University of California 
 College of Agriculture 
 Agricultural Experiment Station 
 Berkeley, California 
 
 HOPS: STATISTICAL-ECONOMIC ANALYSIS OF MARKETING 
 
 by 
 
 Sidney Hoos and J. N. Boles 
 
 September, 1952 
 
 Contribution from the 
 Giannini Foundation of Agricultural Economics 
 Mimeographed Report No* 139 
 
 LIBRARY 
 
 UNIVERSITY OF CALIFORNIA 
 DAVIS 
 
HOPS: STATISTICAL-ECONOMIC ANALYSIS OF MARKETING 
 
 by 
 
 Sidney Hoosi/ and J. N. Boles^/ 
 Contents 
 
 Page 
 
 Introduction ...... • 1 
 
 Economic Setting and Background 
 
 Survey of Economic Trends h 
 
 Hop Marketing Agreement . . 11 
 
 Statistical Price Analysis . 1U 
 
 Concluding Comments 26 
 
 Selected Statistics 28 
 
 l/ Professor of Agricultural Economics, Agricultural Economist in the 
 Experiment Station and on the Giannini Foundation. 
 
 2/ Assistant Specialist in the Experiment Station and on the Giannini 
 Foundation. 
 
HOPS: STATISTICAL-ECONOMIC ANALYSIS OF MARKETING 
 
 Introduction 
 
 This report results from an investigation undertaken at the request of 
 the United States Hop Growers Association. That group, faced with current 
 and prospective marketing problems, felt the need of statistical price analyses 
 which would aid in appraising results of alternative lines of action. These 
 lines of action relate to the control of hop supplies flowing to market under 
 the jurisdiction of a federal marketing order. 
 
 Hop growers have operated under a federal marketing order at various times 
 since 1938. The present order became effective in July, 19h9, after the price 
 developments in the fall of 19U8 when, for the first time since World War II, 
 the available supply of hops was substantially greater than the demand and 
 when the price appeared unreasonable to most growers. An indication of the 
 situation is that during the fall of 19U8 the prices for uncontracted hops 
 dropped sharply, from about 65 cents to 30 cents or less per pound. And even 
 this marked decrease did not absorb the available supplies. 
 
 With the introduction of the federal marketing order in the middle of 
 19^9, the price situation for hops improved from the viewpoint of producers 
 and prices increased, although not necessarily only because of the order. The 
 increase was sharp enough so that the price for best quality hops reached 83 
 cents per pound in the fall of 1950, although sales of the entire crop of 1950 
 averaged about 65 cents per pound. 
 
 Although cost of production figures generally are notoriously unreliable, 
 a figure of from 35 cents to 55 cents a pound is a range within which cost of 
 production probably lies in the past year or two for most hop growers, depend- 
 ing upon the area of production and other factors. The favorable returns to 
 many growers in 19k9 and 1950 stimulated new production. This expanded pro- 
 duction is reflected in an increase of about 5>000 acres planted in 1950, at 
 a time when there was no shortage. The expanded production was also reflected 
 in what hop growers viewed as a "surplus" in 1951, in an amount of 17 million 
 pounds; and many growers were dissatisfied with the situation, although other 
 growers undoubtedly made favorable returns due to fortunate future sales. 
 
 In view of the situation in 1951, it became clear to many in the industry 
 that the continuation of a federal marketing order striving for higher prices 
 with "parity" as a goal was not consistent with a market price situation where 
 
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2. 
 
 increased quantities of hops remained unsold. There appeared to be more 
 growers taking the view that, from the long-run interests of the industry, 
 the marketing policies and programs which were being followed required careful 
 review. 
 
 Substantial differences of opinion exist among growers as to appropriate 
 lines of action under the current and prospective situation. Some growers wish 
 to eliminate the federal marketing order and "let the law of supply and demand 
 take care of the situation." Other growers feel that the federal marketing 
 order should be continued but in a modified form. As an early step in clari- 
 fying the situation, the management of the United States Hop Growers Associa- 
 tion recognized that some sort of analysis would be helpful which would 
 suggest the various prices, in a given season, which are likely to result 
 from particular market situations. To help meet that objective is the major 
 purpose of this report. Additional background material is also provided for 
 the aid of those who are less familiar with the hop industry and its marketing; 
 for the specialists in that area, the results of the section on statistical 
 price analysis are more pertinent, and the material in the remaining sections 
 is more for establishing an appropriate setting. 
 
 The following section of this report presents a brief picture of the 
 "Economic Setting and Background" in order to provide the general reader with 
 some basis for reviewing the current situation. The third section, "Survey 
 of Economic Trends," outlines what has occurred in the industry in terms of 
 behavior over time in acreage, production, yield, prices, and trade. With 
 this material as a basis, the reader may then go forward to the next section, 
 "Hop Marketing Agreement," where the administration and operation of the agree- 
 ment and order are explained. Then, in the section, "Statistical Price 
 Analysis," we present results from our investigations on the major factors 
 affecting the season average farm price of hops, and briefly indicate how the 
 results of the statistical price analysis may be used in the operation of the 
 hoo marketing order. The final section, "Concluding Comments," considers the 
 use of the price analysis and the role of the marketing order in meeting the 
 needs of the hop industry. 
 
 Economic Setting and Background 
 Almost all United States hops are now grown in the Pacific Coast states 
 of California, Oregon, Washington, and Idaho. In 1950-51, there were over 800 
 growers in these states cultivating almost 39,000 acres and producing over 
 
3. 
 
 58 million pounds of hops. Some of these growers were dealers in hops and 
 some were brewers growing hops for their own use. The salable quantity for 
 1950-51, £0 million pounds, at the season average farm price of 62.1 per 
 pound was valued at approximately 31 million dollars. 
 
 Nearly all of the hops consumed domestically go into the production of 
 fermented malt liquors such as beer and ale. Providing the brew with its 
 unique flavor, about four-tenths of a Dound of hops is used in the production 
 of a 31-gallon barrel of beer. Since there is no close substitute for hops 
 and since the cost of hops makes up only a very small proportion of the cost 
 of producing beer, the domestic consumption of hops does not seem to be 
 significantly influenced by its price. Brewmasters tend to use the amount 
 of hops per barrel which they think will make their product most salable, 
 whether the current hop price is relatively high or relatively low. 
 
 Brewers maintain fairly large stocks of hops. September 1 stocks, at the 
 beginning of the crop year, have averaged, well over £0 per cent of annual con- 
 sunrotion each postwar year following 1916-U7, and reached 80 per cent in 
 19U9-£0. Hops flow into United States stocks from domestic and foreign 
 growers and flow out of United States stocks mainly to domestic and foreign 
 brewers. At various times, through voluntary decisions on the part of indi- 
 vidual growers, a fraction of the current production has remained unharvested 
 for economic reasons. At other times, under the provision of a federal hops 
 marketing order, each grower has been permitted to sell only a stipulated per- 
 centage of his crop and for the most part has allowed the unsalable portion of 
 his crop to remain unharvested. 
 
 In postwar years there has been a net export balance of more than 5 million 
 Pounds every year with no clear trend evident in either exports or imports. 
 Imports come principally from Germany and Czechoslovakia, surmounting a 2k cents 
 per pound tariff, while exports go primarily to non-European countries. Thus, 
 the harvested portion of the United States crop goes into United States stocks 
 from which are derived the large quantities used domestically and the $ to 
 10 million pounds reouired for the net export balance. Since the inflow and 
 outflow have no precise automatic adjustment, the quantity of hops on hand at 
 the end of one season and the beginning of the next varies from year to year. 
 
 Most of the crop is harvested in the fall months of August, September, and 
 October. Turing this period, many growers negotiate with dealers and sign for- 
 ward contracts for the crop to be harvested the following season, so the price 
 is determined on a major segment of the harvest before the size of the harvest 
 
1 fifil ' 
 
 I O -2 3 
 
is known. As the statistical price analysis in a later section will show, 
 among the principal determinants of the United States season average farm 
 price is the size of the hop inventory at the beginning of the crop year, 
 and the level of national total consumption expenditures for all goods and 
 services. 
 
 At the time when the prices are determined, the size of current stocks is 
 known, the amount of current movement from growers is known, and domestic eon- 
 sumption and the next export balance can be estimated. From these figures comes 
 an estimate of stocks on hand at the beginning of the following season. If 
 these stocks are expected to be relatively low, then brewers will wish to add 
 to their stocks, even at relatively high prices; if these stocks are expected 
 to be relatively high, then brewers will add to their stocks only if the price 
 is low. 
 
 The information utilized in this study, from 1933-3U, comes from a period 
 which includes significant events for the brewing and hop industries. Prohi- 
 bition was in effect until 1933. The depression and recovery of the thirties 
 was followed by the high employment, high income and relative shortage of con- 
 sumer goods during and following World War II. As a part of the economic 
 background and setting, therefore, the following section will summarize the 
 effects of the changing economic environment on hop acreage, yield, production, 
 consumption, imports, exports, stocks, and prices. 
 
