up). Therefore, the estimated gross revenues for all of the scenarios peak by 4 year. Net income varies by year, depending on the hops farming scenario, and only remains constant after the hop farm is earning a profit and all debt is paid off. The number of years it takes for the business to profit is estimated based on when revenues exceed the total expenses (The net income statements for all of the scenarios can be found in Appendix B). Table 7. Total start-up costs with capital, working capital and personal contributions for each scenario at 1, 5, 10 and 20 acres.
Scenario Acres Start-up Capital Costs
Start-up working capital
Total Start-up
Personal Contribution
Gross Revenue (4+yrs)
Net Income (4yrs)
Years to
Profit
Collective Growers Program
1 $60,500 $74,080 $134,580 $18,150 $13,500 ($9,094) 11 5 $118,500 $111,153 $229,653 $35,550 $67,500 ($4,300) 7
10 $191,000 $108,643 $299,643 $57,300 $135,000 $3,216 4 20 $336,000 $378,124 $714,124 $100,800 $270,000 $6,173 4
Independent Pellet
1 $128,500 $84,000 $212,500 $38,550 $22,500 ($9,753) 11 5 $258,500 $137,008 $395,508 $77,550 $75,000 $20,941 3
10 $393,500 $238,346 $631,846 $118,050 $225,000 $47,335 3 20 $566,000 $418,370 $984,370 $169,800 $450,000 $122,997 3
Independent Whole
1 $98,500 $113,680 $212,180 $29,550 $15,000 ($14,917) 11 5 $228,500 $203,105 $431,605 $68,550 $50,000 ($19,381) 11
10 $323,500 $271,945 $595,445 $97,050 $100,000 ($15,913) 6 20 $496,000 $470,829 $966,829 $148,800 $200,000 ($9,905) 6
New Farmer vs. Existing Farmer The financial scenarios have been based on a farmer starting a commercial hops farm from scratch, with the exception that all scenarios assume the farmer has land (land prices vary throughout the province and it’s challenging to estimate land value for the province as a whole). An existing farmer commencing a hops farming enterprise may already own a variety of farm equipment (e.g. truck, trailer, tractor, storage facility etc.) and would thus forgo the costs on these capital expenditures.
Conclusions on Financial Feasibility Financial feasibility is usually the piece of the business planning process that dictates whether or not you will turn a business idea into action. The financial feasibility of growing hops on a small-scale farm depends on the farmer’s (business owner’s) objectives. If the farmer’s goal is to maintain a modest lifestyle with a modest income while assuming minimal financial risk, then growing 5 or 10 acres in a collective growers program may make sense. This may also prove a good option for new farmers with little or no experience growing hops or other commercial crops. Although a 5 or 10 acre farm in a collective growers program will not earn a profit until years 7 and 4 respectively, growing hops at this scale with the support of a collective enterprise and without having to invest a significantly large amount of money make this a relatively low risk and accessible option for farmers with limited access to equipment and capital. While not as potentially lucrative as selling direct to breweries, participating in a CGP at this scale can provide a decent income if the farm owner does the majority of the farm work themselves. For those seeking a more lucrative and significantly higher risk and more costly venture, an independent 10 or 20-acre farm selling pellets directly to brewers may prove to be a more appealing scenario. Although the start-up capital costs are high ($250,000 to $550,000) for growing and selling pellitized hops directly to breweries, the years to profit are relatively low (3 years for 5, 10, and 20 acre farms) and the projected net incomes range from $46,000 per year for 5 acres after year 10 and $198,000 per year for a 20 acre farm after year 10. Scenario combinations that are not recommended include 1 acre sized farms for all scenarios and independently farming and selling whole hops. The analysis showed that all 1 acre sized hop farms either never start to earn a profit, or if they do those profits are extremely small (e.g. $263 net income for 1 acre in the collective growers program). Independently farming and selling whole hops directly to brewers is also not recommended both because of the limited market for whole hops amongst breweries and the number of years required to earn a profit (6-11 years).
Value Added Enterprises In addition to the revenue generated from the sale of hops, other farm enterprises can make us of the hop yard to generate additional revenues and provide other benefits. Harvesting and Selling Hops Rhizomes Hop plants are most often propagated from rhizomes, which are essentially the underground shoot from the hops plant. Rhizomes can be harvested by digging them out of the ground each spring. The harvested rhizomes are then cut into 6 to 8 inch lengths and sold to growers. A mature hops plant can produce a large quantity of rhizomes in a single season. Although it is common practice for many farms to till the shoots back into the soil during the spring, some farmers will harvest their rhizomes and sell them to new or existing farms. The price for rhizomes can vary from $1 to $6 per rhizome. Livestock in the Hop Yard Chickens and hops can have a mutually beneficial relationship when raised/grown together. According to a report from the US Agricultural Research Service17, the antibacterial bitter acids found within the hops flowers can help in preventing pathanogenic bacteria from affecting chickens’ stomachs. On the other hand, chicken manure can be an excellent source of nutrients into the farm, in addition to light tilling, aeration and mixing of organic matter at the surface of the soils. Sheep can also be beneficial to hops farming. In New Zealand it is common for farmers to run sheep through their hopyards to control weeds and add nutrients for soil fertility (Sirrine, 2014)18. As potential source of additional revenue, a small-scale organic chicken farm or flock of sheep could be incorporated into the hops farm. Intercrops Intercropping is another possibility with growing hops. For small-scale farmers, it is possible to for other crops to be grown between the hops plants. According to Left Field Farms in Sorento BC, peas have shown to grow excellently with hops as they fix nitrogen back into the soil and do not interfere with hops plants or irrigation systems. According to LFF, the basic criteria for choosing an intercrop is the ability of the plant to do well on drop irrigation, harvest earlier in the season than hops, grow clear of the hops plants and irrigation systems, and not impact nutrient balances in the soil when the vegetables are harvested.
Conclusions
This feasibility study examined hops farming at different scales and under different business models; a collective growers program (CGP), independent farmers selling pelletized hops, and independent farmers selling whole hops.
Given the current market conditions from the boom in the craft beer industry, which is showing no signs of slowing down, there is significant opportunity for hops farming in BC. The opportunity is grounded in the fact that most of BC has the right climate, receives enough precipitation, and receives enough daylight during the growing season to support a viable hops farming industry.
The most feasible options for farming hops depends on several factors. If the farmer’s goal is to maintain a modest lifestyle with a modest exposure to risk and modest income, then growing 5 or 10 acres in a collective growers program may make the most sense. The collective growers program may also make the most sense for a new farmer with little or no experience growing hops or commercial crops. Given that the farmers in the CGP have the lowest start-up costs, the financial risk is also lowest compared to other scenarios. It should be noted that this option would require the establishment of a collective enterprise to provide processing, marketing and distribution services to multiple farms. For those seeking a more lucrative and significantly more costly venture, an independent 10 or 20-acre farm selling pellets directly to brewers may prove to be a more appealing scenario. Independent hops farming may make more sense to an existing farmer who already has a solid foundation of in commercial agriculture and much of the knowledge required to operate a successful farm. The scenarios for farming hops independently have the highest start-up costs and thus take on the most risk. Scenario combinations that are not recommended include 1 acre sized farms for all scenarios and independently farming and selling whole hops. The analysis showed that all 1 acre sized hop farms either never start to earn a profit, or if they do those profits are extremely small. Growing and selling whole hops has a very high start-up costs and the projected time to eventually earn a profit is likely to take 6-11 years. The market for whole hops amongst breweries is also small making this a more difficult product to sell. The feasibility of all of the hops scenarios is summarized in the table below.
Scenario Start-up costs Net income Risk Feasible?
