Natural Disasters Out West Coupled with a Craft Brewing Boom Provide Opportunity for Hop Farmers to Gain Market Share

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Cornell, Eric
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This paper focuses on the hops market during the previous years of 1980 to 2015. Background knowledge, economic theory, a review of recent literature, and regression analysis are performed to attempt to provide evidence that heat and drought have significantly opened up an opportunity for farmers to gain market share in the hop farming industry. This study focuses on the United States' greatest supplier of hops, the Yakima Valley of Washington. As the Yakima Valley has been subject to recent prolonged periods of drought and high temperatures, their market share has noticeably dropped. It is theorized that the Yakima Valley market share is losing its market share due to a loss in profits, which is in turn because of the recent weather conditions. It can be said that their market share has decreased from the indirect effect of the weather conditions. At best, the market share to be gained would be from other farmers located in the northern middle to the northern east side of the United States. This would be true only under the assumptions that other farmers are now able to become competitive and that they are in business for the long run. However in the short run, hops may be imported from other areas around the world to make up for the market share gap. This study fails to provide evidence that heat and drought are the direct causes of a shift in the market share. This leads one to consider whether the shift in the market share may be explained through other factors within the businesses or from the demand side of things and price changes. It is important to keep in mind that there are various different types of hops with different qualities and characteristics. Each different kind may have its own separate demanded amount from brewers. It is also important to note the fact that growing hops is a very biological rich process. Farmers may be dealing with completely other issues such as pests and diseases of their plants.
34 p.
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