 Survey of Economic Trends 
 
 Acreage in hops declined sharply in 1917 even though the Volstead Amend- 
 ment was not in effect until 1918. Acreage harvested during the years shortly 
 before World War I averaged over U0,000 acres annually, but with prohibition 
 acreage dropped and fluctuated between 18,000 to 27,000 acres during the 1920' s 
 and early 1930' s. Anticipating the repeal of the l8th Amendment, acreage 
 harvested expanded in 1933 and by 1935-36 reached a pre-World War II peak of 
 about 39,000 acres. Then there was a sharp reduction in 1936-37 to 31*000 
 acres. Until 19U3-UU, acreage harvested fluctuated around 32,000 acres, and 
 since then has averaged close to 1*0,000 acres. In 1951-52 the acreage for 
 "hops harvested and salable under marketing agreement, hops harvested but not 
 salable under marketing agreement, and hops produced but not harvested" was 
 Ul,200 acres compared to 37,138 acres as an average for the period 19UO-19U9. 
 
 Figure 1 compares the annual acreage, production and yield expressed as 
 percentages of their average during the period 1935-1939. The increased 
 
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FIGURE 1 
 
 United States Hops; Indexes of Acreage, Production, and Yield Per Acre from 1933-34 
 
 200 
 190 
 180 
 170 
 
 / 
 
 / 
 
 -Production 
 
 / 
 
 / 
 
 1955-1959 averages 
 
 Acreage: 33,800 acres 
 
 Production: 37,684,000 pounds 
 Yield: 1,123 pounds per acre 
 
 I I J L 
 
 1933- 1935- 
 
 54 56 
 
 1945- 
 46 
 
 1950- 
 51 
 
T90-. ; 
 
 0£ yai, 
 
6. 
 
 production beginning in the middle 19U0's resulted from both expanded acreage 
 and improved yields. But since the late 19U0's, the sharp increase in produc- 
 tion was due more to the increased yields than to acreage which increased less 
 sharply. Thus by 1951-52, yield had reached on all-time high, whereas acreage 
 was about the same as in 19U5-U6 as the several following years. 
 
 The average yield of hops per acre varies considerably from season to sea- 
 son. This occurs as a result of variable climatic factors, and also as lands 
 of varying productivity come into production or go out of production. This 
 variability of yield is one factor encouraging the brewers and others to carry 
 fairly large stocks from one season to the next. The average yield during the 
 period 19U0 to 191; 9 was 1,267 pounds per acre harvested compared with over 
 1,500 pounds per acre during 1950 and 1951 • 
 
 With a greater number of acres in production and with above average yields, 
 production estimates of 58.1 million pounds in 1950 and 63.2 million pounds in 
 1951 were not surprising even though the 19U0 to 19U9 average was only 1*7.1 
 million pounds. In 1951-52, acreage was 23. h per cent higher than the average 
 acreage for the period 1935 to 1939, yield was 36.7 per cent higher and produc- 
 tion was 67.8 per cent higher. 
 
 Since hop bales may be stored for several seasons, the utilization of hops 
 can be considered in terms of stocks and flows. In other words, the stock of 
 hops at any point in time is the resultant of the inflow of bales from the 
 growers, and the outflow of bales to the users, both domestic and foreign. 
 There is no precise automatic balance between the inflow and outflow and con- 
 sequently the stocks on hand September 1 fluctuate from year to year. The 
 range of fluctuation is indicated by September, 19hh stocks at a level of 
 27 per cent of the 19UU-U5 domestic consumption, compared with September, 19U9 
 when stocks were 30 per cent of the domestic consumption in 191*9-50. 
 
 Such fluctuations in stocks have had a bearing on hop prices. At various 
 times and for various growers, the price offered for baled hops has not been 
 high enough to warrant harvesting their crop. At other times, under the pro- 
 visions of a federal marketing order, only a fraction of each grower's crop 
 has been certified as salable; in such years most of the remainder of the crop 
 produced was left on the vines in order to save handling costs. Figure 2 shows 
 the quantity of hops produced and the quantity salable under the marketing 
 orders compared with domestic consumption. 
 
 TO supplement domestic production, we import hops from other countries, 
 principally Germany and Czechoslovakia. These imports, in large part, are of 
 
.p.' 
 
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 :o snxjcwtisfli 
 
 Jttifoo Tetita nn 
 
FIGURE Z 
 
 United States Hops; Production, Salable Quantity, and Domestic Consumption from 1933-34 
 
 Production 
 
 < Salable 
 r> * ■* quantity 
 
 Domestic 
 consumption 
 
 J L 
 
 1935- 
 
 36 
 
 1940- 
 41 
 
 L 
 
 1945- 
 46 
 
 j l_ 
 
 1950- 
 51 
 
8. 
 
 special qualities and types. The quantity of hops imported reached a prewar 
 peak of 11 million pounds in 1936-37 when there was a very poor harvest in the 
 United States. Imports declined rapidly in the latter 1930' s and were negli- 
 gible during the war years. Since the end of the war, imports have varied 
 from 3.3 to 5.7 million pounds annually with no discernible trend up or down. 
 (See Figure 3.) 
 
 United States exports have exceeded United States imports of hops for most 
 years since 1933-3U. 3he only exception to this occurred from 1935-36 through 
 1938-39. Since that time there has been a net export balance with the range 
 varying from over 10 million pounds in 19U5-U6 and 1950-51 to a little over 
 1 million pounds in 1938-39. The smallest postwar net export balance occurred 
 in 19li7 -U8 and amounted to some 5J million pounds. (See Figure 3.) 
 
 The major outflow from United States hop stocks goes into the production of 
 fermented malt liquors, principally beer. Beer production has increased from 
 about hO million barrels in 1933-3U to about 90 million barrels in the late 
 forties and early fifties, but the quantity of hops used did not increase 
 proportionately. (See Figure U.) 
 
 During prohibition there had grown up a new generation which seemed to 
 prefer a milder beer. Where one barrel of beer in 193h-35 required, on the 
 average, 0.702 pounds of hops, in 1950-51 only 0.1;03 pounds were required. 
 Thus, in 1950-51* 36 million pounds of hops were used to produce almost 90 
 million barrels of beer; while in 193U-35> 32 million pounds were used to pro- 
 duce only I46 million barrels of beer. Beer production has declined about 3 
 million barrels during the last five years, while domestic hop consumption 
 has declined more than 6 million pounds and reached a postwar low of 36 million 
 pounds in 1950-51. 
 
 As a result of the variable inflows (domestic production and imports) and 
 outflow (domestic consumption and exports), United States stocks of hops on 
 hand September 1 have fluctuated from year to year. At the beginning of 
 1937-38, there was reached the prewar peak of 29 million pounds; those stocks 
 equaled 8I4. per cent of the amount consumed domestically that season. At the 
 beginning of 19U9-50, a postwar peak was reached at 30 million pounds, or 80 
 per cent of the amount consumed domestically in the same season. 
 
 The season average farm price has also fluctuated from year to year in 
 response to changes in the supply and demand situations. From a low -«£ 
 cents per pound in 1935-36, the average price increased irregularly to a 
 
1o :issa 
 
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FIGURE 3 
 
 United States Exports and Imports of Ho ps from 1955-54 
 15 — — — 
 
TO 
 
FIGURE 4 
 
 United States Production of Fermented Malt Liquors and Hops Used in Production 
 
 of Fermented Malt Liquors from 1933-34 
 
 / 
 
 Hops used in beer 
 
 Beer production 
 
 1933- 
 
 34 
 
 _1 
 
 1935- 
 36 
 
 1940- 
 41 
 
 1945- 
 
 4S 
 
 1950- 
 51 
 
11. 
 
 postwar peak of 68. h cents in 19U7-U8. thereafter, the price fell to 55.1* 
 cents in 19l*84i9 and then recovered to 62.1 cents in 1950-51. Figure 5 sum- 
 marizes the changes in stocks on hand September 1, season average farm prices, 
 and consumption since 1933-3U. 
 
 Hop Marketing Agreement 
 
 Hop growers, marketing a production the consumption of which is not 
 greatly affected by changes in its price (within the range of market experience) 
 and the production of which is variable from year to year, have been subject 
 to fairly wide price fluctuation. This fluctuation is tempered, however, by 
 the policy of the brewing companies to maintain fairly large stocks relative 
 to annual utilization, increasing them in years of low prices and decreasing 
 them in years of high prices. 
 
 Following World War II, production and supply of hops increased more 
 rapidly than did their consumption. This rapid increase in stocks initiated 
 in 19U8 a price drop for uncontracted hops from about 65 cents to about 30 
 cents per pound. Growers and handlers responded with an appeal to the U. S. 
 Department of Agriculture for a Marketing Agreement and Order to control the 
 quantity of hops which could be marketed. This was done to restore the farm 
 price to the neighborhood of its "parity" level. That goal was achieved and 
 the hop industry has operated under a marketing order since 19U9. Hops had 
 been marketed under federal marketing agreement and orders before World War II, 
 although they were terminated in 19hS» 
 
 Since 19U9, under the terms of the marketing order, the Secretary of Agri- 
 culture has designated the physical quantity of the current crop which can be 
 marketed. The administrative agency which assists the Secretary of Agriculture 
 is the Hop Control Board, composed of 9 grower members, 2 grower-dealer mem- 
 bers, 3 dealer members, and h brewer members. 
 