Collective growers program
Low Medium Low Yes – Low Risk Low Profits
Independent farms: whole hops
High Low High No – High Risk Low Profits
Independent farms: pelletized hops
High High High Yes – High Risk High Profits
References 1 R. Kneen, “Small Scale & Organic Hops Production” Left Fields Farm and BC Investment 2 M. Staats and D. Whyte, “Technical Memo #1: The Current Market for BC Grown Hops”, Persephone Brewing Co. and BC Investment Agriculture Foundation, Gibsons BC, 2014. 3 Z. Zeschky, “The Brewerd Awakening Guide to BC’s New Breweries in 2014 – Updated”, The Province, Vancouver BC, 2014. Available: http://blogs.theprovince.com/2014/01/30/the-brewed-awakening-guide-to-b-c-s-new-breweries-in-2014/ (URL) 4 BC Liquor Distribution Branch, “Statements of Financial Information”, For Fiscal Years Ending March 31, 2008-2013 5 J. Yuill (2014, August 15). British Columbia Beer Guide, Available: http://www.bcbeer.ca/default.aspx (URL) 6 J. H. Barth, C. Klinke and C. Schmidt, “The Hop Atlas”, Joh Barth & Sohn, Nuremberg Germany, 1994. 7 Environment Canada, Meteorological Service of Canada, “Canadian Climate Normals”, 1981-2010. Available: http://climate.weather.gc.ca/climate_normals/index_e.html (URL) 8 H. Oran “How to Grow Hops”, The Canadian Organic Grower, 2011, http://www.cog.ca/uploads/TCOG%20Articles/How%20to%20Grow%20Hops.PDF 9 N. Brady, R. Weil, “Elements of the nature and properties of soils” Upper Saddle River (NJ): Pearson, 2010. 10 H. Darby, “Fertility Guidelines for Hops in the Northeast” University of Vermont Extension Program, 2011 http://www.uvm.edu/extension/cropsoil/wp-content/uploads/HopFertilityManagementNE.pdf 11 R. Sirrine, “Sustainable Hop Production in the Great Lakes Region” University of Michigen, 2010, http://www.uvm.edu/extension/cropsoil/wp-content/uploads/Sirrine-Sustainable-Hop-Production-in-the-Great-Lakes-Region.pdf 12 J. R. Wilson Business Development Services, “2009-2010 Feasibility and Market Research Study For Commercial Hop Production in New England”, Vermont Agency of Agriculture Food and Markets and Massachusetts Department of Agricultural Resources, September 2010. Available: http://www.uvm.edu/extension/cropsoil/wp-content/uploads/hops-feasibility-study.pdf 13 UVM Extension Northwest Crops and Soils Team, “Constructing a Hop Yard”, Available: Part 1 https://www.youtube.com/watch?v=vPF7QlVGgtA&feature=share&list=UU7sh59UG2pKqfmPMfaVxpbA, Part 2 https://www.youtube.com/watch?v=QrRIyWIzTTs (URL)
14 R. G. Morton, “Nova Scotia Hop Growers’ Guide 2013”, Coldbrook NS, January 2013. Available: http://novascotia.ca/thinkfarm/documents/hop-grower-guide2013.pdf (URL) 15 I. Pfeiffer and B. Pinand, “University of Vermont Extension Hops Baler”, Available: http://www.uvm.edu/extension/cropsoil/wp-content/uploads/PfeifferPinand_Hops_Baler.pdf (URL) 16 D. H. Gent, J. D. Barbour, A. J. Dreves, D. G. James, R. Parker and D. B. Walsh (editors), “Field Guide for Integrated Pest Management in Hops”, Oregon State University, the University of Idaho, U.S. Department of Agriculture – Agricultural Research Service, and University of Washington, 2009. Available: http://ipm.wsu.edu/field/pdf/HopHandbook2009.pdf (URL) 17 USDA Agricultural Research Services “Hops extracts may reduce Clostridium in Chickens”, Available: http://www.ars.usda.gov/is/pr/2008/081029.htm.2015 (URL) 18 R. Sirrine “Can Michigan hop growers run sheep through their hopyards? Michigan State University Extension, 2014. Available: http://msue.anr.msu.edu/news/can_michigan_hop_growers_run_sheep_through_their_hopyards (URL)
Appendices Appendix A – Strengths, weaknesses, opportunities and threats (SWOT) analysis for Collective Growers (CGP), Independent farmers selling whole and pelletized hops, and the BC Hops industry in general SWOT CGP
Strengths -‐ Access to expertise -‐ Shared access to equipment (picker) -‐ Farmer can focus on growing/drying -‐ Enhance consistency by pooling hops -‐ Relatively low start up costs – only need
to assemble yard and oast house -‐ No processing/storage required -‐ Guaranteed market -‐ Focus solely on growing hops
Opportunities -‐ Work with other farmers to establish
best practices -‐ Bulk ordering with other farmers -‐ Share large equipment (tractors etc.) -‐ Support for/from other growers -‐
Weaknesses -‐ Competing for equipment at crucial
times of the year (harvest) -‐ Little control in marketing/distribution -‐ Dependence on collective of growers -‐ Contractual obligations
Threats -‐ Change in market value of the hops -‐ Poor quality from other farms may
reduce overall quality of hops -‐ Equipment failures
SWOT Independent Grower – Pellets
Strengths -‐ Full control over business -‐ No middle man -‐ Direct revenue stream -‐ Simple organizational structure -‐ Maximum revenue potential -‐ Less storage required -‐ Pelletized hops are in demand
Opportunities -‐ Pursue “organic” market (may increase
profit) -‐ Leverage equipment for additional
revenue stream (rent processing services) -‐ Unique flavour character in varieties -‐ Secure contract with one or two brewers
Weaknesses -‐ High start-up costs -‐ More complex and specialized
equipment required -‐ Cost of marketing and sales -‐ Limited variety -‐ Independent sourcing
Threats -‐ Consistency in product -‐ Crop failure -‐ Reliability of supply promis with
customers -‐ May be too small to meet brewers needs -‐ Small farms may opt for cheaper/smaller
equipment at expense of quality
SWOT - Independent Grower - Whole Hops
Strengths -‐ No processing required (pellets) -‐ Full control over business -‐ No middle man -‐ Direct revenue stream -‐ Simple organizational structure -‐ Low start-up costs
Opportunities -‐ Pursue “organic” market (may increase
profit) -‐ Other niche markets for whole hops
(soaps, candles etc.) -‐ Unique flavour character in varieties -‐ Secure contract with one or two brewers -‐ Option to partner on marketing/sales
with other growers -‐ Option to pelletize at later date
Weaknesses -‐ A lot of storage space required -‐ Limited market (non-compatible brewing
equipment) -‐ Lower selling price -‐ A lot of packaging -‐ Limited variety -‐ Independent sourcing -‐ High cost of cold storage -‐ Responsible for own marketing and
distribution
Threats -‐ Consistency in product -‐ Crop failure -‐ Reliability of supply promis with
customers -‐ May be too small to meet brewers needs
SWOT – BC Hops industry in general
Strengths -‐ Suitable land/climate for hops -‐ Established growing practices -‐ Hops are in DEMAND -‐ Crucial ingredient for beer
Opportunities -‐ Value added farm enterprise -‐ Diversify agriculture in BC -‐ Tax breaks (farm land status) -‐ Diversification to craft beer -‐ Decrease food miles for BC beer -‐ Create hops flavours specific to BC -‐ Growth/diversification to craft beer -‐ Agro-tourism
Weaknesses -‐ Competing with US prices -‐ Minimal access to proprietary strains -‐ 4-year lag to full yield -‐ long return on investment -‐ relatively high costs of land
Threats -‐ Change in market value of the hops -‐ No government subsidies -‐ Pests and desease -‐ Weather and crop failure -‐ Volatility in the market -‐ Climate change -‐ Crash in craft beer market -‐ Saturation in hops supply
Appendix B - Net Income Statements Collective Growers Program – 1 Acre
Revenues
Year 1 Yr 2 Yr 3 Yr 4 Yr 5
Yield
Total Acres 1 1 1 1 1
New Acres (0%) 1 0 0 0 0
Acres at 40% 0 1 0 0 0
Acres at 90% 0 0 1 0 0
Acres at 100% 0 0 0 1 1
Production (dried pounds) 0 600 1350 1500 1500
Revenues $0 $5,400 $12,150 $13,500 $13,500
Total Revenue $0 $5,400 $12,150 $13,500 $13,500
Expenses
Variable Expenses Cost/Acre
Fertilizer/Compost $300 $300 $300 $300 $300 $300
Trellising Supplies/Maint. $150 $150 $150 $150 $150 $150
Fuel & Oil* $100 $100 $100 $100 $100 $100
Equip. Repairs/Maint. $350 $350 $350 $350 $350 $350
Pest Management $250 $250 $250 $250 $250 $250
Electricity for Processing $0 $0 $0 $0 $0 $0
Spring/Summer Labour (500 hrs/acre) $6,000 $6,000 $6,000 $6,000 $6,000 $6,000
Harvest Labour/acre (mechanized pick)(45 hrs) $540 $0 $216 $270 $540 $540
Pelletizing & Package Labour/acre (20 hrs) $0 $0 $0 $0 $0 $0
Leasing land (150/acre/mo)* $0 $0 $0 $0 $0 $0
Bank Charges (0.5% of revenue) $0 $0 $27 $61 $68 $68
Vehicle fuel/maintenance $750 $750 $750 $750 $750 $750
Water $600 $600 $600 $600 $600 $600
Tractor Maintenece* $300 $300 $300 $300 $300 $300
Materials & Inventory $250 $250 $250 $250 $250 $250
Travel $100 $100 $100 $100 $100 $100
Sub-total VE (hops only) $9,690 $9,150 $9,393 $9,481 $9,758 $9,758
Fixed Expenses Cost/yr.
