This post is part of a blogging series by economics students at the Presidio Graduate School’s MBA program. You can follow along here.
By Inna Volynskaya
Being a responsible beer geek, you opt for a Berkeley-brewed Bison or one of those super green Oregon breweries to quench your thirst. Or maybe you unknowingly bought something that sounded sustainable like Green Valley’s Organic Stone Mill Pale Ale or Organic Wild Hop Lager. The Green Valley label is actually nothing more than Budweiser maker Anheuser-Busch attempting to get a cut of the craft beer market. Anheuser-Busch is able to offer you an organic product at a lower price but is that due to its vast buying power or is something else at play?
There are two main agricultural ingredients in beer: barley and hops. Until a new law becomes active in 2013, brewers can use conventional hops and still carry an organic label. Why? The USDA believes that organic hops are not abundant enough to meet the demands of the growing organic beer sector.
Hops are prone to disease and pests, making it difficult to grow them without harmful pesticides. They are also sensitive to climate, which makes them difficult to grow without fertilizer. According to Mellie Pullman, Supply Chain Professor at Portland State University, “Even organic hops may be treated with compounds containing sulfur, copper, and other ingredients that pose threats to the health of both humans and the environment.” These challenges keep organic hops in short supply and this helps the price tag stay three times higher than the conventional crop. Meanwhile, conventional crops are heavily subsidized diluting price signals in the market.
If giants like Anheuser-Busch paid the high price of organic hops they could have a real impact on the industry. However, thanks to the USDA’s excuses, they are allowed to sink their dollars into conventional crops and still get a marketing boost from organic labels. The burden then falls on small breweries to make a real commitment to impacting the hop industry.
The 2013 deadline gives organic hop growers ample time to meet demand but now brewers who have been allowed to get away with false labeling will have to start walking the talk. The Organic Farming Research Association has already granted funds to research new methods for growing hops. Adapting methods used for other organic crops like apples have proven effective in cultivating the most widely used varieties of hops.
What can you do to make sure real organic beer has a future? As always, educate yourself. Question and research what your labels say. Engage your fellow beer geeks on sites like Beer Advocate to proliferate the conversation. Check to see which breweries are really using organic hops and encourage your favorite breweries to do so. The organic labeling loopholes don’t only apply to beer. Visit Organic Consumers to make sure the premium you pay for organic is worth your dollars.
Inna Volynskaya is a San Francisco Bay Area-based sustainable beer enthusiast, food supply chain specialist, and 2012 MBA candidate at Presidio Graduate School.