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E-Malt.com News article: USA: Proposal to limit sales of Northwest hops is to be halted

The U.S. Department of Agriculture announced on June 20 it would halt consideration of a proposal to limit the sale of hops that grow in the Pacific Northwest and are sold to brewers to give beer its bitter taste, according to Associated Press.

A coalition of hops growers had asked the agency to establish a federal marketing agreement to regulate the quantity of hops that could be brought to market by growers. It was an attempt to boost prices and compensate for an oversupply of the alpha acid extracted from hops and used to flavor beer. Such supply-limiting curbs on agricultural production go into effect after a majority of growers approve the proposal through a referendum.

But after more than two years of deliberations, USDA's Agricultural Marketing Services said it had ended the marketing order proceedings prior to putting the issue to a vote. Agency officials determined there was no demonstrated need for limits on the amount of U.S.-produced hops released into the world market and that there would be no positive economic benefit on the hop industry from such an order.

"It's up to the advocates for the order to make their case, and on several levels, the case failed to reflect convincing industry support," said George Chartier, a spokesman for Agricultural Marketing Services in Washington, D.C.

One of the proponents of the hops marketing order, Steve Carpenter of Carpenter Ranches in Granger, Wash., said he was disappointed the USDA terminated the proposal without putting it to a vote of producers.

"We felt we had about two-thirds of the growers behind us, but now we just have to all come to the conclusion that the brewers are not going to need as many hops as we've produced in the past," he said. "This order would have given us the ability to deal with that reality."

The U.S. hops industry has had three previous federal marketing orders that regulated production volumes - from 1938 to 1944, 1949 to 1952 and 1966 to 1986. The most recent order was terminated when less than two-thirds of growers voted to continue it. Since then, farmers have been able to grow as much as they want and sell whatever they produce.

About 75 percent of the 54 million pounds of hops produced in the U.S. last year came from Washington state, with Oregon and Idaho growing the remainder of the $105 million annual crop, said Ann George of the Washington Hop Commission.

While Washington and Oregon growers were divided over the need for an order, Idaho producers had opposed the proposal.

"Growers in Idaho were of the opinion market forces should dictate the price of the commodity," said Idaho Hop Commission President Reed Batt of Wilder, whose farm covers 250 acres in southwestern Idaho. One of the largest growers in the U.S. is near the northern Idaho town of Bonners Ferry - the 1,800-acre Elk Mountain Hop Farm, which is owned by Anheuser-Busch and grows two varieties of hops for the brewing conglomerate.

Michelle Palacios, administrator of the Oregon Hop Commission, said there was not widespread support for the order among growers because many didn't think restricting U.S. sales of hops would trigger an upswing in prices on the global market.

"If we are not producing hops there are many other places in the world that can fill that hole and do it cheaper," she said. "Just because we reduce our production, it doesn't force our suppliers to pay more money, they'll just look elsewhere."

Sen. Mike Crapo, R-Idaho, a member of the Senate Agriculture Committee, had written Agriculture Secretary Mike Johanns last month to complain that provisions in the proposed hops marketing order would create an "unfair and undesirable" situation for Idaho producers. Monday, Crapo said he was pleased the Agriculture Department had halted the process and allowed growers to continue to compete on the open market.

"Now, they can continue to produce high-quality hops without the cloud of this marketing order hanging over them," he said.

George of the Washington Hop Commission, which did not take a position on the market order proposal, said some growers believe politics played a part in the USDA's decision.

"Idaho has all of five growers in the state but it's arguably got the most powerful voices in Congress on this issue, with Sen. Crapo on the Agriculture Committee and (Sen.) Larry Craig on the appropriations committee," she said. "Some of the growers who supported this are thinking maybe they should have worked the political angle a little more."

23 June, 2005

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