Organic Hop Regulation: Great For Business

Jeff Alworth

Yesterday's Oregonian reported on a subject I've been following with some interest on my beer blog. At issue, the question of whether beer labeled "organic" should have to be made with organic hops. The answer seems obvious, right? There are effectively two ingredients in beer, malt and hops, so obviously, hops should be organic. Ah, but in fact, the USDA has an exemption for trace ingredients (less than 5%)--and hops, despite their prominence in beer, are trace ingredients.

The issue and the ruling both stand as a useful example of how regulation can be good for business. Currently, the USDA allows beer labeled "organic" to be made with conventional hops. Hops, it turns out, are a delicate crop, prone to blight and infestation. The cost required to grow organic hops is two to three times greater. So here's the rub: if organic hops aren't necessary for organic beer, what becomes of the organic hop-growing business? Without the demand from brewers for organic hops to make organic beer, the market withers in the field.

A month ago, a subcommittee of the sub-agency within the USDA that oversees these things decided to continue the hops exemption. The past month, organic hop growers have mounted a mighty campaign to change their minds on the matter, and last week, they did. The subcommittee overturned its ruling, unanimously. The final decision of the full agency will be made next month.

Now, there are a bunch of green, socialist reasons why I think "organic" beer should be made with organic hops. Those reasons are the stuff of a different post. In this post I just wanted to highlight the business aspects. An entire industry (albeit a small one) hangs on this decision. If the USDA decides organic beer can be made with regular hops, the only thing that happens is a bunch of hop growers go out of business (or shift to regular hops). If they decide in favor of the hop growers, a new market springs up, new opportunities for brewers, and everyone wins.

See, not all big gubmint regulation is bad.

By Jeff Alworth Oct. 19, 2010