Points to Consider Before Starting a Hops Operation

Growing Hops in Ohio Fact Sheet Series
ANR-58
Agriculture and Natural Resources
Date: 
07/21/2017
Brad Bergefurd, Horticulture Specialist, OSU South Centers

Hop farming requires a substantial investment in capital, time and management. A business and marketing plan is essential to developing a successful hops operation. This fact sheet outlines preplanning points that should be addressed to create a financially successful hops operation.

Main points to consider before you start growing hops

Economic considerations and site preparation are two important points for a successful hops operation and integral to a business and marketing plan. Planning in these two areas is essential, and the business and marketing plan should be developed at least one year prior to planting the first hop plants. 

New hop growers are also encouraged to consider the details in this fact sheet before making an investment. Production budgets indicate at least $25,000 per acre may be needed to establish a high trellis hop planting and at least a $100,000 investment for a small-scale hop processing, drying, pelletizing, cooling, packaging and freezing facility built to federal and state food safety regulatory standards. This fact sheet looks at:

  • Market establishment
  • Labor needs and availability
  • Facilities for processing and storage
  • Insurance considerations
  • Financial and planning resources
Site preparation considerations including:
  • Site selection
  • Field preparation
  • Plant selection
  • Plant nutrition and fertilization
  • Pest management

Economic considerations for hops

Establish your market first — You must have your brewery buyers lined up in advance of planting your hops yard. The brewery buyers are looking for certain hop varieties and volumes. You will need to know this information before purchasing the first rhizome or plant. It’s crucial to work with your buyers to plant the correct variety of hops. The types of brews the crafters are currently creating, or anticipate producing, will require specific varieties of hops or blends of varieties. 

Figure 1: A successful hop operation requires preplanning and preparation. This could take up to three years or more to complete. Photo by Brad Bergefurd, OSU Extension.

To find potential buyers in your area, visit the Ohio Craft Brewers Association website for a listing of many Ohio craft brewers, or visit the Ohio Division of Liquor Control website.

Ask your brewery buyers the kinds of brews that will be made with your hops. For example, green brews are brewed fresh, so the hops are used within 24 hours of harvest. This eliminates the need for you to process the hops. However, most brews require the hops to be processed to match the specific brewing process and filtration equipment. While most brewers in Ohio currently use pelletized hops, individual brewers may prefer a different hop process.

Labor needs and availability — Hops production is a labor-intensive endeavor. You will need access to labor to complete production, management, harvesting and processing tasks in a timely manner. Hops production requires hand and stoop labor, so readily available seasonal help may be a factor in your planning process.

Facilities for processing and storage — Ask your brewery buyer how the hops processed will need to be packaged for their brewing process. Hops can be purchased as fresh, dried whole cone, dried pelletized, vacuum packaged or inert-gas (nitrogen) packaged in oxygen-barrier packaging material. Knowing this information prior to developing your hops operation will help determine costs associated with facility needs. At a minimum, you will need a cooling facility and dryer. You should also plan to have freezer storage available for a week or more. 

Ohio and Federal Processing Requirements

Because you are processing food products for human consumption, you need to consider food safety considerations for your processing facility. You need to maintain a clean environment to avoid contamination of your product in all the facilities: grading, drying, processing, and storage.

In Ohio, you are not required to have a food safety inspection of your facilities if you are growing and mechanically drying your hops to be sold in bulk or bales to a pelletizing or packaging firm. However, if you are pelletizing and/or commercially packaging the hops labeled for sale to the end user or distributor, Ohio law requires an annual food safety audit and inspection of the processing facility.

The required inspection will be conducted by the Ohio Department of Agriculture (ODA) prior to processing the first set of hops. The audit and inspection is required each year prior to the processing season. Before building your processing facility, contact the ODA Food Safety program to verify that your plans meet Ohio law provisions. The ODA website is agri.ohio.gov, or call 614-728-6201 and ask for the Food Safety program.

