Latest / No Dirt No Flowers Podcast / How We Got Here / Part 2 / Ft. Leslie Roy

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How We Got Here / Part 2 / Ft. Leslie Roy · No Dirt No Flowers Podcast

• 0:00
  Hello everyone and welcome back to episode 4
• 0:02
  of No Dirt No Flowers. Today's episode is How
• 0:05
  We Got Here Part 2 featuring Les Roy. He'll be
• 0:10
  sitting down with Mike and Drew to finish the
• 0:12
  conversation about how the hop industry got to
• 0:14
  where it is today. Now, if you know my father,
• 0:17
  this will come as no surprise that this episode
• 0:19
  is going to be a long one. But hopefully you'll
• 0:21
  find it as entertaining and enjoyable as we do.
• 0:24
  Oh, one more thing. Around five minutes into
• 0:26
  the podcast, Mike, Drew, and my father will begin
• 0:29
  discussing something called the Federal Marketing
• 0:30
  Order. Now, for those of you who don't know,
• 0:33
  this was a government program that regulated
• 0:35
  and at times restricted the production of hops
• 0:38
  in the country. There have been several throughout
• 0:41
  the history of the U .S., but the one they'll
• 0:43
  be discussing in particular today began in 1966
• 0:46
  and ended in 1985. Enjoy the show. No, no, no,
• 1:00
  no, no, no, no. You just you do you. First of
• 1:03
  all, let's start with ground rules on timing
• 1:05
  answers. OK, can I get a piece? I have a piece
• 1:07
  of paper to write down questions. I think you
• 1:10
  just seem to be off the top of your head. Yeah.
• 1:12
  So we have this challenge now where we're talking
• 1:15
  about attention deficit disorder times three.
• 1:19
  And so we got to figure out how to stay on task
• 1:22
  here. Yeah. There's so much to say. I mean, it's
• 1:25
  a lifetime. It's a journey of a lifetime. We
• 1:27
  got two hours. Two hours? There can be more if
• 1:32
  we all behave. Okay. All right. So we got two
• 1:38
  hours, and we're going to try and be as focused
• 1:43
  as possible. Maybe an hour and 45. Hour and 45.
• 1:46
  Perfect. This will be the longest podcast we've
• 1:49
  ever recorded. It could be. Serious? It's only
• 1:53
  our fourth podcast. True. Okay. No dirt, no flowers.
• 1:58
  How we got here, part two, featuring Les Roy.
• 2:01
  Should we start with an introduction? Like, tell
• 2:04
  us who you are. Sure. Should we just start over?
• 2:07
  He can use any B -roll he wants. Yeah, I mean,
• 2:09
  we're recording and he can edit this all out,
• 2:11
  so. Welcome to episode four, no dirt, no flowers,
• 2:14
  with one Leslie Roy. Les Roy. The patriarch.
• 2:22
  The current. The current patriarch. How are you?
• 2:25
  Good. Thank you guys for inviting me here today.
• 2:28
  Tell us a little bit about yourself and how you
• 2:31
  got into this hop game. Well, I was born into
• 2:37
  it. It's funny, I'm sitting here looking out
• 2:40
  the window, and that's the same window I grew
• 2:42
  up looking out, or the same view I had as a young
• 2:46
  child. Right where we're sitting is where I was
• 2:49
  born and raised in this house. It was a house.
• 2:52
  The current office was the house? Or this is
• 2:54
  where the house sat? This is where the house
• 2:56
  sat. Then it moved and we built the office. But
• 2:59
  the view is the same. When did they bring electricity
• 3:02
  in? We had electricity. We didn't have TV for
• 3:08
  a while. We had a house. There were seven kids.
• 3:13
  One bathroom with a tub. It was an add -on because
• 3:17
  prior to the 1950s, it had an outside odd house.
• 3:21
  So when they add it on, they just add it right
• 3:24
  to the kitchen. So you can imagine this back
• 3:26
  and forth of nine people in a house. The upstairs
• 3:30
  was divided to left side, right side, boys on
• 3:34
  the right, girls on the left. It was just kind
• 3:36
  of a dorm style. It was pretty interesting. No
• 3:40
  heat upstairs, no air conditioning. We didn't
• 3:42
  even heard of air conditioning back in those
• 3:43
  days. But the view from the window, the small
• 3:47
  window we had, is the same view that we're looking
• 3:49
  at today. What else did you raise or just hops?
• 3:53
  We were hops. Well, we had chickens, cows, milk
• 3:56
  cows, made butter, things like that. Did you
• 3:59
  milk the cows? Yes, my father did. I think I
• 4:05
  might have participated at times, but it was
• 4:07
  not a responsibility. How big was the ranch when
• 4:11
  you were? My father started at this location
• 4:14
  in 1950 with 20 acres. And he bought from a man
• 4:21
  called Henry Fortier. At that time, the Rosa
• 4:24
  irrigation system was just coming into play.
• 4:27
  So the area up in this area was all irrigated
• 4:31
  by wells. And then eventually it was replaced
• 4:34
  by the Rosa irrigation district. And it's a funny
• 4:39
  thing. I was looking at some old history as I
• 4:41
  was moved from my office to my new office, ran
• 4:45
  across some old papers that had the contracts,
• 4:48
  the very first contracts my father had. And my
• 4:51
  grandfather, who farmed across the valley, which
• 4:54
  is a couple miles away, had to co -sign for my
• 4:57
  father's first hop contract, Steiner and Haas.
• 5:00
  Oh, wow. Yeah, like, you know, 20 acres was 40
• 5:04
  ,000 pounds total. A month of picking with a
• 5:08
  portable picker to do 20 -some acres, about an
• 5:11
  acre a day. We'd fill up one kill that was probably
• 5:16
  40 by 40, maybe 30 by 35 or something like that.
• 5:20
  That was the whole day. Was it wood -fired? No,
• 5:24
  it was coal. Then we were using sulfur at the
• 5:27
  time. When did you guys start scaling? Probably...
• 5:33
  By the late 50s, we were starting to buy. The
• 5:36
  farms were starting to transition to other owners
• 5:41
  and stuff, sell. The owners were selling, so
• 5:43
  we started buying at that time. So by 1985, I
• 5:49
  came back to the farm in 74 after I graduated
• 5:52
  from WSU. Got my degree in economics and came
• 5:56
  back. My father put a shovel in my hand. For
• 5:59
  the next four years, I just dug ditches irrigating.
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  So there was a period of time that I didn't really
• 6:04
  know a lot about the financial side of it or
• 6:06
  even the marketing side. 1966, they put the federal
• 6:10
  marketing order in. Came back in 74 with a young
• 6:15
  bride from the city. She didn't forgive me for
• 6:19
  about 10 years, taking her out to the country.
• 6:23
  You described Yakima so much nicer than this.
• 6:27
  Yes, for sure. Yeah. So then. Marking order was
• 6:32
  in play. A lot of people were involved in various
• 6:37
  organizations. Tom Carpenter started a young
• 6:41
  farmers group. Mike Smith, Steve Peralt, Darren
• 6:47
  Gamache. A lot of us, all of us young farmers
• 6:50
  were involved. We'd go there for like once a
• 6:53
  month or something and have these little... discussion
• 6:56
  groups at that time it was all about virus you
• 6:58
  know and everybody was scared what viruses are
• 7:00
  going to do so we helped pursue some research
• 7:04
  along those lines so since the title is how we
• 7:07
  got here part two you wrote the exact same thing
• 7:10
  i wrote i know so let's start we both wrote down
• 7:13
  marketing order so this is something that i don't
• 7:17
  know a whole lot about i remember you talking
• 7:18
  about it um throughout the years about how is
• 7:23
  this time of health And I think I'm curious about
• 7:28
  that as we look at where we're at right now and
• 7:31
  how we got here. How did some of these failures
• 7:34
  and successes of the past bring us to this point?
• 7:38
  And one of the things I'd like to hear a little
• 7:40
  bit more about is the marketing order and maybe
• 7:42
  the pros and cons of it and how that was viewed
• 7:46
  across the industry. Well, there was actually
• 7:49
  the one that... that was put in place in 1966
• 7:52
  was actually the third one. They had tried previous
• 7:56
  iterations, and in some cases they controlled
• 8:00
  it by acreage. They tried to control it by bales
• 8:04
  and pounds. They just never lasted. It was very
• 8:08
  controversial. In fact, there's one newspaper
• 8:10
  article of my father and my uncle, his brother,
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  both on opposite sides of the marketing order.
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  It's a great news article if you ever want to
• 8:21
  look at it. But they were put in place during
• 8:24
  very difficult times in the market. Back in those
• 8:27
  days, the market was wildly crazy. We had all
• 8:31
  the states. New York was a player, plus, of course,
• 8:35
  England and some other places. And the Western
• 8:38
  expansion of the population created demand, and
• 8:42
  there was a lot of problem. That's when... Aphids
• 8:45
  started coming in, and mildew came in, blue mold.
• 8:49
  There was blue mold, which is kind of like paranospera.
• 8:53
  Not a paranospera. That would be a downy mildew,
• 8:56
  but it's kind of like that. They had these diseases
• 8:59
  that would devastate the crop at harvest, and
• 9:01
  you'd create these massive shortages, and it
• 9:04
  was just a wild time. But in 66, we put in the
• 9:08
  federal marketing order. There was, I think it
• 9:12
  was 13 people on the board. And then they met.
• 9:16
  It was federally mandated to all hops that were
• 9:19
  raised. And that included California at the time.
• 9:23
  California, Oregon, Washington, Idaho. Was Canada
• 9:26
  a part of that? No. No. But so when it was put
• 9:30
  in place, it was basically the marketing order
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  would meet or the board, they called them. There
• 9:36
  was a lot of jokes. A lot of people were against
• 9:37
  it. There was a lot of people for it. Eventually,
• 9:40
  it was put in place, the vote. But they would
• 9:44
  call them the boys. You know, they met and they
• 9:46
  would decide on the marketability. They would
• 9:49
  issue base. Let's say if you had 100 pounds of
• 9:51
  base, every year they would say, what could you
• 9:55
  sell? Could you sell 80? Look at the market.