Vehicle Insurance $1,440 $1,440 $1,440 $1,440 $1,440 $1,440
Rent (Processing)($600/mo)* $0 $0 $0 $0 $0 $0
Rent (equipment/other)* $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Dues and Subscriptions $0 $240 $240 $240 $240 $240
Lab Fees* $300 $300 $300 $300 $300 $300
Office Expenses $0 $500 $500 $500 $500 $500
Advertising (Rhizomes) $0 $0 $0 $0 $0 $0
Bank Fees (general) $0 $0 $0 $0 $0 $0
Bookkeeper $0 $0 $0 $0 $0 $0
Business License $0 $0 $0 $0 $0 $0
Taxes $0 $0 $0 $0 $0 $0
Depreciation* $3,955 $3,955 $3,955 $3,955 $3,955 $3,955
Interest Capital Loan $2,769 $2,448 $2,106 $1,740 $1,348
Interest Operating Loan $4,931 $4,361 $3,751 $3,098 $2,400
Telephone/cell phone $0 $0 $0 $0 $0 $0
Empl. Costs (WCB, EI, CPP, AL) $0 $0 $0 $0 $0 $0
Farm Manager Salary* $0 $0 $0 $0 $0 $0
Marketing sales staff $0 $0 $0 $0 $0 $0
Farm Manager Salary (grant funded) $0 $0 $0 $0 $0 $0
Subtotal FE (Hops only) $6,695 $10,204 $9,883 $9,541 $9,175 $8,783
Net Income
Total Revenue $0 $5,400 $12,150 $13,500 $13,500
Total Expense $19,354 $19,276 $19,022 $18,932 $18,540
Yr 10
1
0
0
0
1
1500
$13,500
$13,500
$300
$150
$100
$350
$250
$0
$6,000
$540
$0
$0
$68
$750
$600
$300
$250
$100
$9,758
$1,440
$0
$1,000
$240
$300
$500
$0
$0
$0
$0
$0
$3,955
$0
$0
$0
$0
$0
$0
$0
$7,435
$13,500
$17,193
Net Income ($24,285) ($18,237) ($10,623) ($8,531) ($7,440) ($3,693)
Collective Growers Program – 5 Acres
Revenues
Year 1 Yr 2 Yr 3 Yr 4 Yr 5
Yield
Total Acres 5 5 5 5 5
New Acres (0%) 5 0 0 0 0
Acres at 40% 0 5 0 0 0
Acres at 90% 0 0 5 0 0
Acres at 100% 0 0 0 5 5
Production (dried pounds) 0 3000 6750 7500 7500
Revenues $0 $27,000 $60,750 $67,500 $67,500
Total Revenue $0 $27,000 $60,750 $67,500 $67,500
Expenses
Variable Expenses Cost/Acre
Fertilizer/Compost $300 $1,500 $1,500 $1,500 $1,500 $1,500
Trellising Supplies/Maint. $150 $750 $750 $750 $750 $750
Fuel & Oil* $100 $500 $500 $500 $500 $500
Equip. Repairs/Maint. $350 $1,750 $1,750 $1,750 $1,750 $1,750
Pest Management $250 $1,250 $1,250 $1,250 $1,250 $1,250
Electricity for Processing $0 $0 $0 $0 $0 $0
Spring/Summer Labour (500 hrs/acre) $6,000 $30,000 $30,000 $30,000 $30,000 $30,000
Harvest Labour/acre (mechanized pick)(45 hrs) $540 $0 $1,080 $1,350 $2,700 $2,700
Pelletizing & Package Labour/acre (20 hrs) $0 $0 $0 $0 $0 $0
Leasing land (150/acre/mo)* $0 $0 $0 $0 $0 $0
Bank Charges (0.5% of revenue) $0 $0 $135 $304 $338 $338
Vehicle fuel/maintenance $750 $3,750 $3,750 $3,750 $3,750 $3,750
Water $600 $3,000 $3,000 $3,000 $3,000 $3,000
Tractor Maintenece* $300 $1,500 $1,500 $1,500 $1,500 $1,500
Materials & Inventory $250 $1,250 $1,250 $1,250 $1,250 $1,250
Travel $100 $500 $500 $500 $500 $500
Sub-total VE (hops only) $9,690 $45,750 $46,965 $47,404 $48,788 $48,788
Fixed Expenses Cost/yr.
Vehicle Insurance $1,440 $1,440 $1,440 $1,440 $1,440 $1,440
Rent (Processing)($600/mo)* $0 $0 $0 $0 $0 $0
Rent (equipment/other)* $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
Dues and Subscriptions $0 $240 $240 $240 $240 $240
Lab Fees* $300 $1,500 $1,500 $1,500 $1,500 $1,500
Office Expenses $0 $500 $500 $500 $500 $500
Advertising (Rhizomes) $0 $0 $0 $0 $0 $0
Bank Fees (general) $0 $0 $0 $0 $0 $0
Bookkeeper $0 $0 $0 $0 $0 $0
Business License $0 $0 $0 $0 $0 $0
Taxes $0 $0 $0 $0 $0 $0
Depreciation* $10,045 $10,045 $10,045 $10,045 $10,045 $10,045
Interest Capital Loan $7,032 $6,219 $5,349 $4,418 $3,423
Interest Operating Loan $8,576 $7,584 $6,524 $5,389 $4,174
Telephone/cell phone $0 $0 $0 $0 $0 $0
Empl. Costs (WCB, EI, CPP, AL) $0 $0 $0 $0 $0 $0
Farm Manager Salary* $0 $0 $0 $0 $0 $0
Marketing sales staff $0 $0 $0 $0 $0 $0
Farm Manager Salary (grant funded) $0 $0 $0 $0 $0 $0
Subtotal FE (Hops only) $14,285 $23,257 $22,444 $21,574 $20,643 $19,648
Net Income
Total Revenue $0 $27,000 $60,750 $67,500 $67,500
Total Expenses $69,007 $69,409 $68,978 $69,431 $68,435
Yr 10
5
0
0
0
5
7500
$67,500
$67,500
$1,500
$750
$500
$1,750
$1,250
$0
$30,000
$2,700
$0
$0
$338
$3,750
$3,000
$1,500
$1,250
$500
$48,788
$1,440
$0
$2,500
$240
$1,500
$500
$0
$0
$0
$0
$0
$10,045
$0
$0
$0
$0
$0
$0
$0
$16,225
$67,500
$65,013
Net Income ($77,582) ($49,993) ($14,751) ($7,319) ($5,109) $2,488
Collective Growers Program – 10 Acres
Revenues
Year 1 Yr 2 Yr 3 Yr 4 Yr 5
Yield
Total Acres 10 10 10 10 10
New Acres (0%) 10 0 0 0 0
Acres at 40% 0 10 0 0 0
Acres at 90% 0 0 10 0 0
Acres at 100% 0 0 0 10 10
Production (dried pounds) 0 6000 13500 15000 15000
Revenues $0 $54,000 $121,500 $135,000 $135,000
Total Revenue $0 $54,000 $121,500 $135,000 $135,000
Expenses
Variable Expenses Cost/Acre
Fertilizer/Compost $300 $3,000 $3,000 $3,000 $3,000 $3,000
Trellising Supplies/Maint. $150 $1,500 $1,500 $1,500 $1,500 $1,500
Fuel & Oil* $100 $1,000 $1,000 $1,000 $1,000 $1,000
Equip. Repairs/Maint. $350 $3,500 $3,500 $3,500 $3,500 $3,500
Pest Management $250 $2,500 $2,500 $2,500 $2,500 $2,500
Electricity for Processing $0 $0 $0 $0 $0 $0
Spring/Summer Labour (500 hrs/acre) $6,000 $60,000 $60,000 $60,000 $60,000 $60,000
Harvest Labour/acre (mechanized pick)(45 hrs) $540 $0 $2,160 $2,700 $5,400 $5,400
Pelletizing & Package Labour/acre (20 hrs) $0 $0 $0 $0 $0 $0
Leasing land (150/acre/mo)* $0 $0 $0 $0 $0 $0
Bank Charges (0.5% of revenue) $0 $0 $270 $608 $675 $675
Vehicle fuel/maintenance $750 $7,500 $7,500 $7,500 $7,500 $7,500
Water $600 $6,000 $6,000 $6,000 $6,000 $6,000
Tractor Maintenece* $300 $3,000 $3,000 $3,000 $3,000 $3,000
Materials & Inventory $250 $2,500 $2,500 $2,500 $2,500 $2,500
Travel $100 $1,000 $1,000 $1,000 $1,000 $1,000
Sub-total VE (hops only) $9,690 $91,500 $93,930 $94,808 $97,575 $97,575
Fixed Expenses Cost/yr.
