How much does a hop-growing project cost

4 October 2022Edouard
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Hops can be a diversification for your farm or the basis of a career change. It is a market with opportunities, but finding the right business model is a decisive factor in the success of your project.

We help you identify the investments, costs and turnover of a hop enterprise.

Forecast turnover – Operating costs – Investments = Operating result

Before going into the economic data of a hop enterprise, let us define the key terms:

• Operating costs: all the annual costs needed to produce hops: seasonal workers’ wages, support strings, off-road diesel, compost, advertising costs, crop protection products…
• Investments: fixed assets needed to produce hops, depreciated over several years, often 8 to 10 years: hop picker, bine-pulling trailer, bale press, hop dryer, and the structure of the hop yard.
• Forecast turnover: total sales over the coming financial year.

Operating costs:

Operating costs average between 8,000 and 11,000€ per hectare. This amount varies mainly with labour, off-road diesel and the area farmed, which allows more or less economy of scale.

• Off-road diesel/fuel oil/gas: for work done with tractors, and also fuel oil for the hop dryer.
• Labour: 200 to 400 h/hectare, of which 30% in May and 30% in September.
• Soil amendments: compost, manure, fertiliser pellets, liquid or solid nitrogen.
• Crop protection products: whether you farm organically or conventionally, the crop needs a few treatments.
• Green manure
• Rental of tools, land or buildings.

Investments:

One of the most decisive factors in the success of your project is your ability to equip yourself with quality machinery, correctly sized for your project: you will have to tie up large sums in machines that will only be used for a few days, or even a few hours, in the year. The choice should not be made on impulse!

• Structure

The cost of a trellis structure depends on the model. There are 4 (to keep it simple): the Flemish model, the cheapest, with a high density of poles per hectare; the Alsatian model, guyed, very tall (>9 m) and more expensive per hectare but also more durable (posts treated with creosote, banned since 2019, or concrete); the English model, with its low hop yards under 5 m, with four strings per hill; and the German model, with 2 to 3 rows of hops between each row of poles.
At HOPSTOCK, we designed, with an engineering consultancy, a hybrid between the Flemish model (from our region, very economical) and the German model (sturdier than the Flemish, and less costly than the Alsatian). The cost per hectare comes out between 20,000 and 30,000€ depending on size and shape.

• Growing equipment: allow 35k€ to 70k€ for second-hand tools specific to crop management.

  • Tractor: choose an orchard or vineyard tractor, four-wheel drive, >90 hp, ideally with >6 hydraulic spool valves.
  • Fischer/Reith tool: an essential tool for ridging up, pruning and trimming the hop rows. They are rare and expensive, but will greatly ease soil work, weed management and the good health of your hops.
  • Access platform: three-point linkage, towed, or mounted on a front fork. You need a platform to reach the top of the trellis, to put up your strings or clean the hop yard.
  • Side compost spreader: not essential but very useful in organic farming.
  • Cultivator, rotary harrow, mulcher, seed drill: to manage the alleys between rows. Whether you choose a “full tillage” approach, an annual cover crop or a permanent cover, you will need tools to manage the alleys.

• Harvesting equipment: count on 50 to 80k€ for a harvesting line sized for 1 to 5 ha. It is rarely shared, because of the large volume of bines to bring in from the field and process in a short time (<2h):

  • Bine-pulling trailer: optional on areas under 1 ha, but greatly appreciated on larger areas. It cuts the bottom of the bine and pulls it onto a trailer with side boards, all automatically, with a single operator.
  • Hop picker, sometimes called a sorter: the centrepiece of the harvesting line, it separates the hop cones from the leaves and the bine. Hard to find on the market and rarely in good condition, it needs careful attention to pick and sort the hops correctly. It picks from 90 bines per hour for the smallest models to 500 bines per hour for the largest.
    We have a maintenance workshop for hop pickers, offer maintenance solutions throughout France and supply wear parts (belts, combs, springs, drive belts, sprockets, chains…)
  • Hop dryer: sized to match the hop picker, the dryer reduces the moisture content of the hops so they can be stored. It consists of a boiler, often oil-fired, sometimes gas-fired, rarely biomass, and a system of tilting drying beds that moves the material through semi-automatically.
  • RB60 bale press: after drying, the hops must be pressed to reduce their volume and improve storage quality. Even if they are to be pelleted, you must wait for the EU certification of the hops, which arrives within 1 to 2 weeks. Bale presses are often semi-automatic, and fill 1 standard 50-60 kg sack (RB60 sacks) in 2 to 4 minutes.

Turnover: in France, turnover per hectare ranges from 12k€ to 30k€

There are many methods for determining your forecast turnover, and a simple Google search turns up a lot of contradictory information. Our experience supporting projects since 2017 has nevertheless given us some good pointers for arriving at a turnover not too far from reality:

To determine the selling price of your hops per kg, you can start either from the market price or from your costs plus a margin.

To determine the selling price of your hops, you will first need to determine the varieties to produce and the quality criterion (organic hops, biodynamic, Nature & Progrès hops, HVE hops or other). A benchmarking exercise is essential: a spreadsheet, a telephone, and a professional directory or a good site listing breweries, plus a few hours, will be needed to give you a more precise idea of the needs.

Be careful, however, when trying to determine the market price with a search engine: the sites that come up often sell hops at retail, or American or New Zealand hops with protected varieties, or with quality criteria different from what we produce at our latitudes. Keep your feet on the ground, and always favour direct contact with brewers over the search engine.

Gather all the economic data in a single spreadsheet

You can gather all this data and run a simulation in an Excel spreadsheet. You can also use our tool: an economic simulator for hop projects, which will help you find your way around operating costs, investments and turnover.

Conclusion: the profitability of a hop project varies greatly with the choices you make: equipment, crop management, or catchment area. Do not underestimate economy of scale, which is an important lever: it is harder to reach profitability on a 0.5 ha project than on a 4 ha project.

We offer support in setting up projects. To discuss it, send us an email.