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  They would say 80 % of your base can be sold
• 10:00
  this year. So you would adjust your acres and
• 10:02
  things like that. And base was pounds base. So
• 10:06
  in other words, 100 pounds you could raise or
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  you could sell 100 pounds. And then anything
• 10:12
  over went into what they call a pool that was
• 10:15
  managed by the committee. If you look at the
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  numbers, it was a very stable time of pricing.
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  The pricing for hops was very stable for that
• 10:25
  whole period of the marketing order. During that
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  time, it's funny, through my life as a farmer
• 10:30
  here, there's been various times when the emphasis
• 10:34
  for the business changed. During certain times,
• 10:39
  it was all about yield. The highest yield gave
• 10:41
  you most hops to sell and the most money. During
• 10:44
  the marketing order, it was more just about being
• 10:48
  efficient in what you could produce. It was a
• 10:52
  stable time in the industry for sure, but it
• 10:55
  couldn't really react when the market went. When
• 11:00
  the market started to really respond after the
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  1980s, when we had that shortage, they... It
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  just couldn't respond fast enough. And there
• 11:09
  was all these new people coming in that wanted
• 11:11
  to raise hops. And there was no provisions initially
• 11:15
  for new growers. Then they put in a provision
• 11:17
  for new growers. And then they just eventually
• 11:22
  just threw it out because they just couldn't.
• 11:23
  There was so much turmoil within there. And actually,
• 11:25
  Ronald Reagan got involved in eliminating the
• 11:30
  federal marketing order because he was against
• 11:32
  all these marketing orders. He was a free market
• 11:33
  guy. So actually, I forgot which grower it was,
• 11:37
  actually called the White House and talked to
• 11:40
  them about it. No kidding. Yeah. Wow. Yeah, it
• 11:44
  was quite a deal back in the day. Made it 60
• 11:46
  minutes. There was actually a 60 minutes segment
• 11:48
  done on the hot marketing order. Wow. So would
• 11:52
  you say that the marketing order was better for
• 11:54
  stability but didn't function as well for growth?
• 11:58
  Yeah. And shortages. What were the limiting factors,
• 12:02
  or I guess what were the limitations of the marketing
• 12:04
  order around those two issues, growth and reductions,
• 12:09
  and why it didn't function as well? Well, you
• 12:11
  know, let's say if there was a shortage or a
• 12:14
  crop failure somewhere else, they couldn't respond
• 12:17
  fast enough. Was that more a function of something
• 12:22
  else, or was it a function of the marketing order
• 12:23
  and people just perceived the issue as the marketing
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  order? I don't know. I really couldn't tell you
• 12:29
  at the time. I mean, it was just a time in history
• 12:34
  when free markets and everything was the talk.
• 12:39
  And so the fragile market restricting people,
• 12:42
  some growers, especially from the outside, smaller
• 12:45
  guys, they were restricted. They couldn't grow
• 12:48
  to be an economical unit. So there was things
• 12:51
  like that. I mean, would that be a function of...
• 12:54
  the size that you came into your marking order
• 12:59
  allocation at? Like if you came into the marking
• 13:02
  order at, let's say, something substandard, would
• 13:06
  it be harder to grow your allocation under that?
• 13:09
  You can't. You couldn't grow your allocation.
• 13:11
  You had to go buy base. From somebody else? From
• 13:13
  somebody else who got out or was reducing or
• 13:16
  whatever. The only way you could expand was to
• 13:19
  buy a farm with base. You couldn't just go plant
• 13:23
  the hops. So then if the market grew, then how
• 13:26
  did they create more base? Well, what they would
• 13:28
  do at the saleable, you would have, let's say,
• 13:30
  if it had been 80%, you would raise it to 85
• 13:34
  % or 90 % of your base. At one point, I mean,
• 13:39
  I remember we had a million pounds of base at
• 13:41
  one point. It actually ended up being more than
• 13:43
  that. But so if you had 80%, that means you could
• 13:46
  raise 800 ,000. You could sell 800 ,000 pounds.
• 13:50
  Let's say we produced 850 ,000 pounds. 50 ,000
• 13:55
  pounds would have to go into a pool managed by
• 13:57
  the committee. So they only allowed the marketing
• 14:00
  of the 800 ,000 pounds. On the buying up farms,
• 14:04
  Kevin Reel sent me something maybe a couple months
• 14:07
  ago. I think I showed it to you where there's
• 14:09
  all the farms in Moxie. When you were buying
• 14:12
  up other farms, was it like... You buy another
• 14:17
  40, so now you're 80, and maybe another neighbor
• 14:20
  buys another neighbor, so they're 80, and then
• 14:21
  you buy the 80 from somebody else, or was that
• 14:23
  cobbling together, like, here, I just bought
• 14:25
  40 more acres, or 20, or was it usually fairly
• 14:28
  large? Some of them, I mean, some of them were
• 14:30
  as small as 20 acres, sometimes 40 acres. There
• 14:34
  was a lot of farmers that probably could get
• 14:38
  to an efficiency level. My father started off
• 14:41
  in 1950. It was 1 ,000, over 1 ,000 hop farms
• 14:45
  in the United States. Wow. And there was probably...
• 14:49
  How many are there today? 65 or something. Well,
• 14:52
  yeah, I think it's less than 60 now, but it depends
• 14:55
  how you count them. Yeah, it depends on how you
• 14:57
  count them. Yeah, so a thousand... Different
• 14:59
  entities and whatnot. When you had the hop conventions,
• 15:02
  it was wild and crazy. I bet. That you guys just
• 15:06
  checked out for a week. I remember a bit of those
• 15:08
  when I was younger. Yeah, over time, the purchasing,
• 15:12
  sometimes the biggest purchases we did... The
• 15:15
  first big one we did was Lee Hefflinger in Toppenish,
• 15:17
  and we moved to Toppenish. That was a story in
• 15:20
  itself. Of course, Ken Deserault and then Bruce
• 15:24
  and Tim Gamache. Those are the three big farms
• 15:28
  that actually came with facilities. Most of the
• 15:31
  other farms were just hop fields or raw land
• 15:35
  or hop fields with bays. Do you think that this
• 15:38
  is... Way fast forwarding, but since we're talking
• 15:40
  on this, you see consolidation happening or sales.
• 15:43
  Do you think that 10 years from now, we're going
• 15:47
  to be down to 50 growers or something? Yeah,
• 15:51
  I think we were down in the low 50s at one point.
• 15:54
  You know, the craft beer movement created some
• 15:57
  new hop farms. I remember when I came back in,
• 15:59
  nobody wanted in. Nobody wanted in, yeah. I mean,
• 16:02
  people were exiting. Yeah, yeah. Because I was
• 16:04
  around during the Deserol purchase and the Gamache
• 16:07
  purchase. And there was very few young people
• 16:10
  in the industry. There wasn't any. I mean, there
• 16:12
  was no other people interested at that time.
• 16:17
  I'm going to squirrel off for a moment to one
• 16:20
  deal. When Michael came back, it was a very tough
• 16:23
  time when he came back into the hop industry.
• 16:26
  And we were farming. I don't know. We had probably
• 16:29
  a couple thousand acres at a time, I suppose,
• 16:31
  maybe more. Yeah. And we were going on a tour
• 16:37
  of the farm one day. Talking about the future
• 16:39
  and what Michael could do. And he says, well,
• 16:41
  you've done it all. There's nothing for me to
• 16:42
  do. He likes to point out how naive I was when
• 16:47
  I first came back to the ranch. I thought there
• 16:49
  was nothing to do. He couldn't improve. There's
• 16:51
  nothing to improve on. And here we are today.
• 17:00
  Let's talk about the story of the old bull and
• 17:02
  the young bull. Something like that. How did
• 17:07
  the brewers view the marketing order at the time?
• 17:11
  They were not very supportive of it, let's say.
• 17:16
  They were involved in the discussions for sure.
• 17:19
  Not directly, but indirectly. So there would
• 17:22
  be a polling of the breweries to see what their
• 17:26
  interest was, growth. I mean, the growth was
• 17:28
  very minimal at the time. You were talking about
• 17:31
  the general beer market was growing, but nothing
• 17:35
  like the craft deal. You know, going from, we
• 17:37
  were down in 19, probably 80, somewhere in the
• 17:42
  70s. By the 1970s, it was down to less than 100
• 17:45
  breweries. And so it was easy to get a pulse
• 17:48
  of what was going on. Then you go look at today
• 17:52
  where we have almost 10 ,000, 9 ,000 something.
• 17:55
  Just in the U .S.? Just in the U .S. How many
• 17:58
  brewers there are globally? A lot. Yeah, I would
• 18:03
  think. I would think. You know, there's still,
• 18:05
  no matter what you say, I love the craft beer
• 18:07
  movement. I love, I think it's really created
• 18:09
  a lot of opportunities and change. But the reality
• 18:13
  is still only five breweries control over half
• 18:16
  the beer of the world. And it's just a fact.
• 18:19
  I presume that may grow, may be not. I don't
• 18:22
  know. You know, beer consumption was off, what,
• 18:25
  2 % last year or something like that? Maybe a
• 18:27
  little more. Yeah. You know, going back to the
• 18:29
  marketing order. We had 13 people. Actually,
• 18:34
  I was very fortunate towards the end that I was
• 18:37
  able to serve on the board. I was not a voting
• 18:42
  member, but I was what they would call an alternate.
• 18:45
  So we had all these young people that were involved
• 18:49
  in the marketing order as an alternate if the
• 18:51
  main person could not attend. And that was actually
• 18:55
  the alternate for Bill Gasling. I got to know
• 19:00
  him quite well. Nice guy. Around the marketing
• 19:04
  order, given your history, I have no opinion
• 19:08
  on this. I assume that this might be a polarizing
• 19:11
  topic to some. Because I remember growing up,
• 19:16
  you being a proponent of the marketing order,
• 19:20
  also being a proponent of free market, which
• 19:24
  we can get into that in a little bit. But, like,
• 19:26
  what would your opinion be around the marking
• 19:27
  order now? Like, would that even be something
• 19:30
  like that even be a good thing? Because it seems
• 19:32
  like there's a lot of production kind of management
• 19:35
  happening, but in more of a haphazard way across
• 19:38
  the industry. You know, we tried to resurrect
• 19:41
  the marking order, I think, in the early 2000s,
• 19:45
  something like that. There was a whole bunch
• 19:47
  of Steve Carpenter, Mike Smith, Steve Proulx,
• 19:50
  all these guys. We worked together. We actually
• 19:52
  went to hearings to... put it back in. It was
• 19:57
  very controversial with many people for and against
• 19:59
  it. So eventually it never happened. I think
• 20:03
  we had a vote. I can't remember, but it went
• 20:05
  down. But my view of it is the marketing would
• 20:09
  be very difficult to implement in today's world
• 20:12
  with proprietary varieties. Yeah. How can you
• 20:15
  manage? You could not manage across the proprietary
• 20:17
  variety line. That's a good point. Yeah. Well,
• 20:22
  listening to all this. And I know we're just
• 20:24
  getting into things, but it makes me think when
• 20:27
  we're talking about how we got here, a lot of
• 20:28
  this isn't new. We keep repeating the same things.