Additional processing facility and procedure requirements are detailed in the Food Safety Modernization Act, a federal law passed in 2011. Hop processing facilities and procedures for processing hops (grading, drying, processing, storing) will need to follow the requirements administered by the Food and Drug Administration (FDA). Updates regarding this law can be found on the FDA website at fda.gov, and search for “Food Safety Modernization Act.”

Insurance Considerations

General and product liability — Don’t be a risk taker. Protect yourself. A general farm liability insurance coverage policy should be considered for a hops operation. Consult with several insurance companies for policy options and cost. You can begin with the agent who issues your homeowner’s policy, but realize many agents are unaware of the scope of a hops operation and thus are unlikely to quote a competitive rate. Often a rider on an existing policy is far less expensive than an entirely new policy. Take time to research several options to find insurance that provides the best coverage.

Your brewery buyer may require product liability insurance coverage for your crop. Even if it is not required, consider having this protection for your investment. Several resources are available from Penn State Extension farm management, and provide information and checklists to assist you with your product liability insurance requirements. Search the website extension.psu.edu for “product liability insurance.” 

Workman’s compensation — If you are hiring employees outside of immediate family, Ohio law requires you to have adequate Workers’ Compensation Insurance coverage. Information for this requirement and options are available at the website for the Ohio Bureau of Workers’ Compensation at bwc.ohio.gov

Financial and Planning Resources

Taxes — For tax purposes, the land used for a hops operation can qualify for reduced property taxation under Ohio's Current Agricultural Use Valuation (CAUV) program. The parcel must be at least 10 acres, or if less than 10 acres, must produce or expect to produce an average yearly gross income of $2,500. 

Discuss with your tax consultant about filing a Schedule F with your federal income taxes. This worksheet is for farm-related expenses and income. Prepare before tax season to have the necessary recordkeeping and accounting for your hop farm’s tax information. Each year, the IRS publishes the Farmer’s Tax Guide, which is available online and helpful for tax preparation. 

Incentives — Consider having your farm property registered with the USDA Farm Service Agency (FSA). USDA provides financial assistance programs through the FSA office that may provide financial assistance for your hops farm if you qualify. Some of the programs include the USDA Farm Loan Programs such as Micro-Loan for New & Beginning Farmers, Socially Disadvantaged Farm Loan Program, Beginner Farm Loan Program, as well as Environmental Quality Incentive Programs (EQIP). A listing of the local FSA offices and available programs is located by searching online for FSA – USDA.

Site preparation considerations for hops

Figure 2: Site selection and preparation should be done one year prior to planting the first hops plant. Photo by Brad Bergefurd, OSU Extension.

Site selection — The easiest part of a hops operation is finding a suitable piece of land. Once you have located acreage for consideration, contact your county OSU Extension office and talk with the agriculture and natural resources educator. The educator may be able to conduct a hop site evaluation for your farm.

An agricultural operation will be exempt from most zoning in a rural area, but there may be zoning restrictions if the hops are grown inside a municipality. Check for any zoning restrictions in your area.

Field preparation — Hops do not like wet root systems and require very well drained soils. Systematic drainage tile installation is recommended and should be installed prior to planting and trellis construction. Other drainage via grass waterways, raised plant beds or other sub-surface construction is also used to adequately drain hop fields.

Irrigation is necessary to keep hops growing at an optimal level. The irrigation system should be designed and installed before planting. It is recommended to have your irrigation supply tested for water quality and discharge volume. Because deep-well irrigation water may have high alkaline levels, acidification may be needed. Testing will determine if an acidification system needs to be installed in advance to ensure plant development. 

Weed control and field preparation needs to be done well in advance of planting. If the land has been previously farmed, you need herbicide records from at least five years prior to your planting date. Some herbicides have residual characteristics that can adversely affect newly planted hops. 

Weed seeds can remain dormant in the soil until conditions are ideal for germination. Weed management to begin controlling annual and perennial weeds should begin up to a year before planting. Ideally, deep tillage moldboard or chisel plowing should be done in the fall before planting. 

