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Latest Ethanol Casualty: Beer Breweries

December 27, 2007

UNITED STATES – Many farmers in the Pacific north-west, where America's hop production is concentrated, have turned to more profitable lines — especially corn — which can be made into ethanol. The decrease in hop production, put at some 50 percent over the past decade, has sent hop prices through the roof, according to The Economist.

Brian Owens, the brew master of the O'Fallon Brewery near St Louis, says the variety he once bought for $3 a pound now costs five times that. Many smaller breweries cannot find what they need at any price. Industry giants like Anheuser-Busch and Miller are better off, thanks to long-term contracts. However, even Anheuser-Busch has been forced to raise prices.

The hops shortage is only part of the problem. Things are no better for barley, used to make the malt that yeast turns into alcohol. It too, has been ploughed under in favor of corn, according to The Economist.

Crop failures in Australia and Europe, combined with the weak dollar, have made it harder to replace the shortage with imports. Other price increases, of fuel, glass and metal, add to the pressure.
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