• 20:31
  So maybe that's part of how we got here is we're
• 20:33
  not changing. We are changing. But I mean, I
• 20:36
  think, I mean, I agree with your point. We aren't
• 20:39
  changing, but we are changing. Well, the proprietary,
• 20:43
  dealing with proprietary varieties, working with
• 20:45
  larger farms, you know, you know, back in the
• 20:48
  day of a unit when that handpicking days or even.
• 20:53
  even with portable pickers, was 40 acres. That
• 20:57
  was a unit. Today, a unit is 600 acres. I think
• 21:01
  there's a lot of things that are different. And
• 21:03
  my opinion is, and feel free to debate this,
• 21:06
  anybody, is that we have these periods of quote
• 21:10
  -unquote change, but we don't really change the
• 21:15
  fundamentals or the base of it. So then when
• 21:18
  we have, when the change gets challenged, We
• 21:22
  revert back to a previous state because of one
• 21:28
  thing or another. Yeah. I would agree. I would
• 21:31
  agree. I mean, I think the fundamentals don't
• 21:35
  change. Absolutely. It's supply and demand. I
• 21:38
  think a lot of things back in the days when I
• 21:40
  first started and prior to that, post -prohibition,
• 21:44
  hops were used mostly in their raw form. In fact,
• 21:49
  exclusively at some point. So they had a useful
• 21:51
  life of, what, two years? Maybe. Yeah, maybe.
• 21:56
  Yeah, it depends. I mean, unless it's going into,
• 21:58
  like, a creek or something like that. Yeah. Like
• 22:00
  the beer style, not like the water. Well, there
• 22:03
  was no other option. There was not Palatine at
• 22:05
  the time. I'm not sure. Palatine probably came
• 22:08
  into play probably in the 60s, 70s, a little
• 22:12
  bit, I think. But even then, as a bush and other
• 22:15
  breweries, of course, they were still using raw
• 22:17
  hops until probably 80s, 90s. So once they put
• 22:21
  pellets in, that increased the inventory life
• 22:23
  of those hops. That created dynamics alone. Then
• 22:27
  we went to extracts. Now we're into downstream
• 22:30
  products. So those are the big changes where
• 22:33
  inventories can be your enemy for longer periods.
• 22:38
  Thinking about Mike's point about we haven't
• 22:41
  really changed, like there has been evolution
• 22:44
  in technology and products and things, but we
• 22:46
  had a discussion at Craft Brewers Conference
• 22:48
  with a... that is in raw material procurement
• 22:52
  for a brewery. Pretty good -sized brewery, and
• 22:56
  this individual came from procurement in a different
• 23:00
  industry, and he was talking about how the hops
• 23:04
  seem to be, like, played by completely different
• 23:08
  rules that don't seem to make a lot of sense.
• 23:10
  For example, they can calculate optimization
• 23:14
  based off efficiency on, like... shipping but
• 23:19
  they don't know they hear things like return
• 23:21
  to grower or margin or whatever in the supply
• 23:25
  chain but they don't really know what that means
• 23:27
  where you know really you want everybody to be
• 23:31
  able to be in a healthy position but nobody gets
• 23:33
  too big of the piece of the pie throughout the
• 23:37
  supply chain but there's no way to understand
• 23:40
  that as a it really is to your what you said
• 23:43
  it really is a supply and demand industry but
• 23:46
  to evolve it probably needs to turn into a value
• 23:51
  sharing industry and you can get away from these
• 23:55
  humongous fluctuations well i mean i think over
• 24:00
  history we've had other value propositions brought
• 24:03
  forward cost plus models we've been involved
• 24:06
  with it it's come and gone what happened it works
• 24:09
  great while the prices are high When the prices
• 24:14
  go low, you know, then there's... Because of
• 24:17
  supply and demand. Yeah, supply and demand eventually
• 24:19
  comes back into it. Let's dig into that a little
• 24:22
  bit because, you know, one of the things we've
• 24:25
  been throwing around, Drew, is you can't go out
• 24:28
  of business if you're making money. Even if it's
• 24:31
  a little bit. Even if it's a little bit. One
• 24:32
  dollar, you are a winner. So talk a little bit
• 24:36
  about... For any brewers listening, by the way,
• 24:37
  we don't just want to make one dollar. We'd like
• 24:39
  to, like... True. Like one total dollar? We might
• 24:44
  have to add a couple zeros. Well, no, because
• 24:48
  I think this is one of the biggest problems I've
• 24:50
  seen is that when the market goes crazy, everybody
• 24:54
  is so concerned about getting the highest price
• 24:57
  per pound. And everyone wants to ring the bell
• 25:00
  and they want the trophy. I don't disagree. You're
• 25:08
  talking at the grower level. Yeah. And everyone's
• 25:10
  concerned about their neighbor, how many acres
• 25:12
  their neighbor has, what they got per pound.
• 25:16
  So in a cost plus model or a performance based
• 25:20
  model, does it really not work in an up market
• 25:26
  or is it just annoying? No, he's saying it works
• 25:29
  in an up market. It's a down market. That's what
• 25:32
  I mean. Does it really not work in a down market
• 25:34
  or is it just annoying? Okay, so here's... As
• 25:37
  an example. So we've been involved with multiple
• 25:41
  companies in that venture or at least exploring
• 25:45
  it. And I remember we were getting ready to ink
• 25:49
  one and the brewer said, well, you know, I understand
• 25:54
  the cost plus yields this level of pricing, but
• 25:58
  the market's down here. So how about first two
• 26:00
  years, we just leave it down to cheap market
• 26:02
  and then we'll come back up and then go forward
• 26:06
  from there. Then when the prices go high, the
• 26:09
  brewer is very happy, you know, because they're
• 26:11
  kind of locked into this price line. When a price
• 26:15
  goes down, they want some sort of concession.
• 26:18
  And we've had many talks with breweries when
• 26:21
  the market drops way down. You know, we have
• 26:24
  a contract at X, and they want, you know, we
• 26:27
  can't compete. You know, we need cheaper. It's
• 26:31
  very frustrating. It's like when you look at
• 26:33
  the industry today. It's like people either have
• 26:36
  short memories or they look at the experience
• 26:40
  that they know and understand. Listening to this
• 26:43
  makes me think about, you know, right now we've
• 26:45
  talked a lot on this podcast and, you know, in
• 26:49
  discussions in the industry how brewers aren't
• 26:51
  contracting, especially brewers that haven't
• 26:53
  been in the industry for a long time. They have
• 26:56
  absolutely no idea what's coming. Yep. And then
• 26:59
  big brewers are saying the market is down, so
• 27:01
  we're going to ride that out right now. But it's
• 27:03
  just going to whiplash the other way, and it's
• 27:06
  going to go really hard. But it seems like there's
• 27:09
  always people trying to get an edge, whether
• 27:11
  it be growers, merchants, or brewers. I don't
• 27:14
  think it's intentional. I mean, it kind of is,
• 27:16
  but a lot of value is lost or gained. It's interesting
• 27:23
  you talk about the breweries and their lack of
• 27:26
  contracting. First of all, they may not know
• 27:28
  what they need. The craft movement is changing
• 27:31
  so fast. That is a big issue, and that one needs
• 27:35
  to get solved for. Better vehicles. I think some
• 27:39
  better vehicles, yeah. The other thing, too,
• 27:42
  in fact, it was funny. I was talking to some
• 27:45
  friends in Germany. We haven't even got into
• 27:47
  the presidential role yet. We're going to get
• 27:49
  there, but keep going. You talked to the Germans.
• 27:51
  It was interesting because the general conversation
• 27:53
  over there from the bigger merchants is that
• 27:56
  this thing is silver supply the inventories are
• 27:58
  huge we need to make all these changes and interestingly
• 28:01
  enough there's been activity in the market by
• 28:05
  the smaller mid -sized dealers and that's very
• 28:08
  confusing to the growers or you know it's are
• 28:12
  the big merchants trying to talk down the price
• 28:14
  so they can buy them cheap or what why are the
• 28:17
  smaller merchants you know buying it's just it's
• 28:20
  really confusing to just still just almost a
• 28:23
  thousand growers in germany so Coming back to
• 28:27
  it, it always boils down to just basic supply
• 28:29
  and demand. You can weave through there at times
• 28:32
  with different ideas, and it does change the
• 28:36
  course maybe temporarily, but ultimately it's
• 28:39
  supply and demand. You know, the breweries need
• 28:42
  this. Their reluctance in the breweries in the
• 28:44
  United States right now is based on all the negative
• 28:46
  comments about the acreage going down, prices
• 28:49
  going down. So part of it is that. lack of knowledge
• 28:53
  of what they need. But the other part is they
• 28:55
  don't want to be the one that paid. It's the
• 28:57
  same thing on the grower's side, but on the brewer's
• 29:00
  side. The grower doesn't want to get five cents
• 29:02
  less than his neighbor, and the brewers don't
• 29:04
  want to pay five cents more. Yep, that's right.
• 29:06
  It's a zero -sum game. One wins and one loses.
• 29:10
  And that's why the Crosby deal, to me, is such
• 29:13
  an interesting one. It's a non -zero -sum game
• 29:15
  where both parties benefit for the benefit of
• 29:19
  the collective. That's something that came up
• 29:23
  quite a bit at CBC when we were talking with
• 29:26
  brewers. Something that really resonated is that
• 29:29
  we have not traded any dollars at all. The idea
• 29:33
  is we've just leveraged each other's capabilities
• 29:35
  to find a way that... Both parties win. Both
• 29:39
  parties win. Ultimately, the brewer wins. That's
• 29:42
  a completely different model than most game theory.