Vehicle Insurance $1,440 $1,440 $1,440 $1,440 $1,440 $1,440
Rent (Processing)($600/mo)* $0 $0 $0 $0 $0 $0
Rent (equipment/other)* $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
Dues and Subscriptions $0 $240 $240 $240 $240 $240
Lab Fees* $300 $3,000 $3,000 $3,000 $3,000 $3,000
Office Expenses $0 $500 $500 $500 $500 $500
Advertising (Rhizomes) $0 $0 $0 $0 $0 $0
Bank Fees (general) $0 $0 $0 $0 $0 $0
Bookkeeper $0 $0 $0 $0 $0 $0
Business License $0 $0 $0 $0 $0 $0
Taxes $0 $0 $0 $0 $0 $0
Depreciation* $15,120 $15,120 $15,120 $15,120 $15,120 $15,120
Interest Capital Loan $10,584 $9,360 $8,051 $6,651 $5,152
Interest Operating Loan $8,199 $7,251 $6,237 $5,152 $3,991
Telephone/cell phone $0 $0 $0 $0 $0 $0
Empl. Costs (WCB, EI, CPP, AL) $0 $0 $0 $0 $0 $0
Farm Manager Salary* $0 $0 $0 $0 $0 $0
Marketing sales staff $0 $0 $0 $0 $0 $0
Farm Manager Salary (grant funded) $0 $0 $0 $0 $0 $0
Subtotal FE (Hops only) $21,860 $35,884 $34,660 $33,351 $31,951 $30,452
Net Income
Total Revenue $0 $54,000 $121,500 $135,000 $135,000
Total Expenses $35,884 $128,590 $128,159 $129,526 $128,027
Yr 10
10
0
0
0
10
15000
$135,000
$135,000
$3,000
$1,500
$1,000
$3,500
$2,500
$0
$60,000
$5,400
$0
$0
$675
$7,500
$6,000
$3,000
$2,500
$1,000
$97,575
$1,440
$0
$5,000
$240
$3,000
$500
$0
$0
$0
$0
$0
$15,120
$0
$0
$0
$0
$0
$0
$0
$25,300
$135,000
$122,875
Net Income ($44,083) ($81,842) ($12,896) $322 $2,982 $12,125
Collective Growers Program – 20 Acres
Revenues
Year 1 Yr 2 Yr 3 Yr 4 Yr 5
Yield
Total Acres 20 20 20 20 20
New Acres (0%) 20 0 0 0 0
Acres at 40% 0 20 0 0 0
Acres at 90% 0 0 20 0 0
Acres at 100% 0 0 0 20 20
Production (dried pounds) 0 12000 27000 30000 30000
Revenues $0 $108,000 $243,000 $270,000 $270,000
Total Revenue $0 $108,000 $243,000 $270,000 $270,000
Expenses
Variable Expenses Cost/Acre
Fertilizer/Compost $300 $6,000 $6,000 $6,000 $6,000 $6,000
Trellising Supplies/Maint. $150 $3,000 $3,000 $3,000 $3,000 $3,000
Fuel & Oil* $100 $2,000 $2,000 $2,000 $2,000 $2,000
Equip. Repairs/Maint. $350 $7,000 $7,000 $7,000 $7,000 $7,000
Pest Management $250 $5,000 $5,000 $5,000 $5,000 $5,000
Electricity for Processing $0 $0 $0 $0 $0 $0
Spring/Summer Labour (500 hrs/acre) $6,000 $120,000 $120,000 $120,000 $120,000 $120,000
Harvest Labour/acre (mechanized pick)(45 hrs) $540 $0 $4,320 $5,400 $10,800 $10,800
Pelletizing & Package Labour/acre (20 hrs) $0 $0 $0 $0 $0 $0
Leasing land (150/acre/mo)* $0 $0 $0 $0 $0 $0
Bank Charges (0.5% of revenue) $0 $0 $540 $1,215 $1,350 $1,350
Vehicle fuel/maintenance $750 $15,000 $15,000 $15,000 $15,000 $15,000
Water $600 $12,000 $12,000 $12,000 $12,000 $12,000
Tractor Maintenece* $300 $6,000 $6,000 $6,000 $6,000 $6,000
Materials & Inventory $250 $5,000 $5,000 $5,000 $5,000 $5,000
Travel $100 $2,000 $2,000 $2,000 $2,000 $2,000
Sub-total VE (hops only) $9,690 $183,000 $187,860 $189,615 $195,150 $195,150
Fixed Expenses Cost/yr.
Vehicle Insurance $1,440 $1,440 $1,440 $1,440 $1,440 $1,440
Rent (Processing)($600/mo)* $0 $0 $0 $0 $0 $0
Rent (equipment/other)* $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
Dues and Subscriptions $0 $240 $240 $240 $240 $240
Lab Fees* $300 $6,000 $6,000 $6,000 $6,000 $6,000
Office Expenses $0 $500 $500 $500 $500 $500
Advertising (Rhizomes) $0 $0 $0 $0 $0 $0
Bank Fees (general) $0 $0 $0 $0 $0 $0
Bookkeeper $0 $0 $0 $0 $0 $0
Business License $0 $0 $0 $0 $0 $0
Taxes $0 $0 $0 $0 $0 $0
Depreciation* $25,970 $25,970 $25,970 $25,970 $25,970 $25,970
Interest Capital Loan $18,179 $16,078 $13,829 $11,423 $8,848
Interest Operating Loan $27,301 $24,145 $20,768 $17,155 $13,288
Telephone/cell phone $0 $0 $0 $0 $0 $0
Empl. Costs (WCB, EI, CPP, AL) $0 $0 $0 $0 $0 $0
Farm Manager Salary* $0 $0 $0 $0 $0 $0
Marketing sales staff $0 $0 $0 $0 $0 $0
Farm Manager Salary (grant funded) $0 $0 $0 $0 $0 $0
Subtotal FE (Hops only) $37,710 $62,329 $60,228 $57,979 $55,573 $52,998
Net Income
Total Revenue $0 $108,000 $243,000 $270,000 $270,000
Total Expenses $245,329 $248,088 $247,594 $250,723 $248,148
Yr 10
20
0
0
0
20
30000
$270,000
$270,000
$6,000
$3,000
$2,000
$7,000
$5,000
$0
$120,000
$10,800
$0
$0
$1,350
$15,000
$12,000
$6,000
$5,000
$2,000
$195,150
$1,440
$0
$10,000
$240
$6,000
$500
$0
$0
$0
$0
$0
$25,970
$0
$0
$0
$0
$0
$0
$0
$44,150
$270,000
$239,300
Net Income ($272,630) ($164,232) ($25,362) $2,122 $8,563 $30,700
Independent Grower (Pelletized Hops) – 1 Acre
Revenues
Year 1 Yr 2 Yr 3 Yr 4 Yr 5
Yield
Total Acres 1 1 1 1 1
New Acres (0%) 1 0 0 0 0
Acres at 40% 0 1 0 0 0
Acres at 90% 0 0 1 0 0
Acres at 100% 0 0 0 1 1
Production (dried pounds) 0 600 1350 1500 1500
Revenues $0 $9,000 $20,250 $22,500 $22,500
Total Revenue $0 $9,000 $20,250 $22,500 $22,500
Expenses
Variable Expenses Cost/Acre
Fertilizer/Compost $300 $300 $300 $300 $300 $300
Trellising Supplies/Maint. $150 $150 $150 $150 $150 $150
Fuel & Oil* $100 $100 $100 $100 $100 $100
Equip. Repairs/Maint. $350 $350 $350 $350 $350 $350
Pest Management $250 $250 $250 $250 $250 $250
Electricity for Processing $100 $100 $100 $100 $100 $100
Spring/Summer Labour (500 hrs/acre) $6,000 $6,000 $6,000 $6,000 $6,000 $6,000
Harvest Labour/acre (mechanized pick)(45 hrs) $540 $0 $216 $270 $540 $540
Pelletizing & Package Labour/acre (40 hrs) $480 $0 $192 $432 $480 $480
Leasing land (150/acre/mo)* $0 $0 $0 $0 $0 $0
Bank Charges (0.5% of revenue) $0 $0 $45 $101 $113 $113
Vehicle fuel/maintenance $750 $750 $750 $750 $750 $750
Water $600 $600 $600 $600 $600 $600
Tractor Maintenece* $300 $300 $300 $300 $300 $300
Materials & Inventory $250 $250 $250 $250 $250 $250
Travel $100 $100 $100 $100 $100 $100
Sub-total VE (hops only) $10,270 $9,250 $9,703 $10,053 $10,383 $10,383
Fixed Expenses Cost/yr.
