What Is A Forward Hop Contract?
Forward Hop Contract, as the name implies, is a forward agreement between the producer (the hop farmer) and the consumer (the brewer). The brewer agrees to buy or take possession of a certain amount of a certain variety of hops from the farmer, who agrees that those hops in those quantities and varieties will be available to the brewer at the agreed upon price. The contract specifies terms, dates, and various other factors negotiated between the party's attorneys.
A forward hop contract is different than a current year hop contract. Current year hop contracts are very rarely offered and can vary widely in their terms and restrictions.
Why Do I Need A Hop Contract?
The craft beer industry, especially in Colorado, is enjoying one of the largest booms ever seen in any industry. Over 100 breweries have opened their doors in Colorado in the past 2 years. Unprecedented growth, however, means unprecedented demand. As we have seen during hop shortages in previous years, not having enough hops in place in the market to cover the demand can have a disastrous effect on operations both big and small.
Because of the nature of hop plants, farmers must plant at least 2 years in advance before having a viable harvest. From the farming perspective, this is a tough pill to swallow. Making the equipment and structure investments, tilling the fields, fertilizing, planting, and caring for fields that won't show a profit for almost two years is unheard of. What if the craft beer industry dries up before the investment made into hop production is covered for the farmer?
A farmer needs reliability from those creating the market, the brewers, just as much as brewers need reliability from the farmers that there will be hops available in the coming years. Forward hop contracts do just that.
How Do I Know My Hop Contract Is Good Enough?
Some brewers would use the contract offered by the hop production company or worse, find a contract draft online and fill in their own terms. For as much time, effort, and specialized skill goes into crafting the recipe and brew techniques for their beer, the brewery owner would not give a list of those techniques and recipe to someone who had never brewed before and trust that their product would turn out right and their company would survive. Likewise, a farmer that invests his time and effort into the production of such a volatile product would never trust his whole investment and livelihood to someone who knew nothing about farming. In the same vein, you should never trust the livelihood of your business to an online form that knows nothing about you, your business, or you needs.
A forward hop contract should never be a handshake or dreaded "verbal agreement." All too often, the situation for one or both party's changes and someone gets left out with no recourse. Eventually going to an attorney with an unsatisfied verbal contract or an opposing party breaching a form contract one of you printed from online may be too little, too late.
Your attorney will help protect your interests and negotiate a fair deal that gets down to business. At The Law Office of Nathaniel Gilbert, Nate handles hop contracting for both breweries and farmers and can help to create lasting relationships that profit both parties. Nate has a unique background in both fields helping him to understand the concerns and serve as a highly effective negotiator. Each cannot live without the other and you need an attorney who understands the importance of that relationship.