• 29:46
  Win -lose, win -lose. You have to lose. That
• 29:49
  person's got to lose for me to gain. That's not
• 29:52
  a – it's got to change. I mean, sometimes it's
• 29:55
  unavoidable. I think a lot of times there's other
• 29:59
  ways to do it. I agree. Yeah. Talk a little bit
• 30:02
  about your free market philosophy because this
• 30:06
  has been a common theme as far back as I can
• 30:09
  remember. Well, every time manipulation – I mean,
• 30:14
  okay, free market and manipulation. That's what
• 30:17
  I would kind of equate the two titles to. So
• 30:20
  in a free market, what's happening right now,
• 30:23
  it's brutal, it's hard, but it creates an outcome.
• 30:27
  What's the best thing for high prices? High prices.
• 30:29
  What's the best thing for low prices? Low prices.
• 30:32
  So if you try to manipulate your way through
• 30:35
  the market, it eventually distorts. It may enhance
• 30:39
  one side more than the other side at any point
• 30:42
  in time. What would be an example of market manipulation
• 30:45
  in this industry? And I would just like to say,
• 30:48
  too, is when did management become termed manipulation?
• 30:54
  Maybe that's not what he's talking about. I don't
• 30:56
  know. I don't know either. Well, okay, management's
• 31:01
  a word. Well, no, no, no. Continue. No, no, no.
• 31:04
  I mean. Market manipulation. Market manipulation.
• 31:07
  Is that like at the dealer level? You mean like,
• 31:10
  well, okay. So I just got nervous. Yeah, I know.
• 31:13
  Well, no, like as an example, like the spot market
• 31:17
  for alpha in the U S and in Germany in 2024 was
• 31:23
  horrible. And yet all that alpha got picked up
• 31:29
  at real low prices. Our brewer is going to see
• 31:34
  a. 50 % drop in the cost of their hops? No. No.
• 31:40
  So is that what you're talking about? Well, that
• 31:42
  is one. It's called that one management. You
• 31:48
  always know if you're going to buy hops below
• 31:50
  the cost of production, you can never go wrong.
• 31:52
  This is how deep is your pocket. How long can
• 31:54
  you keep them? And I'm not necessarily blaming
• 31:57
  anybody for doing that. No, as we spoke about
• 31:58
  earlier, you know, with these alternative products
• 32:01
  that can store for longer periods. You have the
• 32:04
  option. Back in the day when you only used raw
• 32:07
  hops, you didn't have that option. I mean, you
• 32:10
  picked up hops, you better get those suckers
• 32:11
  out within a year or two or there was no value
• 32:14
  left in them. I mean, I was reading a great story
• 32:17
  about Esmond Meeker, you know, over in Puyallup
• 32:20
  and stuff, and he used to go to London every
• 32:23
  year after harvest to sell hops. He had to sell
• 32:26
  them all. And how it all collapsed within a year
• 32:30
  or two. It was... He couldn't get bank financing.
• 32:35
  It's just seen read sometime called the Hop King,
• 32:39
  Esmond Meeker, and how he was the largest hop
• 32:44
  farmer in the world. He was probably close to
• 32:47
  1 ,000 acres in Puyallup, and it all collapsed
• 32:49
  within two years. Wow. Whoa. What year was he?
• 32:54
  Probably in the 1850s, 1860s. He was that big?
• 32:58
  Oh, yeah. Oh, yeah. So he tossed a thousand acres
• 33:01
  of hops onto a ship and took it to. Well, I mean,
• 33:04
  I think there was there was, you know, at that
• 33:06
  time, there was tons of little middle merchants,
• 33:08
  you know, say a brewery. There's so many of them
• 33:11
  at that time. There was like three or four thousand
• 33:13
  breweries pre -prohibition, you know, probably
• 33:15
  that time. They all had individual people that
• 33:19
  would go buy the hops for them. The breweries
• 33:21
  were busy doing their thing. I mean, when I first
• 33:24
  came in, there was probably 40 merchants. in
• 33:27
  the United States, maybe more. They were all
• 33:29
  based out of the East Coast. You know, Oppenheimer,
• 33:32
  Warheimer, all these names were people, they
• 33:36
  were pop traders. And there was money made, more
• 33:39
  money made in the middle than there ever was
• 33:41
  made growing or on the... Isn't that still the
• 33:44
  case? Still the case. I would assume so. But
• 33:48
  anyway, you know, then you have, you know, a
• 33:49
  lot of things have happened as the proprietary
• 33:51
  varieties have changed the dynamics of the whole
• 33:54
  industry. It's one guy has them, one guy doesn't.
• 33:58
  Let's circle back to free market for a second.
• 34:00
  So why have you been such a big proponent of
• 34:03
  free market, let's say minus management, manipulation,
• 34:09
  however you want to define that? You're always
• 34:11
  going to have manipulation or management. That's
• 34:14
  the problem. One of the problems with our current
• 34:16
  system is you have to speculate. There's a degree
• 34:20
  of speculation. So if you're, say, a middle merchant,
• 34:24
  I'm going to use the numbers, let's say 100 pounds,
• 34:26
  just because it's easy math, and I have contracts
• 34:29
  for, you know, 80 pounds, am I going to, and
• 34:32
  I usually sell 100, so you're forced to speculate
• 34:35
  on a certain volume. And as you pointed out earlier,
• 34:40
  there's more and more breweries reluctant to
• 34:42
  buy because they think they can buy it cheaper.
• 34:44
  And it could be a cash flow issue. In other words,
• 34:47
  if I can wait till I need it to buy it, that
• 34:51
  merchant's going to have that volume in their
• 34:53
  inventory. So all these things start changing
• 34:56
  dynamics. Yeah, there's a lot of pressures right
• 34:59
  now for a brewer. I mean, forecasting, balance
• 35:01
  sheet, you know, all of it. And I'm sure some
• 35:04
  of it is like, well, I can wait and maybe get
• 35:06
  it cheaper, but there's also other forces at
• 35:08
  play. Yeah, I mean, it's cash flow. I mean, when
• 35:11
  we first... when I first got into farming, we
• 35:14
  were paid 100 % on November 1 for the crop. That'd
• 35:18
  be nice. Yeah. Now we're over, most of them are
• 35:23
  in two payments, three payments, even sometimes
• 35:25
  over a period of over a year, some of them a
• 35:28
  year, year and a half. Well, and our direct stuff
• 35:30
  can go on that long as well. Well, then that's
• 35:33
  what kind of led to some of the, I mean, the
• 35:35
  real struggles was we had contracts and we were,
• 35:39
  when we were doing some international stuff,
• 35:43
  The contract stated that the payment was, let's
• 35:46
  say, 30 days from time of delivery. Well, if
• 35:49
  they don't take it, you ain't getting paid. It
• 35:51
  was sometimes two years. We had a crop of nuggets.
• 35:54
  My cousin Gary Morford and I were involved in
• 35:57
  this. And for two years, they never took a delivery.
• 36:01
  Ouch. No money. That was no dirt. No flowers.
• 36:09
  Which is off that old Buddhist deal, no mud,
• 36:12
  no lotus. That's the metaphor. Love it. So I
• 36:17
  keep wanting to dig into this free market thing
• 36:19
  just because I've heard you say it for so many
• 36:22
  years. And I've always maybe argued with you,
• 36:27
  debated, if you will, about how some – Your child
• 36:32
  and your father, I was always wrong and you were
• 36:35
  always right. Yeah. It goes with my daughter.
• 36:38
  Goes with my other son. Well, you grew some strong
• 36:42
  -willed humans. True. True story. True story.
• 36:48
  No, but I mean, I remember I would always be
• 36:50
  a little bit more of a proponent around management,
• 36:52
  especially around some of the proprietary varieties
• 36:55
  that came out of our breeding program. And, well,
• 36:59
  we could debate how much management is good,
• 37:02
  and I was always generally a proponent of more
• 37:05
  management. And you... would definitely be on
• 37:10
  the other side of that and say, no, we need to
• 37:12
  let the market decide. That's true. We had those
• 37:15
  discussions, and I was probably of the same mindset
• 37:18
  during my earlier years. But as time went on,
• 37:22
  it's just there's a degree of speculation that
• 37:26
  is trying to be removed with proprietary rights
• 37:28
  because we're going to manage it, we're going
• 37:29
  to know what it is. But it just didn't happen.
• 37:34
  So I think the free market is brutal, but it's
• 37:37
  efficient and it's quick and it's fast. It gets
• 37:39
  it done. Do you think that given how many proprietary
• 37:43
  varieties are in domestic craft right now, do
• 37:46
  you feel like this market correction is going
• 37:49
  faster or slower than market corrections you've
• 37:54
  seen in the past? Well, the proprietary varieties
• 37:57
  are not moving fast enough. The public varieties
• 38:00
  move very quickly. And that's why I think you're
• 38:02
  starting to see maybe a little bit of interest
• 38:04
  in publics because the price went down very quickly.
• 38:07
  And the acreage changed very quickly. The proprietary
• 38:13
  varieties were slow to change. Like the acreage
• 38:18
  on proprietary moved quick. The price. Has not
• 38:21
  changed. Has not. Which I could argue. It has.
• 38:23
  It has a little bit. Yeah, but not as much. Which
• 38:26
  I could argue is a benefit to the supply chain.