Vehicle Insurance $1,440 $1,440 $1,440 $1,440 $1,440 $1,440
Rent (Processing)($600/mo)* $0 $0 $0 $0 $0 $0
Rent (equipment/other)* $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Dues and Subscriptions $0 $240 $240 $240 $240 $240
Lab Fees* $300 $300 $300 $300 $300 $300
Office Expenses $0 $500 $500 $500 $500 $500
Advertising (Rhizomes) $0 $0 $0 $0 $0 $0
Bank Fees (general) $0 $0 $0 $0 $0 $0
Bookkeeper $0 $0 $0 $0 $0 $0
Business License $0 $0 $0 $0 $0 $0
Taxes $0 $0 $0 $0 $0 $0
Depreciation* $9,695 $9,695 $9,695 $9,695 $9,695 $9,695
Interest Capital Loan $6,787 $6,002 $5,163 $4,264 $3,303
Interest Operating Loan $6,516 $5,763 $4,957 $4,095 $3,172
Telephone/cell phone $0 $0 $0 $0 $0 $0
Empl. Costs (WCB, EI, CPP, AL) $144 $144 $144 $144 $144 $144
Utilities (E) $600 $600 $600 $600 $600 $600
Mareketing sales staff $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Farm Manager Salary $0 $0 $0 $0 $0 $0
Subtotal FE (Hops only) $13,179 $21,706 $20,921 $20,082 $19,183 $18,222
Net Income
Total Revenue $0 $9,000 $20,250 $22,500 $22,500
Total Expenses $30,956 $30,624 $30,135 $29,566 $28,605
Yr 10
1
0
0
0
1
1500
$22,500
$22,500
$300
$150
$100
$350
$250
$100
$6,000
$540
$480
$0
$113
$750
$600
$300
$250
$100
$10,383
$1,440
$0
$1,000
$240
$300
$500
$0
$0
$0
$0
$0
$9,695
$0
$0
$0
$144
$600
$1,000
$0
$14,919
$22,500
$25,302
Net Income ($37,472) ($27,387) ($14,842) ($11,161) ($9,277) ($2,802)
Independent Grower (Pelletized Hops) – 5 Acres
Revenues
Year 1 Yr 2 Yr 3 Yr 4 Yr 5
Yield
Total Acres 5 5 5 5 5
New Acres (0%) 5 0 0 0 0
Acres at 40% 0 5 0 0 0
Acres at 90% 0 0 5 0 0
Acres at 100% 0 0 0 5 5
Production (dried pounds) 0 3000 6750 7500 7500
Revenues $0 $45,000 $101,250 $112,500 $112,500
Total Revenue $0 $45,000 $101,250 $112,500 $112,500
Expenses
Variable Expenses Cost/Acre
Fertilizer/Compost $300 $1,500 $1,500 $1,500 $1,500 $1,500
Trellising Supplies/Maint. $150 $750 $750 $750 $750 $750
Fuel & Oil* $100 $500 $500 $500 $500 $500
Equip. Repairs/Maint. $350 $1,750 $1,750 $1,750 $1,750 $1,750
Pest Management $250 $1,250 $1,250 $1,250 $1,250 $1,250
Electricity for Processing $100 $500 $500 $500 $500 $500
Spring/Summer Labour (500 hrs/acre) $6,000 $30,000 $30,000 $30,000 $30,000 $30,000
Harvest Labour/acre (mechanized pick)(45 hrs) $540 $0 $1,080 $1,350 $2,700 $2,700
Pelletizing & Package Labour/acre (40 hrs) $480 $0 $960 $2,160 $2,400 $2,400
Leasing land (150/acre/mo)* $0 $0 $0 $0 $0 $0
Bank Charges (0.5% of revenue) $0 $0 $225 $506 $563 $563
Vehicle fuel/maintenance $750 $3,750 $3,750 $3,750 $3,750 $3,750
Water $600 $3,000 $3,000 $3,000 $3,000 $3,000
Tractor Maintenece* $300 $1,500 $1,500 $1,500 $1,500 $1,500
Materials & Inventory $250 $1,250 $1,250 $1,250 $1,250 $1,250
Travel $100 $500 $500 $500 $500 $500
Sub-total VE (hops only) $10,270 $46,250 $48,515 $50,266 $51,913 $51,913
Fixed Expenses Cost/yr.
Vehicle Insurance $1,440 $1,440 $1,440 $1,440 $1,440 $1,440
Rent (Processing)($600/mo)* $0 $0 $0 $0 $0 $0
Rent (equipment/other)* $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
Dues and Subscriptions $0 $240 $240 $240 $240 $240
Lab Fees* $300 $1,500 $1,500 $1,500 $1,500 $1,500
Office Expenses $0 $500 $500 $500 $500 $500
Advertising (Rhizomes) $0 $0 $0 $0 $0 $0
Bank Fees (general) $0 $0 $0 $0 $0 $0
Bookkeeper $0 $0 $0 $0 $0 $0
Business License $0 $0 $0 $0 $0 $0
Taxes $0 $0 $0 $0 $0 $0
Depreciation* $18,095 $18,095 $18,095 $18,095 $18,095 $18,095
Interest Capital Loan $12,667 $11,202 $9,636 $7,959 $6,165
Interest Operating Loan $9,591 $8,482 $7,296 $6,026 $4,668
Telephone/cell phone $0 $0 $0 $0 $0 $0
Empl. Costs (WCB, EI, CPP, AL) $612 $612 $612 $612 $612 $612
Utilities (E) $1,800 $1,800 $1,800 $1,800 $1,800 $1,800
Mareketing sales staff $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
Farm Manager Salary $0 $0 $0 $0 $0 $0
Subtotal FE (Hops only) $24,747 $44,354 $42,889 $41,323 $39,646 $37,852
Net Income
Total Revenue $0 $45,000 $101,250 $112,500 $112,500
Total Expenses $90,604 $91,404 $91,589 $91,559 $89,765
Yr 10
5
0
0
0
5
7500
$112,500
$112,500
$1,500
$750
$500
$1,750
$1,250
$500
$30,000
$2,700
$2,400
$0
$563
$3,750
$3,000
$1,500
$1,250
$500
$51,913
$1,440
$0
$2,500
$240
$1,500
$500
$0
$0
$0
$0
$0
$18,095
$0
$0
$0
$612
$1,800
$5,000
$0
$31,687
$112,500
$83,600
Net Income ($100,194) ($54,886) $2,366 $14,915 $18,067 $28,901
Independent Grower (Pelletized Hops) – 10 Acres
Revenues
Year 1 Yr 2 Yr 3 Yr 4 Yr 5
Yield
Total Acres 10 10 10 10 10
New Acres (0%) 10 0 0 0 0
Acres at 40% 0 10 0 0 0
Acres at 90% 0 0 10 0 0
Acres at 100% 0 0 0 10 10
Production (dried pounds) 0 6000 13500 15000 15000
Revenues $0 $90,000 $202,500 $225,000 $225,000
Total Revenue $0 $90,000 $202,500 $225,000 $225,000
Expenses
Variable Expenses Cost/Acre
Fertilizer/Compost $300 $3,000 $3,000 $3,000 $3,000 $3,000
Trellising Supplies/Maint. $150 $1,500 $1,500 $1,500 $1,500 $1,500
Fuel & Oil* $100 $1,000 $1,000 $1,000 $1,000 $1,000
Equip. Repairs/Maint. $350 $3,500 $3,500 $3,500 $3,500 $3,500
Pest Management $250 $2,500 $2,500 $2,500 $2,500 $2,500
Electricity for Processing $100 $1,000 $1,000 $1,000 $1,000 $1,000
Spring/Summer Labour (500 hrs/acre) $6,000 $60,000 $60,000 $60,000 $60,000 $60,000
Harvest Labour/acre (mechanized pick)(45 hrs) $540 $0 $2,160 $2,700 $5,400 $5,400
Pelletizing & Package Labour/acre (40 hrs) $480 $0 $1,920 $4,320 $4,800 $4,800
Leasing land (150/acre/mo)* $0 $0 $0 $0 $0 $0
Bank Charges (0.5% of revenue) $0 $0 $450 $1,013 $1,125 $1,125
Vehicle fuel/maintenance $750 $7,500 $7,500 $7,500 $7,500 $7,500
Water $600 $6,000 $6,000 $6,000 $6,000 $6,000
Tractor Maintenece* $300 $3,000 $3,000 $3,000 $3,000 $3,000
Materials & Inventory $250 $2,500 $2,500 $2,500 $2,500 $2,500
Travel $100 $1,000 $1,000 $1,000 $1,000 $1,000
Sub-total VE (hops only) $10,270 $92,500 $97,030 $100,533 $103,825 $103,825
Fixed Expenses Cost/yr.
