E-Malt.com News article: USA, MI: Michigan’s largest hop grower looking for a buyer

Michigan’s largest grower and processor of hops and one of the largest operations outside of the Pacific Northwest is looking for a buyer, Crain’s Grand Rapids Business reported.

Based in Acme Township, about 10 miles east of Traverse City, MI Local Hops includes a 220-acre farm, 30,000-square-foot processing facility and 15,000-square-foot pelletizing and cold storage warehouse.

The company, which controls nearly half of the hops acreage in the state, produces nine varieties of hops and ships internationally, exporting to New Zealand, Canada, Japan, Taiwan, South Korea, Brazil and India.

Coming off its seventh harvest, MI Local Hops is currently in the process of seeking a buyer, President Mike Moran confirmed to Crain’s Grand Rapids Business. The company has been shopping the business to other hop farms in the state with the hopes of finding a buyer that will preserve the current growing and processing operation, and will list it widely starting next month, he said.

“There is some interest there but we are moving forward with listing outside of the state in July,” Moran said.

Bellaire-based Short’s Brewing Co. uses hops from MI Local in its seasonal Pure Michigan lineup, among others, according to CEO Scott Newman-Bale. He said MI Local recently gave the brewery a brief heads up that the farm could be changing hands.

Newman-Bale added that while “change is expected” for hops growers, he hopes whoever purchases the farm continues to use the land for growing hops.

“It is great to have local ingredients to choose from, which is especially true in brewing, where brewers act as community partners as well as in business,” he said.

J. Robert Sirrine, a community food systems educator at the Michigan State University Extension specializing in hop production, said MI Local Hops’ 2022 harvest had “some of the best quality they’ve ever had.”

While he believes the land would sell with ease to a developer, Sirrine hopes the facility will continue to be used for hop growing and processing for the sake of maintaining the farmland, but also for other hop growers in Michigan.

“MI Local processes quite a few hops for other growers across the state,” Sirrine said. “Keeping them in business is important for not just them, but the Michigan (hops) industry as a whole.”

News that the state’s largest hop operation was looking for a buyer follows a mixed year for growers as the persistent oversupply of hops continues to challenge the industry, particularly for operations of MI Local’s size.

Brewers Association Chief Economist Bart Watson told trade publication Brewbound that the hop supply has outpaced demand for the last six years, which has led to hops “piling up in warehouses, and that situation at some point is going to become unsustainable.”

The hops industry in Michigan, the largest state for hops outside of the Pacific Northwest, has felt the brunt of that volatility. The acreage harvested peaked in 2017 at 810 acres and has plummeted 53% over the last five years to 380 acres in 2022, according to annual data from Hop Growers of America, which found hops acreage doubled nationally over the last decade.

The market imbalance has left hop producers in a tough situation.

“You’ve got to be able to sell all your hops,” Sirrine said. “You can grow the best hops in the world and if you’re leaving 10% of them in the freezer and they’re not getting sold, that’s your profit margin.”

While Sirrine doesn’t think many hops farmers are “doing really well right now,” he’s noticed some growers are doubling down and increasing their acreage, despite the adverse market conditions.

“There are farmers that are doing well enough to be planting more acres of hops and there’s others that for whatever reason have had a go at it and thrown in the towel,” Sirrine said. “I don’t want to be overly optimistic, but it’s just weird.”

Sirrine thinks that a few more years of good crops could put Michigan’s hops growers in better shape, adding that the difference between their success or failure will ultimately come down to their business model.

“If folks went in fairly well financed, were able to improve their efficiency, increase the quality of their crop, had the right varieties in and are able to sell all their hops, or at least the majority of them, then they’re apt to be more successful,” he said.

MI Local Hops was formed in 2015 by MI Local Investment which included Traverse City-area businessman Mark Johnson, who now owns a 95% stake. The company purchased the former High Pointe Golf Club along M-72 and had ambitious plans to expand to about 800 acres of production by leveraging the newest technology.

The hopyard initially focused on growing commodity hops varieties such as Cascade and Centennial, as well as the locally native Michigan Copper. In 2020, MI Local told Crain’s Detroit Business that the company grew 14 varieties of hops and harvested upwards of 250,000 pounds at its peak prior to the pandemic. Bell’s Brewery Inc. was the company’s biggest customer at the time.

Johnson acknowledged the challenges in the hops industry that were brought on by oversupply and exacerbated by the pandemic.

“When there are shortages, prices go up. When prices go up, farmers plant more and prices go down,” Johnson said in the report. “We made a big investment anticipating high profits for a while to pay off the investment, and that didn’t happen. But I’m here for the long haul.”


29 June, 2023