• 38:31
  But, okay, the proprietors did change quickly
• 38:33
  in that one year or two years. But prior to that,
• 38:37
  it should be the messaging and the, what I'm
• 38:41
  trying to think of the word, were there. They
• 38:44
  already knew what was going to happen. First
• 38:46
  of all, you have a good point, sir. If I can
• 38:49
  attempt to summarize, would you say that the
• 38:52
  market signals were there and there wasn't movement
• 38:56
  when the market signals were there? When maybe
• 38:59
  some of the other varieties? moved quicker to
• 39:03
  adjust because the yeah that makes sense yeah
• 39:08
  very good summary which i think you know thinking
• 39:11
  through this obviously we are proponents of proprietary
• 39:15
  varieties and managed varieties because we have
• 39:19
  a breeding program and you know we're looking
• 39:22
  at it's a competitive advantage thing at the
• 39:24
  end of the day where we want to be able to provide
• 39:28
  novel products and this is true of everybody
• 39:30
  who's producing proprietary hops right now they
• 39:33
  want to produce high yielding novel options for
• 39:36
  for brewers and you could even say if like let's
• 39:41
  say we only make our varieties available through
• 39:45
  a couple channels because we want to make sure
• 39:48
  that we have our finger on the pulse we want
• 39:49
  to make sure that we can manage supply and demand
• 39:54
  as as well as possible and also in a way that
• 39:58
  gives the brewer a really great value proposition
• 40:00
  there's a fine line between management manipulation
• 40:05
  and like just competitive advantage as well and
• 40:09
  an attempt for a sustainable supply chain right
• 40:14
  yes and so i'm sure we're going to talk about
• 40:18
  proprietary genetics quite a bit because it is
• 40:22
  proprietary genetics are just a large percentage
• 40:26
  of the domestic craft market, right? And we are
• 40:29
  attempting to breed and release. And I think
• 40:32
  it's important to acknowledge, too, that proprietary
• 40:36
  genetics out of private programs are still relatively
• 40:42
  young in their evolution. The management of them
• 40:46
  in the market, right? To try and look at that
• 40:49
  whole situation with an open mind, I think that
• 40:53
  we have to acknowledge that. Well, let's go back
• 40:56
  to the marketing order. So, you know, let's say
• 40:59
  there was 100 pounds of allotment across the
• 41:04
  whole industry and you have 50 growers. Every
• 41:07
  grower has two pounds. And so when the merchants,
• 41:11
  it was an interesting time as far as marketing
• 41:12
  because when the merchants needed hops, they
• 41:15
  had to go, they couldn't go to one grower and
• 41:19
  say, I want six pounds because the grower couldn't
• 41:23
  do it. He only had two pounds of base. Regardless
• 41:26
  of quality? That was going to be my question.
• 41:28
  How is quality managed at that point? Well, that's
• 41:33
  where leaf and stem came in. I mean, that was
• 41:35
  before that, but you had certain parameters.
• 41:37
  You had leaf and stem, you had seed. It was a
• 41:39
  lot simpler, though. Leaf and stem, seed, and
• 41:42
  HSI and alpha, beta, or whatever is a lot easier
• 41:46
  to manage then. I mean, you only had a couple
• 41:48
  varieties. Really, it was all clusters. Until
• 41:52
  Cascade came in and Bullion and Galena and some
• 41:55
  of those came in. But yeah, so going back, every
• 41:58
  grower had a chance to be a part of the market.
• 42:02
  So in other words, if they needed volume, now
• 42:06
  a grower, a merchant could go to one grower.
• 42:09
  If he only needed five pounds or six pounds,
• 42:12
  he could go to three growers and get what he
• 42:13
  needed and didn't do anything for the other guys.
• 42:16
  That was a problem. But generally speaking, everyone
• 42:20
  shared equally and we all went up because the
• 42:22
  price differential between grower one and grower
• 42:27
  50 was not that big. I mean, there was a grower
• 42:31
  would brag if he got a half a cent. There was
• 42:33
  literally contracts that were half a cent better
• 42:36
  than the previous one. Oh, gosh. And so going
• 42:40
  back to proprietaries, the idea of proprietaries,
• 42:43
  generally the proprietary varieties are limited
• 42:46
  in who can grow them. Which in the beginning,
• 42:49
  that sounds really great. But, you know, and
• 42:52
  when everyone was sharing in it, it worked out
• 42:54
  all right. But now it's becoming a thing where
• 42:58
  you have, I have this variety, you don't. Zero
• 43:02
  of some comes back in. You know, when one hurts,
• 43:05
  one, yeah. Do you think, I've wondered about
• 43:08
  that. Do you think it is better for, let's say
• 43:11
  you fast forward five years from now. And everybody's
• 43:14
  kind of in their camps. Maybe that'll help and
• 43:17
  maybe it won't. But do you think it's better
• 43:19
  if there's this camp has these varieties and
• 43:25
  another has these ones? And so if you're a brewer,
• 43:29
  you're going to several different avenues or
• 43:33
  merchants, however, but you can't get it all
• 43:36
  in one place. But at the same time, that grower
• 43:39
  group or that merchant, you know, Hauser Steiner,
• 43:42
  and they work with these 10 growers. Chief works
• 43:45
  with these 20 growers and the Crosby Roy works
• 43:51
  with six growers. But by and large, they're kind
• 43:53
  of all, you know, that's who they grow for. Do
• 43:56
  you think that would be a good solution moving
• 43:59
  forward? Well, that was a solution in the past.
• 44:02
  Merchants, I mean, growers were generally tied
• 44:04
  to one merchant. When my father started off and,
• 44:07
  you know, early on, he was. This is interesting.
• 44:11
  He was a Steiner grower. He worked at Steiner
• 44:15
  during the offseason. He had seven kids. He couldn't
• 44:19
  take the winter off, so he would go and Steiner,
• 44:22
  and he would... take bales in, weigh bales, and
• 44:26
  do things like that. What I remember is he was,
• 44:27
  or we, he was 100 % Steiner, right? So delivered
• 44:32
  all the hops to Steiner and then would go work
• 44:34
  in the warehouse in the wintertime. That's similar
• 44:37
  to some of the other countries too. But then
• 44:39
  we became, after Steiner, we moved to Vaughn
• 44:42
  Horse. By then Vaughn Horse Company came in and
• 44:45
  they offered a nickel more. And growers were
• 44:49
  moving over there and we became 100%. Vaughn
• 44:53
  Horse Grower. What happened to those guys? They
• 44:56
  went bankrupt. That nickel killed them. Yeah,
• 44:59
  there was more than that. It was how they were
• 45:05
  carrying the inventory on their books. Well,
• 45:07
  that was part of the problem. Because you helped
• 45:10
  close that company down, didn't you? Well, the
• 45:13
  Vaughn Horse Company started off. They came in
• 45:16
  the United States. They were one of the very
• 45:17
  first ones that had the extract plant. they were
• 45:19
  came out of germany hexing and then they came
• 45:23
  in they created all the warehouses at the yakima
• 45:26
  chief uh union yakima chief campus where it was
• 45:30
  all built by um louis von horse and then oh the
• 45:35
  old hop union yeah okay and then uh louis von
• 45:38
  horse went broke hop union uh we came in with
• 45:42
  a grower group western hop that didn't last very
• 45:46
  long then we took a partner with hop union Sold
• 45:49
  out to Hop Union, became Hop Union. Then Hop
• 45:52
  Union sold off the craft brew to the group, the
• 45:58
  other group, the Hop Union group. House bought
• 46:01
  the other hops. There was a time when, during
• 46:05
  that really bad time in the early 2000s, I mean,
• 46:09
  there was, oh, man, 10, 15, 20 merchants. All
• 46:13
  these guys, Morris Hanbury, Lupo Fresh. There
• 46:18
  was a bunch of them. That all went by the wayside.
• 46:22
  But going back to the deal was, so you were a
• 46:24
  grower, most of the growers, so it's kind of
• 46:26
  like proprietary varieties. But the varieties,
• 46:29
  but back in those days, the varieties that were
• 46:31
  involved were universal across all the growers.
• 46:35
  Today you have varieties that are specific to
• 46:38
  a group. I mean, there's tons of proprietary
• 46:43
  owners out there. It's almost like a brand. In
• 46:48
  my view, it was kind of a switchover. We used
• 46:51
  to have your brand was your farm or your name.
• 46:53
  Well, now if you have this variety or you have
• 46:56
  that variety, you have to come to me to get it.
• 46:59
  Is that good or bad? It's okay, I guess. Sometimes
• 47:03
  your quality before, you would have to fight
• 47:06
  on quality and yield to do it. You were more
• 47:10
  in a group environment. Now, if the only place
• 47:14
  you can get variety X, well, if you're a bad
• 47:17
  grower, well, that's the only place you can get
• 47:20
  it. How long ago do you think people started
• 47:23
  growing for more than one? Merchant? Yeah. Oh,
• 47:27
  my gosh. I mean, like on a large scale. I can
• 47:32
  remember when I was working for Yakima Chief
• 47:34
  doing procurement, I would go in to meet new
• 47:38
  growers that didn't grow. Whereas at the time,
• 47:40
  and there was oftentimes, more often with smaller
• 47:43
  growers, that they were 100 % Haws or 100 % Steiner
• 47:47
  or Hollingberry or whoever they grew for. But
• 47:49
  that was few and far between, I guess, in 2012,
• 47:54
  13. So when did it really start happening? Well,
• 47:57
  I think that, in my view, part of the reason
• 47:59
  it changed is because the growers became larger.
• 48:01
  When you were a 40 -acre grower or a 100 -acre
• 48:03
  grower or a 200 -acre grower, it was easier just
• 48:07
  to have a relationship with one. merchant what
• 48:10
  year did roy start or around what did roy start
• 48:13
  saying okay we're going to sell them more than
• 48:15
  one entity generally i would say through our
• 48:19
  history we've probably been 80 at least to one
• 48:23
  merchant and then those peripheral things you
• 48:27
  know then we start doing direct you know that
• 48:29
  was a big thorn in some of the merchant's side
• 48:31
  and that's actually at times you were blackballed
• 48:35
  from being involved in the um direct sales that
• 48:39
  happened during the ab deal when they and as
• 48:41
  a bush came out and started their direct program
• 48:43
  there was there was uh oh yeah was that the first
• 48:48
  time you straight away no we straight away a
• 48:52
  little earlier than that but oh with cores right
• 48:54
  yeah of course yeah the very first prior the
• 48:57
  first direct brewery contract with was uh with
• 49:00
  cores for tetang and then of course changed their
• 49:05
  course, and then we ended up going with an azure
• 49:07
  bush with tetanang for a long time. I was looking
• 49:11
  at a little deal from 1985. 1985, almost 80 %
• 49:14
  of our acreage was in three varieties, cluster,
• 49:18
  cascade, and tetanang. Of which we only grow
• 49:22
  one now. Yeah, right. I'd like to get some clusters
• 49:26
  back. Yeah, they were a great hop. They were
• 49:29
  easy to farm. Man, I remember seeing... some
• 49:32
  pictures of some monster cluster vines. Like
• 49:36
  I remember being over in Carpenter's office for
• 49:38
  something or just like visiting or something.