Vehicle Insurance $1,440 $1,440 $1,440 $1,440 $1,440 $1,440
Rent (Processing)($600/mo)* $0 $0 $0 $0 $0 $0
Rent (equipment/other)* $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
Dues and Subscriptions $0 $240 $240 $240 $240 $240
Lab Fees* $300 $3,000 $3,000 $3,000 $3,000 $3,000
Office Expenses $0 $500 $500 $500 $500 $500
Advertising (Rhizomes) $0 $0 $0 $0 $0 $0
Bank Fees (general) $0 $0 $0 $0 $0 $0
Bookkeeper $0 $0 $0 $0 $0 $0
Business License $0 $0 $0 $0 $0 $0
Taxes $0 $0 $0 $0 $0 $0
Depreciation* $27,545 $27,545 $27,545 $27,545 $27,545 $27,545
Interest Capital Loan $19,282 $17,053 $14,668 $12,116 $9,385
Interest Operating Loan $16,684 $14,756 $12,692 $10,484 $8,121
Telephone/cell phone $0 $0 $0 $0 $0 $0
Empl. Costs (WCB, EI, CPP, AL) $1,116 $1,116 $1,116 $1,116 $1,116 $1,116
Utilities (E) $2,400 $2,400 $2,400 $2,400 $2,400 $2,400
Mareketing sales staff $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
Farm Manager Salary $0 $0 $0 $0 $0 $0
Subtotal FE (Hops only) $37,801 $70,523 $68,294 $65,909 $63,357 $60,626
Net Income
Total Revenue $0 $90,000 $202,500 $225,000 $225,000
Total Expenses $163,023 $165,324 $166,441 $167,182 $164,451
Yr 10
10
0
0
0
10
15000
$225,000
$225,000
$3,000
$1,500
$1,000
$3,500
$2,500
$1,000
$60,000
$5,400
$4,800
$0
$1,125
$7,500
$6,000
$3,000
$2,500
$1,000
$103,825
$1,440
$0
$5,000
$240
$3,000
$500
$0
$0
$0
$0
$0
$27,545
$0
$0
$0
$1,116
$2,400
$10,000
$0
$51,241
$225,000
$155,066
Net Income ($179,707) ($90,079) $23,367 $47,335 $52,428 $69,934
Independent Grower (Pelletized Hops) – 20 Acres
Revenues
Year 1 Yr 2 Yr 3 Yr 4 Yr 5
Yield
Total Acres 20 20 20 20 20
New Acres (0%) 20 0 0 0 0
Acres at 40% 0 20 0 0 0
Acres at 90% 0 0 20 0 0
Acres at 100% 0 0 0 20 20
Production (dried pounds) 0 12000 27000 30000 30000
Revenues $0 $180,000 $405,000 $450,000 $450,000
Total Revenue $0 $180,000 $405,000 $450,000 $450,000
Expenses
Variable Expenses Cost/Acre
Fertilizer/Compost $300 $6,000 $6,000 $6,000 $6,000 $6,000
Trellising Supplies/Maint. $150 $3,000 $3,000 $3,000 $3,000 $3,000
Fuel & Oil* $100 $2,000 $2,000 $2,000 $2,000 $2,000
Equip. Repairs/Maint. $350 $7,000 $7,000 $7,000 $7,000 $7,000
Pest Management $250 $5,000 $5,000 $5,000 $5,000 $5,000
Electricity for Processing $100 $2,000 $2,000 $2,000 $2,000 $2,000
Spring/Summer Labour (500 hrs/acre) $6,000 $120,000 $120,000 $120,000 $120,000 $120,000
Harvest Labour/acre (mechanized pick)(45 hrs) $540 $0 $4,320 $5,400 $10,800 $10,800
Pelletizing & Package Labour/acre (40 hrs) $480 $0 $3,840 $8,640 $9,600 $9,600
Leasing land (150/acre/mo)* $0 $0 $0 $0 $0 $0
Bank Charges (0.5% of revenue) $0 $0 $900 $2,025 $2,250 $2,250
Vehicle fuel/maintenance $750 $15,000 $15,000 $15,000 $15,000 $15,000
Water $600 $12,000 $12,000 $12,000 $12,000 $12,000
Tractor Maintenece* $300 $6,000 $6,000 $6,000 $6,000 $6,000
Materials & Inventory $250 $5,000 $5,000 $5,000 $5,000 $5,000
Travel $100 $2,000 $2,000 $2,000 $2,000 $2,000
Sub-total VE (hops only) $10,270 $185,000 $194,060 $201,065 $207,650 $207,650
Fixed Expenses Cost/yr.
Vehicle Insurance $1,440 $1,440 $1,440 $1,440 $1,440 $1,440
Rent (Processing)($600/mo)* $0 $0 $0 $0 $0 $0
Rent (equipment/other)* $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
Dues and Subscriptions $0 $240 $240 $240 $240 $240
Lab Fees* $300 $6,000 $6,000 $6,000 $6,000 $6,000
Office Expenses $0 $500 $500 $500 $500 $500
Advertising (Rhizomes) $0 $0 $0 $0 $0 $0
Bank Fees (general) $0 $0 $0 $0 $0 $0
Bookkeeper $0 $0 $0 $0 $0 $0
Business License $0 $0 $0 $0 $0 $0
Taxes $0 $0 $0 $0 $0 $0
Depreciation* $39,620 $39,620 $39,620 $39,620 $39,620 $39,620
Interest Capital Loan $27,734 $24,528 $21,097 $17,427 $13,499
Interest Operating Loan $29,286 $25,900 $22,278 $18,402 $14,255
Telephone/cell phone $0 $0 $0 $0 $0 $0
Empl. Costs (WCB, EI, CPP, AL) $2,124 $2,124 $2,124 $2,124 $2,124 $2,124
Utilities (E) $3,600 $3,600 $3,600 $3,600 $3,600 $3,600
Mareketing sales staff $20,000 $20,000 $20,000 $20,000 $20,000 $20,000
Farm Manager Salary $0 $0 $0 $0 $0 $0
Subtotal FE (Hops only) $57,084 $111,258 $108,052 $104,621 $100,951 $97,023
Net Income
Total Revenue $0 $180,000 $405,000 $450,000 $450,000
Total Expenses $296,258 $302,112 $305,686 $308,601 $304,673
Yr 10
20
0
0
0
20
30000
$450,000
$450,000
$6,000
$3,000
$2,000
$7,000
$5,000
$2,000
$120,000
$10,800
$9,600
$0
$2,250
$15,000
$12,000
$6,000
$5,000
$2,000
$207,650
$1,440
$0
$10,000
$240
$6,000
$500
$0
$0
$0
$0
$0
$39,620
$0
$0
$0
$2,124
$3,600
$20,000
$0
$83,524
$450,000
$291,174
Net Income ($325,544) ($148,012) $77,036 $122,997 $131,072 $158,826
Independent Grower (Whole Hops) – 1 Acre
Revenues
Year 1 Yr 2 Yr 3 Yr 4 Yr 5
Yield
Total Acres 1 1 1 1 1
New Acres (0%) 1 0 0 0 0
Acres at 40% 0 1 0 0 0
Acres at 90% 0 0 1 0 0
Acres at 100% 0 0 0 1 1
Production (dried pounds) 0 600 1350 1500 1500
Revenues $0 $6,000 $13,500 $15,000 $15,000
Total Revenue $0 $6,000 $13,500 $15,000 $15,000
Expenses
Variable Expenses Cost/Acre
Fertilizer/Compost $300 $300 $300 $300 $300 $300
Trellising Supplies/Maint. $150 $150 $150 $150 $150 $150
Fuel & Oil* $100 $100 $100 $100 $100 $100
Equip. Repairs/Maint. $350 $350 $350 $350 $350 $350
Pest Management $250 $250 $250 $250 $250 $250
Electricity for Processing $0 $0 $0 $0 $0 $0
Spring/Summer Labour (500 hrs/acre) $6,000 $6,000 $6,000 $6,000 $6,000 $6,000
Harvest Labour/acre (mechanized pick)(45 hrs) $540 $0 $216 $270 $540 $540
Pelletizing & Package Labour/acre (20 hrs) $0 $0 $0 $0 $0 $0
Leasing land (150/acre/mo)* $0 $0 $0 $0 $0 $0
Bank Charges (0.5% of revenue) $0 $0 $30 $68 $75 $75
Vehicle fuel/maintenance $750 $750 $750 $750 $750 $750
Water $600 $600 $600 $600 $600 $600
Tractor Maintenece* $300 $300 $300 $300 $300 $300
Materials & Inventory $250 $250 $250 $250 $250 $250
Travel $100 $100 $100 $100 $100 $100
Sub-total VE (hops only) $9,690 $9,150 $9,396 $9,488 $9,765 $9,765
Fixed Expenses Cost/yr.