 The functions of the Hop Control Board are: 
 
 a. to determine the quantity of hops (including hops products) which can 
 be marketed from the crop produced in the current season. This "salable quan- 
 tity" is based on "consumptive demand." 
 
 b. to determine the total quantity of hops available for market from all 
 growers (including any hops unharvested) . 
 
 c. to determine the percentage ratio between the "salable quantity" and 
 "aggregate production." 
 
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FIGURE 5 
 
 United States Hops; Stocks, September 1, Consumption 
 and Season Average Farm Price from 1933-34 
 
 60 — —~ 
 
\ 
 
 G 
 
 ft- 
 
 si 
 
 g 1 
 o 
 
 O .A 
 
13. 
 
 d. to determine the "salable allotment" for each grower by applying the 
 "salable percentage" to each grower's "available quantity." 
 
 e. to issue "handling certificates" to cover each grower's "salable allot- 
 ment. " ' 
 
 "In July each year an estimate is made of the following factors: 
 
 (i) Brewers ' requirements : The brewer members of the Hop Control 
 Board give their estimate of the barrelage of beer likely to 
 be brewed in the following twelve months. This estimated 
 barrelage is then multiplied by the current average hopping 
 ratio to give the estimated weight of hops likely to be used 
 by brewers. To this is added the small weight of hops to be 
 used by distillers and yeast, malt-syrup and pharmaceutical 
 manufacturers, etc. 
 
 (ii) Probable exports of hops during the following twelve months. 
 
 (iii) Brewers carry-overl/ (stocks) of hops at the end of the follow- 
 ing twelve months. 
 
 The sum of the above three estimates is the consumptive de- 
 mand. 
 
 At the same time the Hop Control Board also estimates: 
 
 (1) Brewers' current carry-overl/ 0 f hops. 
 
 (2) Probable imports of hops during the following twelve months. 
 
 The sum of these two estimates is then deducted from the 
 consumptive demand and the result is the salable quantity. "2/ 
 
 The salable percentage cannot be determined precisely until final esti- 
 mates are made. Hence, handling certificates covering up to 90 per cent of 
 the salable allotment based on tentative estimates are issued on request, so 
 that most of the crop can be moved before the final estimates are made. The 
 preliminary estimates are useful also in that many growers only harvest about 
 that fraction of their production which they believe can be sold, and thus 
 save the harvesting costs on the unsalable portion of the crop. 
 
 At the present time, there is a diversion privilege in that the handling 
 certificates are negotiable. In recent years some of these have changed hands 
 at prices ranging from 10 to 50 cents per pound of certification rights. 
 There has been some dissatisfaction expressed about the application of this 
 privilege to unharvested hops and the Hop Control Board and the U. S. Hop 
 
 l/ For "Brewers' carry-over" should be substituted "total U. S. stocks." 
 
 2/ Quoted from: The Hop Industry , Anglo-American Council on Productivity, 
 New York, August, 1951 • 
 
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Ik. 
 
 Growers Association have proposed an amendment which would limit the diversion 
 privilege to harvested hops. It is felt that this might aid in restricting 
 individuals from growing hops to maturity with the primary purpose of obtain- 
 ing and selling certification rights. 
 
 The Hop Control Board provisions are not effective during any year in 
 which the "consumptive demand" is 93 per cent or more ef the available crop, 
 or if the estimated average price for the season exceeds the "parity" price. 
 Except for its control of salable quantity and some control over quality 
 (maximum leaf and stem content), the Hop Control Board does not directly enter 
 the marketing process. Most growers sell their product under contract to 
 dealers, usually up to a year in advance of harvest and frequently two or 
 three years in advance. The price is usually set by mutual agreement in the 
 contract so that the grower is protected from price declines but is also pre- 
 vented from gaining by price increases. Normally, cash advances are made to the 
 grower prior to harvest and delivery. 
 
 The salable quantity has been smaller than aggregate production every 
 year since 19U9. The amounts withheld (most unharvested) are shown in the 
 following table with average farm prices. 
 
 United States 
 Crop year Hops withheld farm price 
 
 million pounds cents per pound 
 
 19U9-50 11.8 55. k 
 
 1950- 51 8.3 57.0 
 
 1951- 52 15.3 62.1 
 
 Statistical Price Analysis 
 
 Before proceeding with a statistical discussion of the results of the 
 statistical price analysis, a brief review of some major characteristics of 
 the hop market is in order. 
 
 Hops have been generally sold on a basis where each grower negotiated 
 with purchasers and they finally arrived at acceptable terms. A large per- 
 centage of each crop has usually been contracted for by the dealers during 
 the preceding harvest period or periods, thus the price on this portion of 
 the crop has been set by contract before there is any knowledge of the size 
 of crop or the salable quantity to be certified by the Hop Control Board. On 
 the one hand, the grower has had some idea about his prospective cultural, 
 
iq ©ri-t ttiv 
 
 ;noxr;. 
 
 itnoo 
 
 soiicr 
 
 iranano-' 
 
 ij&tttioo 7--. iu Jiurriq tisnJ Xiaa ci9W07 
 ■it xlJcfBu^eil bciR tfeavieri 'io oonfivfcs ni 
 toamssi^B Xst/ii/m doe x^^ 6i;a,; « f 8i 
 * eX Svd eanXlotjb ooXt^ inoiJ beioscffiiq 
 ;6tii 31P ceonfivrp dERO ^VrTlfinHcK »s-'2£9"to»i 
 
 fioicraabofiq ij^figsiggB neifcf isXIans need 
 t mforis riB (bat^aviGfiao isom) bL&nrlfb*' 
 
 .asoiiq wie 
 
 J J X lit xii X ..tl x ^ ill W JL w c5Ci 
 
 , ?«3ooiq 
 
 KB dlff '.P'1\>I 
 
 acnO 
 
 one 
 
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 eiev.isaA so ill Led. 
 >riJ lo floiseu'oar.ib XsoXJ^id"! 
 
 ooiiq Xao. 
 
 -13G 
 
 :;orss tffi 
 
 brij lo e^bvlwon*' \fib si. o*jyiit an 
 cboS XotinoD qoH arid \d fcailXJ-JSD 
 
15. 
 
 picking, drying, and baling costs while, on the other hand, the dealer has had 
 some idea as to transportation costs and the price which might induce brewers 
 
 to add to their stocks. 
 
 At the time of negotiation, there was available to dealers and growers 
 estimates of stocks on hand September 1 or later and the salable quantity from 
 the current harvest. The Hop Control Board, in arriving at a decision as to 
 the salable quantity to recommend to the Secretary of Agriculture, made fore- 
 casts of beer consumption, hop exports, and hop inports. Using the forecast 
 of beer consumption and the most recent average hop ratio, a forecast of hop 
 consumption was also made. These estimates and forecasts then led to a fore- 
 cast of stocks on hand at the end of the current season and the beginning of 
 the next. Stocks on hand September 1, plus salable quantity, plus imports, 
 less exports, less consumption, gave stocks on hand the following September 1. 
 
 The average cost of hops per barrel of beer is currently in the neighbor- 
 hood of 25 cents. This is a very small element in the total cost of producing 
 beer. The hops ratio is chosen primarily with the selling characteristics of 
 the end product in mind, and not with reference to the high or low price of 
 hops. 
 
 Since hop movement from growers varies from year to year and only by 
 chance is equal to utilization for the same year, stocks on hand absorb the 
 surplus or cover the deficit. The inventory policy of brewers, then, is an 
 important determinant of the average hop price. In general, the larger their 
 inventory, the less eager are the brewers to add to it. However, inventory 
 policy itself is subject to change from time to time. If the Hop Control 
 Board is successful in stabilizing hop prices, brewers may feel freer about 
 carrying a large inventory. On the other hand, if there is widespread dis- 
 satisfaction with the results of the Hops Marketing Order to the extent that 
 its future existence is in doubt, the size of current acreage and production 
 would make dealers and brewers very hesitant about making forward contracts 
 or current purchases, anticipating the possibility of future purchases at 
 substantially lower prices. During periods of international tension, brewers 
 may desire to keep larger stocks on hand than they would if no immediate 
 prospect of conflict were present. 
 
 To summarize, growers and dealers negotiate prices on a large fraction 
 of a given crop up to a year or longer in advance of harvest. The negotiated 
 prices cannot be significantly lower than anticipated direct cultural and 
 
■ ■ ' 
 
 '■ 
 
 ■ 
 
 ■ 
 
16. 
 
 harvesting costs or some growers will allow their yards to remain idle the 
 following season and incur only the bare minimum costs required to keep the 
 yard productive. The prices, on the other hand, cannot be so high that dealers 
 see no chance to induce the brewers to add to their stocks at a price profit- 
 able to the dealers. Thus, a forecast of the size of brewers' stocks and 
 inventory policies is useful to the dealer in his price negotiation. 
 
 After reviewing some of the more important marketing practices, we may 
 now turn to consideration of how the behavior of prices is related to various 
 market determinants. 
 
 It may first be noted that the statistical price analysis is that part 
 of this report which is of prime interest to the hop marketing industry. The 
 need for such a statistical price analysis prompted the request which re- 
 sulted in this report. Yet, the statistical price analysis, by itself, is 
 much less meaningful than when it is interpreted and used in a particular 
 setting such as operation of the Hop Marketing Order. 
 