• 49:40
  And there's a picture of like, it's probably
• 49:41
  like Tom or somebody in there with this vine
• 49:44
  that was ginormous. It looks like that CTZ vine
• 49:49
  from the Redwoods last year. We should put a
• 49:53
  picture of that on social media. The Redwoods?
• 49:56
  Because people don't know what the Redwoods are
• 49:58
  when they see the photo. Oh yeah. Okay. But see,
• 50:02
  if you look back in history, there was just the
• 50:06
  management manipulation of the markets. They're
• 50:11
  just named different things today. Where did
• 50:13
  these grower divides, where did they get created
• 50:18
  in history? Because, I don't know, this is something
• 50:22
  that I struggle with on an almost daily basis
• 50:25
  is the divides, the competitiveness. And, you
• 50:29
  know, I watched you and I don't know if this
• 50:31
  was reality or if this was just my perception,
• 50:34
  but my perception was you were working really
• 50:40
  hard to try and bridge these divides in the industry
• 50:44
  over the years. And my perception was, is that
• 50:47
  you were getting screwed over. And so I don't
• 50:50
  know if that was reality or not, but for some
• 50:52
  reason, like I have this in the back of my mind
• 50:55
  that I watched you give, give, give. And I'm
• 50:58
  sure you didn't always give. You got competitive
• 51:01
  and whatnot. But generally speaking, I think
• 51:03
  at your core, I watched you try to give and bridge.
• 51:07
  And then just you're somewhat constantly met,
• 51:11
  not by necessarily an individual or an organization,
• 51:13
  but it's just constantly met by these industry
• 51:16
  forces that made it really challenging. Yeah.
• 51:20
  Yeah, that's an interesting path of discussion.
• 51:24
  Yeah, I always felt that. As a group, we were
• 51:28
  stronger than we were individually. Going back
• 51:31
  to this marketing order, it was interesting.
• 51:33
  At that time, we concentrated more on the growing
• 51:36
  side than the marketing side because we had,
• 51:39
  you know, of the 100 pounds and 50 growers, we
• 51:42
  had our two pounds. So they had to come to us
• 51:44
  for the volume. So we didn't have to worry about
• 51:47
  marketing so much because there was nothing really
• 51:49
  to market. So you concentrated on growers, on
• 51:52
  growing, and having the highest yield, you know,
• 51:55
  and things like that. quality. Well, then after
• 51:58
  the marketing order went out, it changed because
• 52:01
  it was all about the marketing. It was knowledge.
• 52:05
  You know, you read these books about Macmillan
• 52:08
  Grains and some of the great grain trading companies.
• 52:10
  It's all about knowledge. You had to be involved
• 52:13
  in the growing for sure. But it was generally
• 52:15
  more of a marketing game then. The difference
• 52:18
  between what grower A got and grower B got for
• 52:22
  price was not the two cents or a half a cent.
• 52:25
  We're talking 20, 30 cents. We're talking a dollar
• 52:28
  when you market it. You know, it was a fight
• 52:31
  because the merchants would always want to buy
• 52:33
  low. You always wanted to sell high. So it was
• 52:36
  a game of kind of chicken, both sides. Did you
• 52:41
  enjoy that game or? Oh, I guess I did. Well,
• 52:46
  it was a game. So you play the game. I mean,
• 52:49
  that was the game. Did you enjoy the game or
• 52:51
  did you enjoy the relationships that were? part
• 52:55
  of the game. I'm a very social person. I know.
• 52:58
  I don't want to put words in your mouth, but
• 53:00
  it seems like the partnerships that you gained
• 53:03
  playing the game were almost more important than
• 53:07
  playing the game. True. Because, you know, as
• 53:11
  time went on, the relationships would always,
• 53:14
  they were good relationships, good friends, a
• 53:17
  lot of good friends. If you have a good, trusted
• 53:20
  friend, you share knowledge. That knowledge is
• 53:23
  the benefit of both parties. If I share knowledge
• 53:27
  with a friend and he shares it with me, we both
• 53:30
  prosper. You know, trying to do the one -man
• 53:35
  show doesn't work very well. So then how come
• 53:39
  Roy Farms is such an island for so many years
• 53:41
  if you had this belief that a one -man show wasn't
• 53:44
  the solution? How would you classify us as an
• 53:48
  island? Oh. It's kind of their reputation. Yeah,
• 53:53
  that's definitely been our reputation. We don't
• 53:55
  play well in sandboxes with others. I mean, that's
• 53:57
  been an internal motto for a number of years.
• 54:01
  We got burned, like you said. No longer, though.
• 54:03
  We got burned a little bit through that process.
• 54:07
  The proprietary varieties is a very classic example.
• 54:11
  I mean, there was a lot of places we got burned
• 54:13
  where we worked with other models and other...
• 54:19
  organizations and it didn't work in the end it
• 54:24
  was a zero -sum game there with our loss so we
• 54:28
  went to probably the more internal model an island
• 54:33
  I guess and I think that worked for a while I
• 54:37
  think times are different right yeah I agree
• 54:39
  yeah I mean over the long term I definitely think
• 54:42
  partnerships are better than than being an island
• 54:46
  but I could I can understand that I mean I think
• 54:49
  we did get burned pretty heavily in the past
• 54:52
  in a couple of situations. Very true. You know,
• 54:55
  and then I think the craft beer movement was
• 54:57
  really interesting because prior to that, you
• 55:00
  know, 80 % of the beer was in a few people's
• 55:03
  hands, and the products that you supplied to
• 55:07
  them was very limited. And then the craft beer,
• 55:10
  now all these varieties. I mean, do we need 300
• 55:13
  hop varieties in the world or two? You know,
• 55:15
  it's crazy. I don't know. That's a hard one to
• 55:18
  answer because if we're talking about flavor,
• 55:21
  I mean, how many flavors does one need in their
• 55:23
  life? Quite a lot. Right. You know, if we're
• 55:27
  talking about, do we need more complications
• 55:29
  that come with the release of every variety?
• 55:32
  No. But the market will tell us one way or the
• 55:37
  other. Yeah. Yeah. It's the cost, too. You know,
• 55:40
  even running a breeding program, you know, these
• 55:42
  breeding programs for... Many, many years did
• 55:46
  not produce anything, public or private. And
• 55:50
  the only thing that saved, I mean that saved,
• 55:52
  that created the proprietary variety movement
• 55:55
  is the craft beer movement. Well, I think it's
• 55:59
  mutually beneficial. Yeah. Where would we be
• 56:02
  if the craft beer market had not taken off in
• 56:06
  the proprietary space? Super alphas. Super, super
• 56:10
  alphas. Super duper alphas. Yeah. Or maybe we
• 56:14
  would have bred really awesome nobles. That would
• 56:16
  have been the topic. Sorry, that would have been
• 56:18
  the focus. We would have had lower trellis. Yeah.
• 56:24
  But the proprietary, with the private programs
• 56:27
  being super focused and on a mission, they were
• 56:32
  able to create new varieties that, I mean, the
• 56:36
  market asked for and took the proprietary. True.
• 56:41
  it was a very mutually beneficial thing. And
• 56:45
  I don't necessarily think public breeding programs
• 56:48
  should be pumping out varieties in the first
• 56:53
  place. I mean, they should do foundational ones,
• 56:57
  but I think the whole purpose of public breeding
• 56:59
  is to create germplasm and foundation material.
• 57:02
  True. So the rise of proprietary varieties is
• 57:07
  interesting. Is it a function of... the varieties
• 57:10
  created or was it brewery was it created this
• 57:13
  they're the ones that went said i want that variety
• 57:15
  and it went i think it was both i mean some of
• 57:19
  the work that i i can only speak to being able
• 57:22
  to you know come up with jason perrault and working
• 57:25
  with him and seeing how he interfaced with brewers
• 57:29
  and really really spent the time to sure still
• 57:33
  does to this day spend the time with the brewers
• 57:35
  to go out in the fields and find out what they're
• 57:37
  looking for and help educate them on what he's
• 57:40
  looking for from an agronomic and a pest resistance
• 57:43
  and drought resistant and all that sort of stuff
• 57:45
  and showing options and then figuring out like
• 57:47
  how can we do this together and that's a good
• 57:50
  point it's a really cool way to collaborate it
• 57:53
  really and it's a different type of conversation
• 57:55
  how many pounds you need what price do you want
• 57:57
  it at yeah i think it's both i think it's both
• 58:01
  going back to the relationship thing and you
• 58:05
  know you sharing information with trusted partners
• 58:09
  of course you are the president of the ihgc and
• 58:13
  you have these tremendous global relationships
• 58:17
  and i know there's probably one of the most respected
• 58:20
  people in the world in hops do you think that's
• 58:23
  because of the relationships that you built with
• 58:27
  with international and domestic what stakeholders
• 58:32
  or how did that all come about and how does that
• 58:36
  those relationships play into where your success
• 58:39
  in that area has come from gosh that's that's
• 58:43
  been a journey for a long journey but i think
• 58:47
  that you know for roy farms there was a time
• 58:50
  when we were the largest farming in the world
• 58:53
  and so as people would foreign visitors in particular
• 58:59
  would come the stop was very farmed that isn't
• 59:02
  so much that ain't the case today There's other
• 59:06
  farms that are much more advanced as far as,
• 59:08
  you know, their facilities and things like that.
• 59:11
  But there was a time when the machine I'm looking
• 59:14
  at through this window was the biggest machine
• 59:16
  in the world, the double Don Howard. No one had
• 59:19
  ever seen those. Now that's pretty standard.
• 59:22
  So there was, I mean, we were just stopped on
• 59:24
  the international trail that we got to know people.
• 59:29
  I'm pretty social. Very, very, very social. Yeah.