Vehicle Insurance $1,440 $1,440 $1,440 $1,440 $1,440 $1,440
Rent (Processing)($600/mo)* $0 $0 $0 $0 $0 $0
Rent (equipment/other)* $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Dues and Subscriptions $0 $240 $240 $240 $240 $240
Lab Fees* $300 $300 $300 $300 $300 $300
Office Expenses $0 $500 $500 $500 $500 $500
Advertising (Rhizomes) $0 $0 $0 $0 $0 $0
Bank Fees (general) $0 $0 $0 $0 $0 $0
Bookkeeper $0 $0 $0 $0 $0 $0
Business License $0 $0 $0 $0 $0 $0
Taxes $0 $0 $0 $0 $0 $0
Depreciation* $6,895 $6,895 $6,895 $6,895 $6,895 $6,895
Interest Capital Loan $4,827 $4,269 $3,672 $3,033 $2,349
Interest Operating Loan $7,958 $7,038 $6,053 $5,000 $3,873
Telephone/cell phone $0 $0 $0 $0 $0 $0
Empl. Costs (WCB, EI, CPP, AL) $144 $144 $144 $144 $144 $144
Utilities (E) $600 $600 $600 $600 $600 $600
Mareketing sales staff $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Farm Manager Salary $0 $0 $0 $0 $0 $0
Subtotal FE (Hops only) $10,379 $16,946 $16,388 $15,791 $15,152 $14,468
Net Income
Total Revenue $0 $6,000 $13,500 $15,000 $15,000
Total Expenses $26,096 $25,784 $25,278 $24,917 $24,233
Yr 10
1
0
0
0
1
1500
$15,000
$15,000
$300
$150
$100
$350
$250
$0
$6,000
$540
$0
$0
$75
$750
$600
$300
$250
$100
$9,765
$1,440
$0
$1,000
$240
$300
$500
$0
$0
$0
$0
$0
$6,895
$0
$0
$0
$144
$600
$1,000
$0
$12,119
$15,000
$21,884
Net Income ($34,053) ($26,821) ($17,831) ($14,917) ($13,107) ($6,884)
Independent Grower (Whole Hops) – 5 Acres
Revenues
Year 1 Yr 2 Yr 3 Yr 4 Yr 5
Yield
Total Acres 5 5 5 5 5
New Acres (0%) 5 0 0 0 0
Acres at 40% 0 5 0 0 0
Acres at 90% 0 0 5 0 0
Acres at 100% 0 0 0 5 5
Production (dried pounds) 0 3000 6750 7500 7500
Revenues $0 $30,000 $67,500 $75,000 $75,000
Total Revenue $0 $30,000 $67,500 $75,000 $75,000
Expenses
Variable Expenses Cost/Acre
Fertilizer/Compost $300 $1,500 $1,500 $1,500 $1,500 $1,500
Trellising Supplies/Maint. $150 $750 $750 $750 $750 $750
Fuel & Oil* $100 $500 $500 $500 $500 $500
Equip. Repairs/Maint. $350 $1,750 $1,750 $1,750 $1,750 $1,750
Pest Management $250 $1,250 $1,250 $1,250 $1,250 $1,250
Electricity for Processing $0 $0 $0 $0 $0 $0
Spring/Summer Labour (500 hrs/acre) $6,000 $30,000 $30,000 $30,000 $30,000 $30,000
Harvest Labour/acre (mechanized pick)(45 hrs) $540 $0 $1,080 $1,350 $2,700 $2,700
Pelletizing & Package Labour/acre (20 hrs) $0 $0 $0 $0 $0 $0
Leasing land (150/acre/mo)* $0 $0 $0 $0 $0 $0
Bank Charges (0.5% of revenue) $0 $0 $150 $338 $375 $375
Vehicle fuel/maintenance $750 $3,750 $3,750 $3,750 $3,750 $3,750
Water $600 $3,000 $3,000 $3,000 $3,000 $3,000
Tractor Maintenece* $300 $1,500 $1,500 $1,500 $1,500 $1,500
Materials & Inventory $250 $1,250 $1,250 $1,250 $1,250 $1,250
Travel $100 $500 $500 $500 $500 $500
Sub-total VE (hops only) $9,690 $45,750 $46,980 $47,438 $48,825 $48,825
Fixed Expenses Cost/yr.
Vehicle Insurance $1,440 $1,440 $1,440 $1,440 $1,440 $1,440
Rent (Processing)($600/mo)* $0 $0 $0 $0 $0 $0
Rent (equipment/other)* $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
Dues and Subscriptions $0 $240 $240 $240 $240 $240
Lab Fees* $300 $1,500 $1,500 $1,500 $1,500 $1,500
Office Expenses $0 $500 $500 $500 $500 $500
Advertising (Rhizomes) $0 $0 $0 $0 $0 $0
Bank Fees (general) $0 $0 $0 $0 $0 $0
Bookkeeper $0 $0 $0 $0 $0 $0
Business License $0 $0 $0 $0 $0 $0
Taxes $0 $0 $0 $0 $0 $0
Depreciation* $15,995 $15,995 $15,995 $15,995 $15,995 $15,995
Interest Capital Loan $11,197 $9,902 $8,517 $7,035 $5,450
Interest Operating Loan $14,217 $12,574 $10,815 $8,934 $6,920
Telephone/cell phone $0 $0 $0 $0 $0 $0
Empl. Costs (WCB, EI, CPP, AL) $612 $612 $612 $612 $612 $612
Utilities (E) $1,800 $1,800 $1,800 $1,800 $1,800 $1,800
Mareketing sales staff $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
Farm Manager Salary $0 $0 $0 $0 $0 $0
Subtotal FE (Hops only) $22,647 $40,784 $39,489 $38,104 $36,622 $35,037
Net Income
Total Revenue $0 $30,000 $67,500 $75,000 $75,000
Total Expenses $86,534 $86,469 $85,542 $85,447 $83,862
Yr 10
5
0
0
0
5
7500
$75,000
$75,000
$1,500
$750
$500
$1,750
$1,250
$0
$30,000
$2,700
$0
$0
$375
$3,750
$3,000
$1,500
$1,250
$500
$48,825
$1,440
$0
$2,500
$240
$1,500
$500
$0
$0
$0
$0
$0
$15,995
$0
$0
$0
$612
$1,800
$5,000
$0
$29,587
$75,000
$78,412
Net Income ($100,751) ($69,043) ($28,857) ($19,381) ($15,782) ($3,412)
Independent Grower (Whole Hops) – 10 Acres
Revenues
Year 1 Yr 2 Yr 3 Yr 4 Yr 5
Yield
Total Acres 10 10 10 10 10
New Acres (0%) 10 0 0 0 0
Acres at 40% 0 10 0 0 0
Acres at 90% 0 0 10 0 0
Acres at 100% 0 0 0 10 10
Production (dried pounds) 0 6000 13500 15000 15000
Revenues $0 $60,000 $135,000 $150,000 $150,000
Total Revenue $0 $60,000 $135,000 $150,000 $150,000
Expenses
Variable Expenses Cost/Acre
Fertilizer/Compost $300 $3,000 $3,000 $3,000 $3,000 $3,000
Trellising Supplies/Maint. $150 $1,500 $1,500 $1,500 $1,500 $1,500
Fuel & Oil* $100 $1,000 $1,000 $1,000 $1,000 $1,000
Equip. Repairs/Maint. $350 $3,500 $3,500 $3,500 $3,500 $3,500
Pest Management $250 $2,500 $2,500 $2,500 $2,500 $2,500
Electricity for Processing $0 $0 $0 $0 $0 $0
Spring/Summer Labour (500 hrs/acre) $6,000 $60,000 $60,000 $60,000 $60,000 $60,000
Harvest Labour/acre (mechanized pick)(45 hrs) $540 $0 $2,160 $2,700 $5,400 $5,400
Pelletizing & Package Labour/acre (20 hrs) $0 $0 $0 $0 $0 $0
Leasing land (150/acre/mo)* $0 $0 $0 $0 $0 $0
Bank Charges (0.5% of revenue) $0 $0 $300 $675 $750 $750
Vehicle fuel/maintenance $750 $7,500 $7,500 $7,500 $7,500 $7,500
Water $600 $6,000 $6,000 $6,000 $6,000 $6,000
Tractor Maintenece* $300 $3,000 $3,000 $3,000 $3,000 $3,000
Materials & Inventory $250 $2,500 $2,500 $2,500 $2,500 $2,500
Travel $100 $1,000 $1,000 $1,000 $1,000 $1,000
Sub-total VE (hops only) $9,690 $91,500 $93,960 $94,875 $97,650 $97,650
Fixed Expenses Cost/yr.