 For use in administration of the Hop Marketing Order, the industry and/or 
 its representatives are interested in suggestions for appropriate lines of 
 action and the potential results of such action. This applies particularly 
 to the price effects which may be expected from manipulation of the supply 
 and inventory position of the industry. Thus, the statistical price analysis 
 may be used in conjunction with other tools to obtain an indication of the 
 price effects likely to result from alternative lines of action by the industry. 
 It must be emphasized, though, that the statistical price analysis does not 
 replace the need for business judgment. Used properly, the analysis can 
 aid in arriving at sound decisions, but it cannot by itself dictate decisions. 
 
 Before proceeding further with a review of the statistical analysis of 
 the price for United States hops, it is necessary to set forth certain 
 characteristics of the data analyzed. From a statistical viewpoint, it is 
 usually desirable to have a fairly long series of observations with which to 
 work, taken from a period which is fairly homogeneous, rfith respect to hops, 
 estimates of prices, production, consumption, and stocks were available for a 
 period beginning as far back as 1920-21, but the situation in the twenties and 
 early thirties was radically different from the situation following the resump- 
 tion, in 1933, of the production of beer stronger than one-half per cent of 
 alcoholic content. Available statistical techniques are not well suited to 
 account for the type of change that occurred in 1933 when prohibition was re- 
 pealed. 
 
tsubrr 
 
 ■ 
 
 i 
 
 . ■ 
 
 - 
 
17. 
 
 During the years of World War II, government programs such as price con- 
 trol and rationing and the shortage of durable consumer goods tended to distort 
 the peacetime "normal" relationships between economic variables. On this ac- 
 count, it is often the practice to exclude the data of the war years from 
 statistical analyses. However, in this case, if the years 19kl~k2 to 19U5-U6 
 were excluded, there would remain only the observations from thirteen seasons, 
 an insufficient number to allow reliable estimates. Also, from the viewpoint 
 of hop marketing, it was believed that the situation was less "abnormal" than 
 with many other goods. Thus, although with some misgivings, it was decided 
 to use the data from the entire period 1933-3U to 1950-51 with the thought 
 that, in this particular case, the distortion of the war period would have 
 only a minor effect on the statistical results ^ 
 
 With minor exceptions, the entire period studied has been one of increas- 
 ing prices. It is a commonplace occurrence that during a period of rising 
 prices, especially if this is better foreseen by dealers and brewers, it is 
 good business policy to carry large inventories and to make forward contracts 
 at prices substantially lower than prices will be at the time of delivery. 
 Consequently, it must be remembered that the reverse situation becomes true 
 if prices are expected to fall drastically. Even if price stability is the 
 expectation held by dealers and brewers, over a period of several years 
 brewers might well decide that a smaller inventory is desired than would be 
 the case if prices were expected to rise. 
 
 The objective of the statistical analysis was to find an explanation 
 of the determination of United States season average farm price for hopsj 
 such an explanation, to be usable, should be fairly simple but still accept- 
 able from both the statistical and economic points of view. Many of the 
 considerations leading to the particular explanations chosen have already 
 been discussed. Based on economic and statistical considerations, summa- 
 rized at the beginning of this section, and on other statistical results 
 summarized in Table 6, the principal determinants of the United States season 
 average farm price during the period covered have been the size of stocks on 
 
 1/ Several analyses were made of data from the period 1923-2U to 1950-51, 
 excluding the war years. Some of these results are given in Table 6, (equa- 
 tion IV a). It is believed, however, that the analyses based on the period 
 1933-3U to 1950-51 including the war years, give superior results from the 
 view of reflecting current institutions and relationships. 
 
NM Qc 
 
18. 
 
 hand September 1 and total United States personal consumption expenditures. 
 The size of stocks on hand September 1 reflects the strength of the hop 
 inventory position of brewers, and incorporates their expectations as to de- 
 sirability of carrying larger or smaller, stocks. Total United States personal 
 consumption expenditures reflect the amount of money consumers have spent for 
 goods and services, and thus is related to the amount of disposable income 
 available to consumers and their views as to how much of that income should be 
 expended. Personal consumption expenditures, thus, are to a great extent cor- 
 related with general business conditions and the level of national employment 
 and income. 
 
 The statistical analysis, then, summarizes the average relationships which 
 have existed between the United States season average farm price, the size of 
 stocks on hand September 1, and United States personal consumption expendi- 
 tures during the period 1933-3U through 1950-51. 
 
 The United States season average farm price is estimated by the United 
 States Department of Agriculture and represents the price which, when multi- 
 plied by the quantity of hops sold by growers, would yield the total gross 
 money returns growers received. Thus, the farm price is influenced to a 
 large extent by the prices determined under forward contract but is also 
 influenced by the prices paid for uncontracted hops. 
 
 The size of stocks on hand September 1 is estimated and reported by the 
 Hop Market Review issued by the Federal-State Market News Service (San Fran- 
 cisco, California) and includes stocks held by growers, dealers, and brewers. 
 
 United States personal consumption expenditures are estimated by the 
 Department of Commerce and reported monthly in its Survey of Current Business. 
 
 Stocks on hand September 1 may be expressed in two different ways — in 
 millions of pounds or as a ratio between the quantity on hand and the quantity 
 consumed during the following season. For example, the stock on hand September 
 1, 1950 was 23.7 million pounds. Consumption during 1950-51 was 35*8 million 
 pounds. Thus, the stock on hand September 1 could also be expressed as 66.3 
 per cent of the consumption in the following season. 
 
 Both methods of measuring the stock on hand were used and the result of 
 each analysis is given below. These two sets of results should not be viewed 
 as separate "explanations" of the price determination; rather, they are two 
 slightly different ways of expressing the same economic relationships. 
 
 The average relationships of United States season average farm price to 
 stocks on hand September 1 and United States personal consumption expenditures 
 may be summarized as follows: 
 
.31 
 
 Dsnossacr zstfGiE bsJxftU IrfoT 
 
 IE . ESOXVl! 
 
 li.tsn "to Xsvsl 
 
 -iiqnuianoo Isnagi 
 
 .X?-C; 
 
 XaU br 
 
 no ^nota 
 
 ibcmmq'j-' brt£;- no eaoi 
 
 Wsi ;r.<< 
 
 [iincsi-iq 3&*sa«J batinU bxis I is>d£ 
 
 : ewoXXo'i 
 
19. 
 
 (1) A change of 1 million pounds of stocks on hand September 1, con- 
 sidered by itself, was on the average accompanied by a change in the opposite 
 direction of about 1 cent per pound in the United States season average farm 
 price of hops of all marketed grades (shown in Figure 6a). 
 
 (2) An increase of 10 per cent in United States personal consumption 
 expenditures, considered by itself, was on the average accompanied by an 
 increase of about 10 cents per pound in the United States season average farm 
 price of hops of all marketed grades (shown in Figure 6b), 
 
 The relations described in (1) and (2), above, are included in an equation 
 which measures the relation of the price to the stocks and national expenditures; 
 the equation reflects the price as a resultant of the interaction of stocks and 
 national expenditures. In other terms, changes or variations in stocks and/or 
 national expenditures are reflected by associated changes in the farm price. 
 
 The derived statistical equation (id in Table 6) can be used to calculate 
 an estimated price for each year. Figure 7 compares such an estimated price, 
 based on the statistical equation, with the actual price for each year. 
 
 We may turn to the alternative formulation of the statistical price 
 analysis. Rather than considering September 1 absolute stocks as such, we 
 now consider relative stocks or the September 1 stocks as a percentage of the 
 hop consumption in the following year. Thus, the price change is considered to 
 be determined by the combined changes in relative stocks and national consump- 
 tion expenditures. 
 
 The average relationships of the United States season average farm price 
 to stocks on hand September 1, expressed as a per cent of consumption in the 
 following season, and United States personal consumption expenditures may be 
 summarized as follows: 
 
 (1) A change of 10 percentage points in the relative stocks on hand 
 September 1, considered by itself, was on the average accompanied by a change 
 in the opposite direction of about 3.5 cents per pound for the United States 
 season average farm price for hops of all marketed grades (Figure 8a). 
 
 (2) An increase of 10 per cent in United States personal consumption 
 expenditures, considered by itself, was on the average accompanied by an 
 increase of about 10 cents per pound for the United States season average farm 
 price of hops of all marketed grades (Figure 8b). 
 
 Estimated prices based on this formulation are compared to actual prices 
 in Figure 9. It should be noted that the degree of correspondence between 
 
IS", 
 
 U? fit"'" 
 
(saeiiop jo suoxTjxq) saan^pusdxa^uox^duinsuog^iBuosja^sa^^s Pg™n 20 « 
 
 (spunod jo suotttxui) I jaqura^dag 'ptreH uo s^oo^g i^J. 
 Q£ $Z OZ $1 01 S 
 
 -01 
 
 02 
 
 oc m 
 
 g 
 
 d- 
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 on w 
 I 
 
 CD 
 tfl 
 
 W 
 
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 ! 
 