• 59:35
  So, I mean, I think I took the time to visit
• 59:39
  a lot of the countries. I mean, there was before
• 59:41
  I became, got involved with ISGC, I was still
• 59:43
  going to the international meetings. This is
• 59:47
  really a small, it was like, this is a great
• 59:50
  group of people. You know, we're all struggling
• 59:51
  with the same problem. What was your path to
• 59:54
  get on the ISGC in the first place? And then
• 59:59
  how did you get on to being a Presidente? Well,
• 1:00:02
  first, like, I think that's. a good explanation
• 1:00:05
  it's also underplaying your role in growing those
• 1:00:09
  relationships i mean yes we were a stop yes we
• 1:00:13
  were the largest or one of the largest but i
• 1:00:17
  think it's more important where it went after
• 1:00:19
  that so circling back around to my observations
• 1:00:24
  as a young man child You were a man child? No,
• 1:00:32
  when I was younger. No, my observations when
• 1:00:34
  I was younger and even to this day around how
• 1:00:38
  you manage relationships or engage in relationships.
• 1:00:41
  So I've watched you operate with a high degree
• 1:00:46
  of integrity and curiosity. And so I think that
• 1:00:52
  that, in my opinion, has played a huge role.
• 1:00:55
  I think it speaks. to how important relationships
• 1:00:59
  are to you, and then we definitely carry that
• 1:01:02
  forward, or I try and carry that forward with
• 1:01:03
  what we're doing. The integrity is an interesting
• 1:01:07
  component of that. There were times when I probably
• 1:01:11
  sacrificed profit for Roy Farms for the integrity
• 1:01:16
  of what I said and what we do. I would say 100
• 1:01:19
  % I've witnessed that. Well, that's how you build
• 1:01:24
  relationships that last. It's integrity. And
• 1:01:29
  so things that we would say as a farm that we
• 1:01:33
  were going to do, even sometimes to the detriment
• 1:01:36
  of the farm, we would continue that path. Once
• 1:01:40
  you cross that line and you do your own thing
• 1:01:43
  to the detriment of the other side, those relationships
• 1:01:47
  were very hard to ever repair. And you talked
• 1:01:51
  about the path. For me, I served on... washington
• 1:01:57
  hop commission briefly because by then we had
• 1:02:00
  bought western hop and you couldn't be a grower
• 1:02:03
  a merchant and be on a one of the commission
• 1:02:07
  boards at that time so i resigned from the commission
• 1:02:10
  i was still involved in hop growers of america
• 1:02:13
  and then the icc back in those days the president
• 1:02:19
  of the icc was the current year's general assembly's
• 1:02:27
  country. So in other words, if the United States
• 1:02:29
  was hosting the international general assembly
• 1:02:33
  for the ICC, the president of half guards of
• 1:02:36
  America would be the president of ICC for one
• 1:02:38
  year. And there was just this constant churn
• 1:02:42
  of people, you know, you could never get anything
• 1:02:44
  really done. So, um, and the same thing was the
• 1:02:48
  representative to the ICC was the president of
• 1:02:50
  ice, uh, of the individual country. So in other
• 1:02:54
  words, as the presidents of hop guards of america
• 1:02:56
  change they would become when they were the president
• 1:02:59
  they were the representative to the icc so you
• 1:03:03
  had all this turn of people and i along with
• 1:03:06
  some other ones you know there's norm bat and
• 1:03:08
  there was a group of people at that time but
• 1:03:10
  norm was one of the leaders in this we pushed
• 1:03:14
  for the fact that you we had a permanent representative
• 1:03:17
  to the icgc which created some degree of consistency
• 1:03:23
  Norm became the president. I replaced Norm when
• 1:03:28
  he retired. That was Hopkers of America. And
• 1:03:31
  then I was a representative to ICC for a time.
• 1:03:36
  And there was a lot, there's a lot of things
• 1:03:37
  that happened. And then, you know, I left the
• 1:03:40
  Hopkers of America, but I still stayed involved
• 1:03:43
  with the ICC. And then I actually represent,
• 1:03:47
  I don't represent the United States. I represent,
• 1:03:50
  you know, Latitude 46. So, Why is that? Why do
• 1:03:55
  you represent Latitude 46? It seems like it's
• 1:03:58
  a weird loophole there. Well, what happened was
• 1:04:03
  when I left, I was on the executive committee
• 1:04:06
  of IHCC at the time. So when I was voted out
• 1:04:10
  of Hopcords of America. You were voted out? Yeah.
• 1:04:15
  Like off the island? Off the island. Jeez, what
• 1:04:19
  happened there? Oh, man, some hot goss for the
• 1:04:22
  podcast. So anyway, so, but then by then I've
• 1:04:26
  always joked around that as the ICC, it's a very
• 1:04:31
  German organization, European organization for
• 1:04:33
  the United States to be involved. So I was involved
• 1:04:36
  in the executive committee. And so I told the
• 1:04:41
  committee, I said, well, I'm going to have to
• 1:04:42
  resign because, you know, I'm not involved in
• 1:04:44
  the hop course of America anymore. So I don't
• 1:04:47
  represent the United States. That's not a requirement.
• 1:04:51
  So by then, Latitude 46 joined, who was actually
• 1:04:54
  ADHA at that time, joined, and I represented
• 1:04:58
  ADHA, and they put me back on the executive committee
• 1:05:01
  for the ADHA. Then, you know, Maggie and, you
• 1:05:06
  know, Doug McKinnon, all through those years
• 1:05:07
  when there was representatives from Hop Growers
• 1:05:11
  of America, that was a big push for the manager
• 1:05:14
  to be the representative that gave the reports
• 1:05:16
  rather than the president. He had more consistency
• 1:05:19
  and he got to know the people. And so, you know,
• 1:05:24
  right now we have Maggie and Jessica who are
• 1:05:26
  doing a fantastic job. They're the representatives.
• 1:05:28
  They switch off. Sometimes Maggie's there. But
• 1:05:32
  Maggie is also co -chair of scientific and technical
• 1:05:35
  with Eric Lehmar from Germany. You know, Ann
• 1:05:39
  George did a fantastic job with Otmar Weingarten.
• 1:05:42
  But Maggie is really doing great. And Jessica
• 1:05:45
  does a great job too. So that's how my history.
• 1:05:49
  So then I became, then I just kept being involved.
• 1:05:52
  And when the previous president, I'm not sure,
• 1:05:56
  Bernard Ingerweiler from France was the representative
• 1:05:59
  for probably 12, 14 years, the president prior
• 1:06:03
  to me. And then he retired and I was voted in.
• 1:06:07
  So I've been there the last 10 years. And it
• 1:06:11
  was also during COVID. I had some technical knowledge
• 1:06:15
  that allowed us to create the whole online portal
• 1:06:20
  for ICC, you know, Zoom calls, which, you know,
• 1:06:23
  that was trying to get, you know, 23 countries
• 1:06:26
  online at one time was pretty interesting. But
• 1:06:30
  we got through it. What's your favorite thing
• 1:06:33
  about being on the, or being the El Presidente?
• 1:06:37
  It's not so much being the president. It's just
• 1:06:39
  being involved in those guys. Great people. You
• 1:06:42
  know, what's funny is you go over there and you
• 1:06:45
  share beer. Sometimes, you know, you come up,
• 1:06:50
  you all have the same problems. It's the one
• 1:06:52
  thing that's interesting I've learned is going
• 1:06:55
  to all these different countries, it's all the
• 1:06:56
  same problems. We all, as growers, have the same
• 1:06:58
  problems. You know, maybe the little nuances
• 1:07:01
  are different, but it's all the same. So it's
• 1:07:03
  sharing the pain. I gave Johann Pickemeyer, retired
• 1:07:08
  this past year. I gave a speech at his retirement.
• 1:07:14
  And one of the things I said was, many nights
• 1:07:18
  we spent many late hours drinking beer, solving
• 1:07:21
  the world's problems. And we'd wake up, the light
• 1:07:24
  of day would show us the problems are still there.
• 1:07:28
  We didn't solve anything. But we tried. We kept
• 1:07:32
  trying. It's the people. It's not so much being
• 1:07:36
  the presidency. It's nice, but it doesn't. it's
• 1:07:41
  really about the people meeting the people and
• 1:07:43
  there are a lot of great people in this industry
• 1:07:46
  brewers growers others and that's a hard thing
• 1:07:51
  too is that there's a lot of great people and
• 1:07:54
  there's a lot of pressures and in ways that relationships
• 1:07:59
  can be damaged a lot of ways relationships can
• 1:08:03
  be built a lot of ways relationships can be damaged
• 1:08:05
  yeah and you've done a hell of a job on the relationships
• 1:08:11
  and the industry i was just thinking about for
• 1:08:14
  those of you that don't know one less roy has
• 1:08:20
  all three levels of the order of the hop oh yeah
• 1:08:24
  which is a the thing's been going on for over
• 1:08:28
  600 years are you one of two or one of one that
• 1:08:31
  that's my question how many that's gotten all
• 1:08:34
  three in life because i think some people have
• 1:08:36
  gotten all three but Well, in the United States,
• 1:08:39
  there is myself and George Signorotti received
• 1:08:43
  the third one, but that was posthumously. Most
• 1:08:45
  people got it posthumously. When I was nominated
• 1:08:51
  and approved to get the third, the joke was could
• 1:08:54
  I live long enough to actually receive it, which
• 1:08:58
  I did. How many people have gotten all three?
• 1:09:01
  In the United States, there's only two of us.
• 1:09:04
  Germany has, I think, four or five. Are you the
• 1:09:07
  only one that's got all three while being alive?
• 1:09:09
  In the United States. Congrats. So you got the
• 1:09:12
  knight, the officer, and the commander. Yes.
• 1:09:17
  That's a pretty big deal. I guess you hang around
• 1:09:19
  those guys long enough. I don't think. Oh, yeah.
• 1:09:23
  I know a lot of people that have been hanging
• 1:09:25
  around those guys for a long time. Well, it's
• 1:09:28
  a great honor. It is. I think you downplayed
• 1:09:30
  it. I think it's well -deserved. Well, thank
• 1:09:33
  you. How much longer are you going to stay on
• 1:09:35
  the IHTC? Well, we've had that discussion. How
• 1:09:41
  do we transition? I've made it known I'm not
• 1:09:46
  going to do this forever, but as long as I can
• 1:09:49
  be relevant and effective and they're comfortable.
• 1:09:53
  Basically, the executive committee says, you're
• 1:09:55
  doing fine, so we don't want to change yet. But
• 1:10:00
  I suppose a couple more years. I enjoy the travel.