Vehicle Insurance $1,440 $1,440 $1,440 $1,440 $1,440 $1,440
Rent (Processing)($600/mo)* $0 $0 $0 $0 $0 $0
Rent (equipment/other)* $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
Dues and Subscriptions $0 $240 $240 $240 $240 $240
Lab Fees* $300 $3,000 $3,000 $3,000 $3,000 $3,000
Office Expenses $0 $500 $500 $500 $500 $500
Advertising (Rhizomes) $0 $0 $0 $0 $0 $0
Bank Fees (general) $0 $0 $0 $0 $0 $0
Bookkeeper $0 $0 $0 $0 $0 $0
Business License $0 $0 $0 $0 $0 $0
Taxes $0 $0 $0 $0 $0 $0
Depreciation* $22,645 $22,645 $22,645 $22,645 $22,645 $22,645
Interest Capital Loan $15,852 $14,019 $12,058 $9,960 $7,716
Interest Operating Loan $19,036 $16,836 $14,481 $11,962 $9,266
Telephone/cell phone $0 $0 $0 $0 $0 $0
Empl. Costs (WCB, EI, CPP, AL) $1,116 $1,116 $1,116 $1,116 $1,116 $1,116
Utilities (E) $2,400 $2,400 $2,400 $2,400 $2,400 $2,400
Mareketing sales staff $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
Farm Manager Salary $0 $0 $0 $0 $0 $0
Subtotal FE (Hops only) $32,901 $62,193 $60,360 $58,399 $56,301 $54,057
Net Income
Total Revenue $0 $60,000 $135,000 $150,000 $150,000
Total Expenses $153,693 $154,320 $153,274 $153,951 $151,707
Yr 10
10
0
0
0
10
15000
$150,000
$150,000
$3,000
$1,500
$1,000
$3,500
$2,500
$0
$60,000
$5,400
$0
$0
$750
$7,500
$6,000
$3,000
$2,500
$1,000
$97,650
$1,440
$0
$5,000
$240
$3,000
$500
$0
$0
$0
$0
$0
$22,645
$0
$0
$0
$1,116
$2,400
$10,000
$0
$46,341
$150,000
$143,991
Net Income ($172,729) ($111,156) ($32,755) ($15,913) ($10,972) $6,009
Independent Grower (Whole Hops) – 20 Acres
Revenues
Year 1 Yr 2 Yr 3 Yr 4 Yr 5
Yield
Total Acres 20 20 20 20 20
New Acres (0%) 20 0 0 0 0
Acres at 40% 0 20 0 0 0
Acres at 90% 0 0 20 0 0
Acres at 100% 0 0 0 20 20
Production (dried pounds) 0 12000 27000 30000 30000
Revenues $0 $120,000 $270,000 $300,000 $300,000
Total Revenue $0 $120,000 $270,000 $300,000 $300,000
Expenses
Variable Expenses Cost/Acre
Fertilizer/Compost $300 $6,000 $6,000 $6,000 $6,000 $6,000
Trellising Supplies/Maint. $150 $3,000 $3,000 $3,000 $3,000 $3,000
Fuel & Oil* $100 $2,000 $2,000 $2,000 $2,000 $2,000
Equip. Repairs/Maint. $350 $7,000 $7,000 $7,000 $7,000 $7,000
Pest Management $250 $5,000 $5,000 $5,000 $5,000 $5,000
Electricity for Processing $0 $0 $0 $0 $0 $0
Spring/Summer Labour (500 hrs/acre) $6,000 $120,000 $120,000 $120,000 $120,000 $120,000
Harvest Labour/acre (mechanized pick)(45 hrs) $540 $0 $4,320 $5,400 $10,800 $10,800
Pelletizing & Package Labour/acre (20 hrs) $0 $0 $0 $0 $0 $0
Leasing land (150/acre/mo)* $0 $0 $0 $0 $0 $0
Bank Charges (0.5% of revenue) $0 $0 $600 $1,350 $1,500 $1,500
Vehicle fuel/maintenance $750 $15,000 $15,000 $15,000 $15,000 $15,000
Water $600 $12,000 $12,000 $12,000 $12,000 $12,000
Tractor Maintenece* $300 $6,000 $6,000 $6,000 $6,000 $6,000
Materials & Inventory $250 $5,000 $5,000 $5,000 $5,000 $5,000
Travel $100 $2,000 $2,000 $2,000 $2,000 $2,000
Sub-total VE (hops only) $9,690 $183,000 $187,920 $189,750 $195,300 $195,300
Fixed Expenses Cost/yr.
Vehicle Insurance $1,440 $1,440 $1,440 $1,440 $1,440 $1,440
Rent (Processing)($600/mo)* $0 $0 $0 $0 $0 $0
Rent (equipment/other)* $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
Dues and Subscriptions $0 $240 $240 $240 $240 $240
Lab Fees* $300 $6,000 $6,000 $6,000 $6,000 $6,000
Office Expenses $0 $500 $500 $500 $500 $500
Advertising (Rhizomes) $0 $0 $0 $0 $0 $0
Bank Fees (general) $0 $0 $0 $0 $0 $0
Bookkeeper $0 $0 $0 $0 $0 $0
Business License $0 $0 $0 $0 $0 $0
Taxes $0 $0 $0 $0 $0 $0
Depreciation* $34,720 $34,720 $34,720 $34,720 $34,720 $34,720
Interest Capital Loan $24,304 $21,494 $18,488 $15,272 $11,830
Interest Operating Loan $32,958 $29,148 $25,071 $20,709 $16,042
Telephone/cell phone $0 $0 $0 $0 $0 $0
Empl. Costs (WCB, EI, CPP, AL) $2,124 $2,124 $2,124 $2,124 $2,124 $2,124
Utilities (E) $3,600 $3,600 $3,600 $3,600 $3,600 $3,600
Mareketing sales staff $20,000 $20,000 $20,000 $20,000 $20,000 $20,000
Farm Manager Salary $0 $0 $0 $0 $0 $0
Subtotal FE (Hops only) $52,184 $102,928 $100,118 $97,112 $93,896 $90,454
Net Income
Total Revenue $0 $120,000 $270,000 $300,000 $300,000
Total Expenses $285,928 $288,038 $286,862 $289,196 $285,754
Yr 10
20
0
0
0
20
30000
$300,000
$300,000
$6,000
$3,000
$2,000
$7,000
$5,000
$0
$120,000
$10,800
$0
$0
$1,500
$15,000
$12,000
$6,000
$5,000
$2,000
$195,300
$1,440
$0
$10,000
$240
$6,000
$500
$0
$0
$0
$0
$0
$34,720
$0
$0
$0
$2,124
$3,600
$20,000
$0
$78,624
$300,000
$273,924
Net Income ($318,886) ($197,187) ($41,934) ($9,905) ($1,796) $26,076