 CD 
 
 09 $ 
 
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 P3 
 
 OL 8 
 
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 CD 
 
 (o siqei <pi uoT^Enbg uo paseg) ssjn^xpuadxg uox-idumsuoo xeuosjaj ptre (x jaqms^dss) 
 s^oois sa^eqs p&^xun o% sdoH jo aoxj<j uijb^ sa^ns pa^xun jo suoxq.ex.aH Teoxq.sxmg q.aN 
 
 9 annoia 
 
FIGURE 7 
 
 United States Hops; Season Average Farm Prices, Actual and Estimated from 1C35-34 
 (Estimated Prices Based on Equation Id, Table 6) 
 
 34 36 4i 46 51 
 
FIGURE 8 
 
 Net Statistical Relations of United States Farm Price of Hops to United 
 States Relative Stocks (September 1) and Personal Consumption Expendi- 
 tures (Based on Equation He, Table 6) 
 
 •a 
 
 o 
 a, 
 
 u 
 
 p< 
 
 w 
 -p 
 c 
 
 <D 
 O 
 
 O 
 O 
 •rl 
 U 
 
 «n 
 
 Q) 
 &D 
 
 § 
 
 03 
 
 <3 
 0) 
 
 to 
 w 
 
 <D 
 -P 
 
 cd 
 -P 
 
 UJ 
 
 0 
 ■P 
 
 I 
 
 X! 
 
 10 20 30 Ho - 50 "60 70 
 
 X fi ; United States Relative Stocks, September 1 (per cent) 
 
 80 ' 90 
 
 1*0 60 80 100 120 TkO 160 180 
 
 'ZZ X 5> United States Personal Consumption Expenditures (billions of dollars) 
 
FIGURE 9 
 
 United States Hops; Season Average Farm Prices, Actual and Estimated from 1933-34 
 (Estimated Prices Based on Equation He, Table 6) 
 
 70 
 
 60 
 
 50 
 
 T3 
 
 O 
 
 ft 40 
 u 
 
 ft 
 
 CO 
 
 -p 
 
 © 
 o 
 
 30 
 
 20 
 
 10 
 
 1933 
 34 
 
 1935- 
 
 36 
 
 1940- 
 41 
 
 1945- 
 46 
 
 /Estimated 
 
 Actual 
 
 1950- 
 51 
 
2U. 
 
 actual and estimated price is not much different in the second analysis compared 
 with the first. Another way of putting the matter is to say, as we have ear- 
 lier, that the two analyses are only different ways of looking at the same 
 thing. Either equation may be used in the work of the Hop Marketing Board. 
 
 It must be emphasized here that the statistical relations of price to 
 stocks and national personal consumption expenditures, summarized above, are 
 average relationships; they may not apply to any particular season. To the 
 extent that average relationships which have tended to prevail in the past 
 continue to hold, the relationships may be helpful in analyzing alternative 
 marketing potentialities. Yet, always it must be recognized that the statisti- 
 cal relations and equations are tools for use in market analysis, and not 
 mechanical forecasters. Used with judgment, the tools can be helpful; but 
 they are not a substitute for business judgment. These characteristics of 
 the statistical relations and equations must be borne in mind when they are 
 considered and used; also, should be borne in mind the fact that new and uncom- 
 mon situations may arise in any season, calling for judicious and appropriate 
 modification of the statistical relations as they are used. 
 
 We may now illustrate the manner in which the members of the Hop Control 
 Board might use the results of this statistical price analysis. For this 
 purpose we shall use the analysis with absolute stocks, and we shall consider 
 how the Board might use the analysis to help arrive at its decision as to the 
 salable quantity to be authorized for the following season. Later, we shall 
 consider the question as to what the average farm prices would likely have 
 been had there been no diversion of hops the past several seasons. 
 
 The objective of the Hop Control Board, operating under the Hop Marketing 
 Agreement and Marketing Orders from the Secretary of Agriculture, is to main- 
 tain the price of hops at specified levels, generally approaching the "parity" 
 level. The "parity" prices reported for hops in Agricultural Prices for July, 
 
 and January, 1952 were, respectively, 7U.it cents per pound and 7U.6 cents 
 per pound. United States season average far* price for 1950-51 was 62.1 cents 
 per pound, while current reports in the Hop Market News indicate that the 
 1951-52 average price may be even lower. 
 
 The Hop Control Board can affect the average price of hops by its recom- 
 mendation in July to the Secretary of Agriculture that he permit only a certain 
 amount from the following harvest to be salable. It is obvious, however, that 
 this decision can have little effect on the price paid for the hops harvested 
 
25. 
 
 and baled in the following several months if most of this harvest has already- 
 been contracted for at a previously set price. However, there is a delayed 
 effect since the quantity moving to brewers following this harvest will con- 
 trol to a large extent the stocks that brewers and others carry over at the 
 end of the season into the beginning of the next. We have indicated that 
 stocks on hand at the end of the season can be projected by adding to current 
 stocks September 1 the current salable quantity and estimated imports and then 
 subtracting estimated consumption and exports. This year-end stock position 
 enters, in an important way, in the determination of the season average price 
 for that season; for with this projected stock position and national personal 
 consumption expenditures, the season average farm price may be estimated by 
 the statistical equation noted above. 
 
 There are at least two approaches that the members of the Hop Control 
 Board can take to this problem of raising marketing price to some particular 
 level such as, for example, "parity." They can compare the most recent season 
 average farm price to its relevant parity level. If the farm price is signifi- 
 cantly lower than "parity," they can include in their estimate of "consumptive 
 demand" a quantity for stocks on hand at the end of the next season which is 
 smaller than current stocks. 
 
 Such procedure would be followed with the thought in mind that, on the 
 average, a decrease in stocks of 1 million pounds has been accompanied by a 
 net increase in season average farm price of about 1 cent per pound. Thus, 
 alternative projected stock levels may be considered in terms of their effect 
 on the farm price. 
 
 The Hop Marketing Board may also take a slightly different approach. It 
 might select as a goal for the following year a particular price, then set the 
 current salable quantity at that level which, in conjunction with anticipated 
 United States personal consumption expenditures, would lead to the desired 
 price. This procedure could also utilize the statistical price analysis 
 equations considered earlier. 
 
 Market experience indicates that variation in the farm price for hops is 
 highly correlated with associated variation in September 1 stocks and national 
 business conditions as reflected by personal consumption expenditures. This 
 latter factor may be estimated for short periods ahead; and the other factor — 
 September 1 stocks — can be influenced by the Board. Thus, the Hop Marketing 
 Board has the means for going a long way toward affecting the farm price for 
 
■ 
 
 itstiB 
 
26. 
 
 hops; and with statistical equations as summarized here, the Board may- 
 evaluate the price effects of various alternative levels of supply control 
 from no restrictions on marketing to that necessary to attain some specified 
 price. 
 
 Concluding Comments 
 
 The evidence summarized in the preceding sections suggests that the most 
 important price-determining variable subject to control, even though only in- 
 directly, by the Hop Control Board is the stock of hops on hand September 1. 
 The operation of the Hop Control Board requires that an estimate be made of 
 "consumptive demand" for the following season. This includes stocks to be on 
 hand September 1, consumption by breweries and others, and exports. The Hop 
 Control Board has no direct influence on consumption or exports, but can de- 
 cide what level of stocks it believes would be desirable. The sum of the cur- 
 rent stocks and estimated imports would then be deducted from the consumptive 
 demand to give the current salable quantity recommended by the Hop Control 
 Board to the Secretary of Agriculture. It should be clear that the primary 
 effect of the Board's control of the salable quantity for one harvest will be 
 on the price received for the following harvest; this is especially so if the 
 custom of forward-price contracts is continued. 
 
 The question is continually raised, what would the season average farm 
 price have been the past few years if there had been no control of the salable 
 quantity? Of course, there is no conclusive answer possible to this question, 
 but the statistical price analysis above does lend some light on the subject. 
 United States average farm price would likely have been lower without the con- 
 trol than it actually was with the control program. A lower price might have 
 caused a slight increase in domestic consumption and perhaps a greater increase 
 in exports. The lower price probably would have reduced somewhat the actual 
 amount produced and/or harvested. 
 
 For the sake of simplification, however, assume that the same amount would 
 have been produced, that all of it would have been harvested and sold, and that 
 consumption, exports, and imports would have remained the same. These assump- 
 tions would concentrate the effect of the entire change on the single variable, 
 stocks on hand September 1. The amount withheld in 19^9-50 would then be added 
 to the stocks on hand September 1, 1950 to give a total of 35.5 instead of 
 23.7 million pounds. This would have been almost as great as total consumption 
 
fcisv -2© alalia &oti-i.q 9xii 
 
 ertf Xsrfj. e-t^a^uf enoi-toas goibsoaiq &xtt nx IwsXu 
 £Xn'> djurodi navp , fciinoo oJ: Josr^a sXderisv grain. 
 
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 no *o o-J sj-.cjQ.'fs s^bx/X-nx sidT .ao^r.aa an 
 
 qoH onT .«"0"xoqx9 fans t ( 
 
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 : ; . . 
 
27. 
 
 for 191*9-50 and would have been the largest stock ever recorded. If, in addi- 
 tion, the diversion in 1950-51 had not taken place, the stock on hand September 
 1, 1951 would have been U6.6 million pounds, a figure much larger than con- 
 sumption for 1951-52. 
 
 Under these conditions, the estimated price for 1950-51 would have been 
 about 56 cents instead of 69.6 cents per pound and for 1951-52 it would have 
 been about U8 cents per pound. The actual price for 1950-51 was about 8 cents 
 below the estimated price and it is entirely conceivable that the 1951-52 
 price could have fallen as low as hQ cents per pound had there been no diver- 
 sion in the preceding years. Of course, a price at this level would auto- 
 matically have led to considerable diversion since it is below cultural costs 
 per pound for some producers. 
 
