Northwest hop farmers face a sharp reduction in research funding because a major brewer plans to withdraw from an industry-funded nonprofit next year.
MillerCoors, a large brewer based in Chicago, will cease funding the Hop Research Council, a nonprofit that funds breeding and other research, in 2019 and beyond due to “continued beer industry headwinds and the resulting budgetary constraints.”
The company cited other problems with funding the council, such as an “inequitable” split of contributions across the beer industry and research benefits being available to non-members, according to a letter sent to HRC this summer.
“We are supportive of an initiative to review how public research and varietal development is funded by the hop industry so that all organizations that benefit are contributing equally,” the letter said.
Capital Press was unable to reach a representative of MillerCoors as of press time.
In 2017, the company’s contribution of roughly $100,000 represented approximately 16 percent of the Hop Research Council’s revenues.
Though the Hop Research Council’s finances remain stable due to cash reserves, MillerCoors’ withdrawal from the organization means members must contemplate new revenue sources or cutbacks to research, said Michelle Palacios, administrator of the Oregon Hop Commission.
The grower-funded hop commissions in Oregon, Washington and Idaho are all members of the council, as are major national brewers, craft brewers and hop brokers.
The Hop Research Council’s reliance on funding from major brewers “makes it very vulnerable to a member leaving” and has lit a fire under discussions about long-term financial sustainability, Palacios said.
While the council isn’t in danger of imploding, a significant decrease in funding would affect research projects that require many years to carry out, such as breeding new varieties or finding ways to control aphids and other pests, she said.
“The biggest risk is that we wouldn’t be able to fund many research projects,” Palacios said.
The HRC had hoped to assist with research in other hop-growing areas, such as Michigan and New York, but the withdrawal of MillerCoors will likely limit the ability to fund such projects, said Ann George, administrator of the Washington Hop Commission.
During an Oct. 18 meeting of the Oregon Hop Commission, members discussed the possibilities of improving the Hop Research Council’s financial resiliency.
Among the options being considered by the industry are a “penny per pound” fee on popular public hop cultivars, a tax on beer sales and enlisting associate members, such as input suppliers, who would contribute funds.
Fortunately, the growth in hop acreage in recent years has generated revenues that will partially help offset the lost funding from Miller Coors, said George.
“There are a lot of options out there that have yet to be vetted,” she said.