hopfarm

Expanding Kansas Agriculture to Respond to Booming Brewery Business

The microbrewery industry in Kansas is growing faster than ever with demand higher than supply across the state.  The Kansas legislature is attempting to respond with bills aimed at bolstering the microbrew and cider production business, but growing production will increasingly burden the already short supply of ingredients such as hops, barley, and fruits.  Kansas farmers are in a unique position to capitalize on an industry that is not only booming in Kansas but across the nation.

Before Kansas farmers jump into hop farming, some considerations regarding the unique hop farm industry should be addressed.  Hops are a fickle plant that often do not produce a significant crop until their third year.  Forward hop contracting is a system that helps to protect the farmer making such a long-term investment.  Forward hop contracts for Kansas farmers ensure that a brewing operation will purchase a set tonnage of hops produced by the farmer in the next 1-2 years.  Having contracts such as this in place helps to protect the up-front investment made by farmers as well as helps the breweries plan ahead knowing a reliable hop producer is in their corner.  These contracts need to be planned through completely with both parties; simply signing the contract produced by the other party may not protect your operation and investment adequately and reviewing the agreement with your attorney is highly advised.

Kansas has never been widely known for its fruit harvest, but changing cider production laws may boost the niche Kansas fruit farming market.  Cider is produced from the fermentation of fruit and a new Kansas law currently going through the legislature states that cider produced in Kansas must contain at least 30% local Kansas fruit.  Like hops, most fruit crops are long-term investments such as orchard trees or grape vines.  Acquiring and expanding an existing orchard or vineyard may be a better choice than starting from scratch.  When your existing farm operation merges or acquires existing fruit production farms, the merger or acquisition needs to be structured carefully to protect the individual interests at play.  Taking on debts or liabilities of an existing company is a large undertaking that can leave your business exposed to lawsuits or unplanned monetary obligations.

The brewery and cider industry in Kansas is a great opportunity for Kansas farmers to respond to the needs of a new industry and support the Kansas economy.  Keeping production local is a benefit to the farmer, brewer, and consumer as well as the state as a whole.  If you have questions or concerns about expanding your agriculture operation to support the Kansas microbrewery and cider production industry, call The Law Office of Nathaniel Gilbert for an absolutely free consultation to help address your concerns and see if the move is right for you.  A qualified attorney in your corner can make all the difference in a successful venture.

Where Are My Hops!? Forward Hop Contracts Save Hassle

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.