 One of the goals of the hop control program and the yardstick by which 
 its success or failure (in a legislative sense) is often measured is the 
 achievement of "parity" price for the hop growers. The program, if not 
 always successful in achieving "parity" price, has at least made the price 
 higher in some seasons than it would have been without the control program. 
 However, there is evidence that, at the same time, the higher prices have 
 induced some growers to expand acreage and production and have induced new 
 growers who were previously producing other crops to begin producing hops. 
 This has led to an expansion of production which, in combination with a 
 static or decreasing consumption, has resulted in continuation of a problem 
 for whose solution the control program was originally introduced. 
 
 Because of erratic yields, the brewers and others desire to carry fairly 
 substantial stocks. For those years when yields are extremely large, some 
 control over salable quantity may be desirable to avoid superabundant stocks 
 forcing down the price erratically for the following seasons. These seasons 
 where control of salable quantity is required, however, should be the exception 
 rather than the rule. 
 
' £0b£ Rl »*+ ^biooat tavto Aooj?. srfct tread uv&ri bin o*r fcos' 0£»^ r 'J 
 
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 t «S"i^oiq t'rfT ,813 wot? qori arii tcl eoiiq "ytiiGq 1 ' lo tc&msvsifo* 
 yoinq 6rtj 9b£«t jep&J: aeri" t soi*rq •tyi'icq* gaivsi'rfor ni Xiilaa^oona a^swXi 
 .iiwi^o-jq XoTtaoo onVt tworiiiw no sd overt bXi/Ow Ji nr. fit anoas9a 9mo8 ni trarfgit 
 svsfi aeoi-iq io«sirf ad^T «aini;f oaswj sxtt *jb ^crf* aonabiva si aie/tt ^.vvswo'r 
 w&n baomVii sv.sri fan- aoiJ-ooboiq bn>~ a^sa-iOB bnsqxs cvt eiawoig amoc bf»onbnj 
 
 b r£iw rtoitanidmoo ni t rfoidw noiiocrboiq lo nciaru-.qra re j&gX -earf eiffl 
 toiaoiq £ lo nibtGirnifaroo nl b- jXyaai zrd .noiocmuenoo aniac^&ab to nUMt 
 
 t'/noa ( sg*T£i •^i&mtsrrirxe BbXsx^; ner'w asot>Y- t^aortJ 10*5 « cTtoote XfiiRjpJeowi 
 saocjs Jnr.bni/'di?T^qi'n Sxovr sXdeiiaeb ^o r ^sm Y,&i3iieur)-^id^lF3 ihvo itytiaoi 
 snoaeoe searfT .moacoa ^ni wo XXol »tW «iel ^TXsoiVfivx,-. >oiiq edi avob yntettl 
 :3-q'yoxH &d bXoorie t is?9wori t bi'iii'p6-i ai Y^i^nsbp sXdeina- 5*5 XonJ-noo siyfft 
 
 .9Xin t.rW nstit ^t&fW'p': 
 
28, 
 
 TABLE 1 
 
 Acreage, Production and Yield of United States Hops from 1933-3b 
 
 Season 
 
 Acreage 
 harvested 
 
 1933-3U 
 193U-35 
 
 1935- 36 
 
 1936- 37 
 
 1937- 38 
 
 1938- 39 
 
 1939- bO 
 19b0-bl 
 19U1-U2 
 19b2-b3 
 19b3-bb 
 19bb-b5 
 19b5-b6 
 
 19U6-U7 
 19b7-b8 
 19U8-U9 
 19U9-50 
 
 1950- 51 
 
 1951- 52 
 
 1 
 
 acres 
 
 30,300 
 37,100 
 39.100 
 31,000 
 3b, 300 
 31,500 
 31,000 
 32,800 
 3b, 800 
 3b, 600 
 32,200 
 37,190 
 bo,9bo 
 bo,9bo 
 39,8UO 
 b0,b20 
 37,550 
 38,700 
 
 m, 200 
 
 Production 
 
 1,000 
 
 pounds 
 
 liO,285 
 b3,93b 
 U6,U33 
 25,281 
 b3,955 
 35,288 
 37,b62 
 U2,8ii6 
 UO,380 
 35,153 
 b2,bb8 
 U8,lU6 
 57,6lb 
 53,751 
 50,786 
 50,b6b 
 50,796 
 58,351 
 63,239 
 
 Yield 
 
 pounds 
 per acre 
 
 1,330 
 
 1,18b 
 1,188 
 816 
 1,281 
 1,120 
 1,208 
 1,306 
 1,160 
 1,016 
 1,318 
 1,295 
 1,U07 
 1,313 
 1,275 
 l,2b8 
 1,353 
 1,508 
 1,535 
 
 Index e 
 
 "Acreage 
 
 — i — 
 
 90.8 
 111.1 
 117.1 
 92.9 
 102.8 
 
 9b.b 
 92.9 
 98.3 
 10b. 3 
 103.7 
 96.5 
 lll.b 
 122.6 
 122.6 
 
 119 .b 
 121.1 
 112.5 
 115.9 
 123.U 
 
 Pro auction 
 
 106.9 
 116.6 
 123.2 
 67.1 
 116.6 
 93.6 
 99. b 
 113.7 
 107.2 
 
 93.3 
 112.6 
 127.8 
 152.9 
 lb2.6 
 13b. 8 
 133.9 
 13b. 8 
 l5b.8 
 167.8 
 
 11513" 
 
 118. b 
 105. b 
 105.8 
 
 72.7 
 llb.l 
 
 99.7 
 107.6 
 116.3 
 103.3 
 
 90.5 
 117 .b 
 115.3 
 125.3 
 116.9 
 113.5 
 111.1 
 120.5 
 13b. 3 
 136.7 
 
 a/ Includes quantities harvested and salable, harvested and not salable due to 
 marketing agreement, unharvested due to economic reasons. Quantities not 
 harvested and/or not salable are estimated as: 
 
 Season 
 
 1935- 36 
 
 1936- 37 
 
 1937- 38 
 
 1938- 39 
 
 1939- bO 
 
 1,000 pounds 
 b,85l 
 
 Season 1,000 pounds 
 
 19b9-50 
 
 1950- 51 
 
 1951- 52 
 
 11,796 
 8,351 
 16,739 
 
 3,890 
 2,501 
 2,22b 
 
 b/ Averages for 1935-36 through 1939-bO equal 100. Averages for this period 
 ■mere: Acreage, 33,380 acres; production, 37,68b pounds] yield, 1,123 
 pounds per acre. 
 
 Source s * 
 
 1950-51 ana 1951-52: Federal State Market News Service, Hop Market Re- 
 view, San Francisco, November 15, 1951. 
 
 19bb-b5 through 19b9-50: U.S. Bureau of Agricultural Economics, Revised 
 Estimates, 19bb-19b9, Statistical Bulletin No. 108, Washington, D„C., March, 1952. 
 
 1939-bO through 19b3-bb: U.S. Bureau of Agricultural Economics, Field and 
 Seed Crops, Acreage, Yield and Production, Revisea Estimates, 1939-19bb, 
 Washington, B.C., April, 19b7. 
 
 1933-3b through 1938-39: U.S. Bureau of Agricultural Economics, Hops: 
 Revised Estimates of Acreage, Yi el a, and Production,. 19l5-19bl, Washington, 
 D.C., October, 19b3. 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 : 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 JOTT 
 
 ls#p3 Of 
 
 u 
 
 ( • 
 
 , no. j : 
 
29. 
 
 TABLE 2 
 
 United States Hops, Production, Salable Quantity, ana Domestic Consumption 
 and United States Hops Imports. from 1933-3U. 
 
 Season^/ 
 
 Production 
 
 Salable 
 quantity 
 
 Domestic 
 consumption 
 
 Exports 
 
 Imports 
 
 
 1 
 
 2 
 
 3 
 
 h 
 
 5 
 
 
 1.000 pounds 
 
 1933-3U 
 193U-35 
 
 1935- 36 
 
 1936- 37 
 
 1937- 38 
 
 1938- 39 
 
 1939- 1*0 
 xyuu— n± 
 19U1-U2 
 19U2-U3 
 19U3-UU 
 19UU-U5 
 19U5-146 
 19U6-U7 
 19U7-U8 
 19U8-U9 
 19U9-50 
 
 1950- 51 
 
 1951- 52 
 
 U0,285 
 U3,93U 
 U6,U33 
 25,281 
 ii3,955 
 35,288 
 37,U62 
 U2,8U6 
 1*0,380 
 
 35,153 
 U2,UU8 
 U8,lit6 
 57,61U 
 53,751 
 50,786 
 
 50,796 
 58,351 
 63,239 
 
 UO,285 
 U3,93U 
 
 m,582 
 25,281 
 
 U0,065 
 32,787 
 35,238 
 U2,8U6 
 Uo,380 
 
 35,153 
 U2,UU8 
 U8,lU6 
 57,61U 
 53,751 
 50,786 
 50,i*6U 
 39,000 
 50,000 
 1*6,500 
 
 26,235 
 31,773 
 33,316 
 37,005 
 3U,875 
 32,7U6 
 31,927 
 31,155 
 3ii,5l2 
 3ii,833 
 36,515 
 37,239 
 36,83U 
 1*2,281 
 hi, 158 
 39,701* 
 
 37 , 325 
 35,750 
 
 7,700 
 6,772 
 6,18)4 
 
 2,719 
 
 5,781i 
 ii,l83 
 7,991 
 10,030 
 
 9,U59 
 
 8,673 
 
 6,311 
 
 8,685 
 11*, 288 
 12,261 
 11,081 
 12,376 
 13,738 
 1U,276 
 
 J ! 
 