Other items that are preferably done in the fall before planting include constructing the trellis system and, if desired, a raised bed system.

Plant selection and management

Plant selection — One of the biggest hurdles for new hop farms is timely delivery of the hop plants. You need to consult with your brewery buyer on the varieties that will be planted. The orders need to be placed as early as possible, ideally by January of the planting year, to guarantee timely delivery, amounts and quality. 

To figure the amount of hops to order, you’ll first need to determine the pounds of hops by individual varieties needed by the brewery buyers. Then, you’ll be able to calculate the acres, or percentage of an acre, needed for each variety. Hops are delivered as rhizomes or, preferably, locally grown plants. Plan for time to find a nursery that produces the variety(ies) you need. Ordering rhizomes or plants is a financial investment as your order is usually paid for in advance of delivery. Some nurseries require payment up to a year in advance of delivery to guarantee the plant quality and quantity.

Plant nutrition and fertilization needs — Soil testing is essential to successful hops production. Have your soil analyzed by a reputable soil laboratory for major and minor nutrients as well as soil pH. This will allow you to determine needed nutritional amendments.

Because hops are a perennial crop, it’s important to incorporate additional nutritional amendments as you won’t have another chance to deeply incorporate amendments for the life of the planting. Hops are very deep rooted, so soil should be tested to a depth of at least 7 to 12 inches. The plan for nutritional amendments may include multiple applications and incorporation before planting to achieve the desired soil test values. A listing of soil testing labs is available by contacting your local OSU Extension office.

On your farm, if you are applying fertilizer to more than 50 acres, you will need to obtain an Agricultural Fertilizer Applicator Certification. For more information about the certification requirements and available training, search online for Ohio fertilizer certification with OSU Extension.

Pest management needs — Like all crops, hops are vulnerable to pests such as weeds, insects and disease. Pesticide is a general term used to refer to herbicides, insecticides and fungicides used for pest management, whether you are cultivating an organic or conventional system. 

When using any organic or synthetic pesticide, hops must be listed on the product label. All pesticide products are federally registered and must pass safety tolerance testing for use on a crop for human consumption. If hops it not listed on the product label, it means the product has not been tested for hops and is illegal to use on the crop. It is also illegal to use home remedies on crops that will be sold from your farm because these have not been tested for safety tolerance for human consumption.

There are two internet databases available for searching crop listings on products. You can visit Greenbook or CDMS and search product labels. You must make sure the product has been approved for use in Ohio, which is also searchable on these two websites. OSU Extension provides information and educational programs about hops production, including pest management. Contact your county OSU Extension office for information on upcoming opportunities. Many pesticides labeled for hops are restricted-use pesticides. Before purchasing these products, you will be required to obtain an Ohio Private Pesticide Applicator License. You will need to take an exam to become licensed. Information about study materials and signing up for the exam is available at your county OSU Extension office.

Additional Resources

Ohio Hop Growers Guild (OHGG) is an Ohio hop growers’ association that was incorporated in 2014. OHGG was established to expand Ohio’s hops grower networking (both internally and externally) to:

  • Agree on common quality standards and assurance.
  • Share information, training and education.
  • Advocate for and market hops.
  • Improve access to resources. 
  • Find innovations and methods to reduce costs. 

The one crosscutting theme for the guild is to promote quality in hop production. OHGG members offer collective purchasing, local hop plant supplies, hop farm consulting, mechanical harvesting and custom processing, and pelletizing services. Search for their website at Ohio Hop Growers Guild, or OHGG.

Ohio Department of Development – Small Business Center is available to assist with writing your small business and marketing plan. Agency offices are located throughout Ohio and can found through the Ohio state government websites. 

Ohio State University South Centers has information for hops production as well as business planning resources and templates. The website is found by searching for South Centers at OSU Extension.

Ohio State University Extension Ohioline has resources for fact sheets on business structures, taxation characteristics and hops production. 

Topics: 
Ohioline https://ohioline.osu.edu