 5,761 
 5,257 
 6,535 
 11, Udo 
 
 9,189 
 8,053 
 6,811* 
 3,736 
 15U 
 ill 
 
 3,859 
 i*,126 
 5,581 
 3,900 
 5,683 
 3,321 
 
 a/ All figures for season September through August except column 
 (3) which is July through June for years 1933-3U through 19U5- 
 I46. 
 
 Sources: Cols. 1 and 2 : See Table . Cols. 3, U, 5: 1933- 
 3U through 191*5-1*6, U. S. bureau of Agricultural Economics, 
 Outlook for Hops From the Pacific Coast, Table 10, Washington, 
 D. C, November, 19 1*8. Since 191*6-1*7, Federal-State Market 
 News Service, Hop Market Review, San Francisco, California, 
 Nov. 15, 1951. 
 
2£M 
 j 
 
30. 
 
 TABLE 3 
 
 United States Hops, Stocks, September 1, Conscription 
 and Season Average Farm Price, 1933-3U through 1950-51. 
 
 Season 
 
 1933-31; 
 193U-35 
 
 1935- 36 
 
 1936- 37 
 
 1937- 38 
 
 1938- 39 
 
 1939- UO 
 19I4O-U 
 19M-U2 
 19U2-U3 
 19U3-UU 
 19UU-U5 
 19U5-U6 
 
 19U6-U7 
 19U7-U8 
 19U8-U9 
 19U9-50 
 
 1950- 51 
 
 1951- 52 
 
 Stocks 
 September 1 
 
 Domestic 
 consumption 
 
 1,000 pounds 
 
 1,789 
 8,658 
 16,061 
 15,825 
 29,29U 
 25,173 
 27,069 
 22,121; 
 20,008 
 18,892 
 
 10,735 
 10,110 
 10,389 
 16, 266 
 23,770 
 28,250 
 29,9UO 
 23,700 
 26,500 
 
 26,235 
 31,773 
 33,316 
 37,005 
 3U,875 
 32,7U6 
 
 31,927 
 31,155 
 31;, 512 
 
 3U,833 
 36,515 
 37,239 
 36,83U 
 U2,28l 
 1*1,158 
 39,701; 
 37,325 
 35,750 
 
 Stocks as 
 per cent of 
 consumption 
 
 per cent 
 
 6.8 
 27.2 
 U8.2 
 U2.8 
 81;. 0 
 76.9 
 81;. 8 
 71.0 
 58.0 
 51;. 2 
 29. h 
 27.1 
 28.2 
 
 38.5 
 57.8 
 71.2 
 80.2 
 66.3 
 
 Season 
 average 
 farm price 
 
 T 
 
 cents per 
 pound 
 
 30.1; 
 ih.S 
 9.8 
 
 27. h 
 16.2 
 
 19.7 
 2U.5 
 26.8 
 31.9 
 U5.2 
 62.2 
 65.3 
 6U.9 
 62.7 
 68. U 
 55. U 
 57.0 
 62.1 
 
 Sources : 
 
 Cols. 1 and 2: From 1933-3U through 19U5-U6, U. S. Bureau of 
 Agricultural Economics, Outlook for Hops from the Pacific Coast, 
 Washington, D. C, November, 19U8, Table 10. From 19U6-U7 to 
 1951-52, Federal-State Market News Service, Hop Market Review, 
 San Francisco, November 15, 1951. 
 
 Col. 3: Col. 1 divided by Col. 2 times 100. 
 
 Col. it: From 1933-31; through 19U7-U8, U. S. Production and 
 Marketing Administration, Statistics of ^he United States Hop 
 Industry, Table IX, Washington, D. C, November 29, 19U8. From 
 19U8-U9 through 1950-51, U. S. Bureau of Agricultural Economics, 
 Season Average Prices and Value of Production, Principal Crops, 
 by States, 19H8 and 19U9, 19U9 and 1950, 1950 and 1951. Washing- 
 ton, D. C. 
 
t crs. 
 
 b.iii 
 
 ,001 
 
TABLE U 
 
 United States Production of Fermented Malt Liquors, 
 Hops used in Production of Fermented Malt Liquors and 
 Hopping Rate by Crop Years from 1933-3U 
 
 Crop year 
 beginning 
 September 
 
 Production of 
 fermented 
 malt liquors 
 
 1933-3*4 
 193U-35 
 
 1935- 36 
 
 1936- 37 
 
 1937- 38 
 
 1938- 39 
 
 1939- 1+0 
 191+0-1+1 
 19fii-U2 
 19U2-1+3 
 191+3-U+ 
 19U1+-U5 
 19U5-U6 
 
 19U6-U7 
 191+7-1+8 
 191+3-1+9 
 19U9-50 
 1950-51 
 
 1,000 
 barrels 
 
 1+0,1+95 
 1+5,873 
 53,872 
 58,U58 
 5U,55l 
 5a,U75 
 54,790 
 56,835 
 614,980 
 71,358 
 83,854 
 86,494 
 82,869 
 91,530 
 91,081^ 
 90,628 
 88,515 
 88,698 
 
 Hop used in / 
 production of-' 
 fermented malt 
 liquors 
 
 1,000 
 pounds 
 
 28,836 
 31,658 
 34,516 
 36,608 
 33,793 
 32,485 
 31,670 
 
 31,831 
 34,806 
 
 34,024 
 36,983 
 37,240 
 36,834 
 42,395 
 40,927 
 39,789 
 37,437 
 35,987 
 
 Hopping 
 rate 
 
 pounds per 
 barrel 
 
 0.712 
 0.690 
 0.641 
 0.626 
 0.619 
 0.596 
 0.578 
 0.560 
 0.536 
 O.U77 
 0.441 
 0.430 
 O.liUU 
 0.1+63 
 0.449 
 0.1+39 
 0.423 
 0.U06 
 
 a/ Includes small amounts of hop extract. 
 Sources: 
 
 1933-3H through 191+6-1+7: U. S. Proauction ana Marketing 
 Administration, Statistics of the United States Hop 
 Industry, Table VIII, November, 191+8. 
 
 1947-48 through 1950-51: Col. (l), U. S. Bureau of 
 Internal Revenue, Statistics on fermented Malt Liquors 
 and Cereal Beverages, 1948, 191+9, 1950, 1951, Washington, 
 D. C; Col. (2) U. S. Bureau of Internal Revenue, Com- 
 parative Statistics on Domestic Fermented Malt Liquors, 
 monthly issues, 1947, 191+8, 191+9, 1950, 1951; Col. (3): 
 Col. (2) divided by Col. (1). Washington, D. C. 
 
sniqqcH 
 
 K 
 
TABLE 5 
 
 Basic Data Used in Regression Analyses. 
 
 Season 
 
 Season 
 avei age 
 
 farm 
 price 
 
 cents 
 
 per 
 pound 
 
 1923- 24 
 
 1924- 25 
 
 1925- 26 
 
 1926- 27 
 
 1927- 28 
 
 1928- 29 
 
 1929- 30 
 
 1930- 31 
 
 1931- 32 
 
 1932- 33 
 
 1933- 34 
 
 1934- 35 
 
 1935- 36 
 
 1936- 37 
 
 1937- 38 
 
 1938- 39 
 
 1939- 40 
 
 1940- 41 
 
 1941- 4£ 
 
 1942- 43 
 
 1943- 44 
 
 1944- 45 
 
 7 
 
 18.8 
 10.3 
 21.8 
 23.1 
 22.9 
 19.3 
 11.4 
 14.8 
 13.8 
 17.5 
 30.4 
 14.5 
 9.8 
 27.4 
 16.2 
 19.7 
 24.5 
 26.8 
 31.9 
 45.2 
 62.2 
 65.3 
 
 Domestic 
 
 con- 
 sumption 
 
 Movement 
 
 from 
 growers to 
 domestio 
 trade 
 
 Domestic 
 trade supply- 
 excluding trade 
 carry-in 
 
 3.8 
 3.2 
 3.4 
 3.1 
 3.1 
 2.7 
 2.6 
 2.2 
 1.8 
 7.8 
 26.2 
 31.8 
 33.3 
 37.0 
 34.9 
 32.7 
 31.9 
 31.2 
 34.5 
 34.8 
 36.5 
 37.2 
 
 mi 1 lion s of pounds 
 
 9.9 
 12.1 
 14.7 
 17.0 
 18.9 
 20.4 
 25.7 
 22.1 
 22.4 
 22.4 
 25.7 
 29.8 
 40.5 
 
 9.1 
 42.3 
 29.2 
 34.4 
 34.2 
 32.0 
 34.6 
 36.8 
 38.7 
 
 10.5 
 12.6 
 15.3 
 17.5 
 19.7 
 21.1 
 26.6 
 23.1 
 23.7 
 27.3 
 31.5 
 35.0 
 47.0 
 20.1 
 51.5 
 37.3 
 41.2 
 37.9 
 32.2 
 34.7 
 36.8 
 38.7 
 
 United States 
 personal con- 
 sumption ex- 
 penditures 
 
 | Index of United 
 ' States nonagri- 
 | cultural income, 
 average 
 1935-1939=100 
 
 billions of 
 dollars 
 
 46.3 
 51.9 
 56.2 
 62.5 
 67.1 
 64.5 
 67.5 
 72.1 
 82.3 
 91.2 
 102.2 
 111.6 
 
 103 
 106 
 113 
 116 
 117 
 122 
 118 
 103 
 81 
 68 
 77 
 83 
 96 
 107 
 101 
 104 
 112 
 129 
 146 
 206 
 235 
 252 
 
 United 
 States 
 stocks 
 on handj 
 Sept. 1 
 
 Relative 
 stocks on 
 
 hand 
 Sept. 1 
 (col. 7/ 
 col. 2) 
 
 Relative 
 stocks on 
 hand Sept. 1 
 lagged one 
 year 
 
 8 
 
 millions 
 of 
 
 pounds 
 
 1.8 
 
 .068 
 
 .327 
 
 8.7 
 
 .272 
 
 .068 
 
 16.1 
 
 .482 
 
 .272 
 
 15.8 
 
 .428 
 
 .482 
 
 29.3 
 
 .840 
 
 .428 
 
 25.2 
 
 .769 
 
 .840 
 
 27.1 
 
 .848 
 
 .769 
 
 22.1 
 
 .710 
 
 .848 
 
 20.0 
 
 .580 
 
 .710 
 
 18.9 
 
 .542 
 
 .580 
 
 10.7 
 
 .294 
 
 .542 
 
 10.1 
 
 .271 
 
 .294 
 
 (Continued on next page.) 
 
 no 
 

 • 
 
 - 
 
 
 j 
 
 
 
 
 
 • 
 
 ■ 
 
 • 
 
 • 
 
 ■ 
 
 
 
 
 
 
 
 
 
 > 
 
 
 
 • 
 
 if 
 
 ••• 
 
 
 
 
 iT- r * t 
 
 
 
 
 
 - 
 
 
 
 
 
 
 
 - • 
 
 • ■ 
 
 
 O «3 £' ; ' 'j J ' i JL T C CJ "1 
 
 J 
 
 
 
 
 
 
Table 5 continued. 
 
 Season 
 
 Ses son 
 ave rage 
 
 farm 
 price 
 
 Domestic 
 
 con- 
 sumption 
 
 Movement 
 
 from 
 growers to 
 doine stic 
 trade 
 
 Doinestic 
 trade supply 
 excluding trade 
 carry- in 
 
 United States 
 personal con- 
 sumption ex- 
 penditures 
 5 
 
 Index of United 
 States nonagri- 
 cultural income, 
 average 
 1935-1939=100 
 6 
 
 1 
 
 United j 
 
 States 
 
 stocks 
 
 /-\Y1 In fl Tl d 
 
 ^ept« 1 
 
 7 
 
 Keiatxve 
 stocks on 
 
 hand 
 Sept. 1 
 (col. 7/ 
 col. 2) 
 8 
 
 Relative 
 stocks on 
 hand Sept. 1 
 lagged one 
 year 
 9 
 
 1945- 46 
 
 1946- 47 
 
 1947- 48 
 
 1948- 49 
 
 1949- 50 
 
 1950- 51 
 
 i 
 
 certs 
 per 
 
 2 13 I * 
 
 ■mill inns of DOlHlds 
 
 billions of 
 dollars 
 
 
 millions 
 of 
 pounds 
 
 
 
 pound 
 
 64.9 
 62.7 
 68.4 
 55.4 
 57.0 
 62.1 
 
 36.8 
 42.3 
 41.2 
 39.7 
 37.3 
 35.8 
 
 37.7 
 33.8 
 34.9 
 36.4 
 31.5 
 32.9 
 
 41.6 
 37.9 
 40.5 
 40.3 
 37.2 
 36.2 
 
 123.1 
 146.9 
 165.6 
 177.9 
 180.2 
 193.6 
 
 j 
 
 249 
 266 
 294 
 304 
 316 
 359 
 
 i 
 
 10.4 
 16.3 
 23.8 
 28.2 
 29.9 
 23.7 
 
 I 
 
 .282 
 .385 
 .578 
 .712 
 ,802 
 .663 
 
 .271 
 .282 
 .385 
 
 .0(0 
 
 .712 
 .802 
 
 ^ Strauss*' rrAN:^ »*«^r*r ^« **. 
 
 California. 
 
 CoL t, tro* U. S. bureau of Foreign and Donatio C„»eroe, National !noo,ne, 196X Edition, A Supplement 
 to the Survey of Current Business, Washington, D. C., 1951. 
 
 Col. 6, computed from data published monthly in Survey of Current Business, Bureau of Foreign and 
 Domestic Commerce, U. S. Dept. of Commerce. 
 

 V 
 
 1 
 
 j. 2A* 2 
 29 * .' 
 
 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TABLE 6 
 
 Summary of Regression Analyses and Auxiliary Statistics 
 
 Equa- 
 tion 
 
 num 
 
 De- 
 pend- 
 ent 
 vari' 
 able 
 
 Constant 
 term 
 
 Independent variables 
 
 X, 
 
 X 
 
 X 
 
 5 
 
 log 10 X 5 
 
 X, 
 
 Adjusted 
 multiple 
 correla- 
 tion co- 
 efficient 
 
 la 
 lb 
 Ic 
 Id 
 
 -1M551 
 -14.8691 
 148. 1301 
 147.3083 
 
 1.1408 
 (1.3705) 
 
 1.1407 
 (U.4222) 
 
 0.1371 
 (0.2108 
 
 figures in parentheses are t-ratios 
 
 0.0035 
 (0.0095) 
 
 0,3543 
 (5.2710) 
 
 0.3544 
 (5.^725) 
 
 104.4762 
 (8.2108) 
 
 106 . 5092 
 (13.2654) 
 
 -1.1007 
 (3.5193) 
 
 -1.1017 
 (3.8847) 
 
 -1.1245 
 (5-4100) 
 
 -1.1239 
 (5.5885) 
 
 0.9003 
 0.9078 
 0.9513 
 0.9545 
 
 Ha 
 lib 
 
 lie 
 
 lid 
 
 lie 
 
 X, 
 
 Ilia 
 
 IVa 
 
 X n 
 
 74.2671 
 74.2250 
 20.2017 
 -29.0546 
 133.2791 
 
 17.9664 
 
 -65.7886 
 
 -0.0013 
 (0.0062) 
 
 -0.1083 
 (1.1143) 
 -0.1083 
 (1.1564) 
 
 O.3863 
 (8.4277) 
 
 1.3491 
 (7.3865) 
 
 0.3854 
 (8.6535) 
 
 -0.4886 
 (2.1261) 
 
 2.4049 
 (5.3080) 
 
 2.4049 
 (5.5084) 
 
 -0.0041 
 
 (5.331*0 
 
 98.4459 
 (12.4231 
 
 -40.9179 
 (6.4536) 
 
 -40.9307 
 (7.1198) 
 
 -35.5590 
 (3.6504) 
 
 -30.2370 
 (5.1444) 
 
 -36.3902 
 (5-2426) 
 
 -48.5382 
 (3.6301) 
 
 50.2057 
 
 (4. 4642) (3. 2750) 
 
 0.9647 
 
 0.9673 
 O.8998 
 
 0.9657 
 
 0.9504 
 
 18.0074 
 (1.37^+2) 
 
 0.9057 
 0.9355 
 
 a/ Sets of equations I and II and equation Ilia 
 to 1950-51, omitting 1941-42 through 1945-46 
 
 are for period 1933-34 through 1950-51 • Equation IVa is for period 1923-24 f 
 (See following page for description and sources of variables.) 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 . 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 r 
 
 ■ 
 
 
 t 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 ■ y 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - ■ 
 
Table 6 continued. 
 
 Source Variable 
 
 Description of Variable 
 
 Table Col . 
 
 5 1 . Season average farm price of hops (cents per pound). 
 
 52 Xg = Domestic consumption (millions of pounds) . 
 
 53 X 3 = MoveIDent from g rowers to domestic trade (millions of pounds) 
 
 5 1+ x k = Domestic trade supply excluding trade carry- in (millions of pounds) . 
 
 55 x s = United States personal consumption expenditures for sets of equations I, II, and III 
 
 " (billions of dollars); and 
 
 5 g Index of United States nonagricultural income for equation IV. 
 
 X* = Time, origin between 19^1-^2 and 19^2-1+3 (6-month intervals) for sets of equations 
 I, II, and III; origin between 193^-35 and 1935-36 (6-month intervals) for 
 equation IV. 
 
 5 7 X 7 = United States stocks on hand, September 1 (millions of pounds) 
 
 58 Xg = Relative stocks on hand, September 1 ( = AXg) • 
 
 59 x Relative stocks on hand, September 1, lagged one year.