• 1:10:02
  It allows me to do other things. I'm over there
• 1:10:06
  at least three times a year, so that allows me
• 1:10:08
  to walk or do other things like that. Oh, yeah.
• 1:10:11
  For those of you that also don't know, you take
• 1:10:15
  big, long walks all over the world. Walkabouts.
• 1:10:20
  Walkabouts. I've been very blessed with decent
• 1:10:22
  feet, decent knees, and decent hips. How'd you
• 1:10:27
  get into that? Oh, my gosh. Ten years ago, a
• 1:10:32
  friend of mine overseas said, you want to go
• 1:10:34
  for a walk? I said, sure. And it turned out we
• 1:10:38
  walked up from Lisbon all the way up to Santiago,
• 1:10:42
  up through Portugal. Who was that? Peter. How
• 1:10:46
  long did that take? That doesn't sound like a
• 1:10:49
  walk. That sounds like a journey. It was a journey.
• 1:10:51
  Yeah. And Gary Morford and myself have done the
• 1:10:55
  whole Camino, you know, over 600 and some miles,
• 1:10:58
  700 miles. from France all the way across Spain
• 1:11:01
  to Santiago. Two tranches. Actually, three tranches.
• 1:11:06
  One tranche in France, half the 250, a little
• 1:11:11
  more, and one tranche and another 250 on the
• 1:11:14
  other tranche. How many bottles of wine do you
• 1:11:16
  go through on a given walk? Peter did the math
• 1:11:21
  on that once. It's a lot. The days are very structured
• 1:11:30
  in the sense you walk. We don't drink in the
• 1:11:34
  daytime because the beer is great at lunch, but
• 1:11:38
  an hour later when you're about three hours left
• 1:11:40
  to go walking, it doesn't work so well. So you
• 1:11:43
  usually have a beer when you get done with the
• 1:11:44
  walk in the day, and then we have dinner and
• 1:11:47
  maybe a bottle of wine maybe. You've got to get
• 1:11:51
  back up again the next morning at 6 and do it
• 1:11:53
  again. It's just a very structured life. And
• 1:11:58
  wine's cheap over there. Actually, just a little
• 1:12:02
  FYI, I am leaving next week to repeat that same
• 1:12:07
  path, a little shorter version with Andy. You're
• 1:12:11
  going to smoke him. I don't know. I would love
• 1:12:15
  to be a fly on the wall. Or just a fly like flying.
• 1:12:20
  With the walking. No, we'll have fun. Then next
• 1:12:22
  year, I hope, do one with Michael. And then my
• 1:12:26
  daughter, I don't know how we're going to do
• 1:12:27
  it. We'll see how things are going, if I can
• 1:12:28
  get away. Yeah. Oh, I checked your calendar.
• 1:12:31
  Yeah, I think you can probably go with your dad
• 1:12:33
  to go walk. I think that's fine. Yeah. Looking
• 1:12:38
  forward. It's a special experience. I've only
• 1:12:40
  walked with one person at a time, sometimes a
• 1:12:43
  second one. Generally just two people. Just circling
• 1:12:47
  back around to relationships. So if I'm hearing
• 1:12:50
  this right, so 25 is Andy, 26 is Mike, 27 is
• 1:12:55
  Liz, and then 28, of course, that's in celebration
• 1:12:59
  of the adoption and their name change. That's
• 1:13:03
  my... I accept that. There we go. Put it on the
• 1:13:10
  calendar. Solidifying. Your pole position. Yeah.
• 1:13:17
  My pole position. That's right. But, you know,
• 1:13:22
  it's just kind of circling back around this whole
• 1:13:24
  free market and managed production. Managed production
• 1:13:30
  is always a part of the whole thing. Now, the
• 1:13:33
  merchants may try to manage it by not buying
• 1:13:36
  to lower the price. Manipulation. You know, and
• 1:13:40
  the idea of the proprietary varieties was they
• 1:13:44
  had knowledge that we did not have. That didn't
• 1:13:49
  work out so well. Why do you think, I mean, why
• 1:13:54
  would they, why when the market signals were
• 1:13:57
  there in 17, I've gone back and looked, in 17,
• 1:14:00
  even 18, 19, there was already signals starting
• 1:14:03
  to kind of pop up about oversupply. Yeah, I think.
• 1:14:09
  Looking at this, there was always a way to fix
• 1:14:14
  it. And so, because craft was growing at the
• 1:14:18
  steady state. And then, yeah, I think 17 or 18,
• 1:14:23
  there was a humongous crop. And I remember we
• 1:14:28
  had to adjust some acres back then. But by the
• 1:14:31
  time you realize the pull rate is slowing down,
• 1:14:34
  you're already into the next crop year. But then
• 1:14:36
  you have, you know, Germany had like, what, two
• 1:14:39
  out of three really, really bad alpha crops.
• 1:14:43
  And so there's this generic market that took
• 1:14:46
  it. And then when you get into 2020 with COVID,
• 1:14:49
  you know, I know that there was, I can only speak
• 1:14:53
  for one, but we did take a reduction that year
• 1:14:58
  kind of across the board. You saw this dip in
• 1:15:03
  demand, but then all of a sudden it re -spiked
• 1:15:05
  back up. It didn't spike as high, but it was
• 1:15:10
  looking at all of the trend collectively versus
• 1:15:14
  the year over year, and I've been wondering why
• 1:15:17
  it didn't get caught earlier as well. I thought
• 1:15:22
  I would pose a question to you because you have
• 1:15:24
  different knowledge than we had, was the fact
• 1:15:28
  that was the change when you saw you said you
• 1:15:30
  saw a spike in demand. Was that for new varieties
• 1:15:33
  or was it for the existing varieties? It was
• 1:15:37
  a rebound off of the COVID. The basic varieties.
• 1:15:41
  Yeah, just the varieties that were being used.
• 1:15:43
  There was a slide on the HGA stat pack. I think
• 1:15:48
  Lewis Gimbel showed it on the merchant panel,
• 1:15:50
  not the stat pack, that showed the dip and then
• 1:15:55
  the rise back up the next year. And I think it
• 1:16:00
  sent... interesting market signals where people
• 1:16:05
  thought maybe we're getting right back into growth
• 1:16:06
  again, but it wasn't. It still never reached
• 1:16:10
  pre -COVID levels. Well, the beer market had
• 1:16:14
  started to change. Beer styles had already started
• 1:16:17
  to change. So there was a backlog of some of
• 1:16:20
  these varieties that were used for the IPAs and
• 1:16:23
  stuff. So that created a backlog over there.
• 1:16:26
  But the breweries had to use those up to... You
• 1:16:30
  just couldn't let them sit there. It was a complicated
• 1:16:33
  time, I think. But the signals were there as
• 1:16:36
  far as I'm concerned. Yeah, you know, it's something
• 1:16:38
  that you said earlier that I've been thinking
• 1:16:40
  about. I'm really glad we are doing this podcast
• 1:16:43
  today because there's things that I hadn't really
• 1:16:46
  thought about. But on the free market public
• 1:16:48
  variety piece and how it corrects faster, it
• 1:16:55
  corrects both in supply and price. right out
• 1:16:59
  of the gates because anybody can find a home
• 1:17:02
  for them and on the one hand that makes me really
• 1:17:05
  appreciate what the you know we've benefited
• 1:17:09
  also from growing proprietary hops here even
• 1:17:12
  for other entities but the the prices you know
• 1:17:16
  remained relatively stable it's the supply that's
• 1:17:20
  really dropped quite quickly but that's also
• 1:17:24
  to your point about you know Some of that supply
• 1:17:27
  could have gone down sooner where the public
• 1:17:30
  thing just crashed like a rock fast, fast. And
• 1:17:36
  people weren't willing to purchase them anymore.
• 1:17:40
  And everybody was getting rid of whatever they
• 1:17:43
  had for as cheap as possible. It's kind of an
• 1:17:47
  interesting dichotomy, I suppose. Yeah. Well,
• 1:17:50
  I agree that it's interesting because in the
• 1:17:53
  public varieties, it's a brutal. It was a brutal
• 1:17:57
  reaction to the market. I mean, very low prices,
• 1:18:00
  very high prices. And like I've told, and then
• 1:18:03
  the proprietaries, I think their hope was to
• 1:18:07
  modulate that adjustment so it wasn't so great
• 1:18:10
  and keep the prices at a more modest level or
• 1:18:15
  a consistent level. I mean, I always tell people,
• 1:18:20
  we talk about this. The market, you look at some
• 1:18:22
  of the prices. During the marketing order days,
• 1:18:24
  the price was very stable, just moving up very
• 1:18:26
  slowly. Not a lot, just kept going up. Then after
• 1:18:30
  the marketing order left, you start seeing these
• 1:18:32
  gyrations in price. And the thing is, like I've
• 1:18:36
  told breweries, many people we've met over the
• 1:18:39
  years and we sold hops to was, you know, in the
• 1:18:42
  end, folks, we have to make a profit. Now, the
• 1:18:46
  way this thing is going, at times... you're getting
• 1:18:50
  prices that we lose money. Then there's times
• 1:18:54
  when we get a very high price. And that average
• 1:18:58
  makes us viable as an industry. And I said, so,
• 1:19:02
  you know, how we do this, we can try to modulate
• 1:19:07
  these highs and lows, which is not good for anyone.
• 1:19:09
  It's very inefficient. You know, trellis coming
• 1:19:12
  out, trellis coming back in. You're planting
• 1:19:15
  hops, not planting them. So that's what... You
• 1:19:19
  know, we are involved in some of these cost plus
• 1:19:22
  other models that we were trying to get involved
• 1:19:24
  with to help modulate those gyrations. But in
• 1:19:30
  the end, it has not seemed to work. Well, I think
• 1:19:34
  one thing we haven't talked about that adds a
• 1:19:36
  layer of complexity to this desire to have sustainability
• 1:19:41
  or pricing consistency is... the conversation
• 1:19:47
  around new infrastructure or growth needs and
• 1:19:52
  i kind of have a feeling that things got a little
• 1:19:56
  hazy in recent years because you know there's
• 1:20:05
  there's one price that's required to sustain
• 1:20:07
  a mature or a an existing operation that doesn't
• 1:20:12
  have a lot of CapEx needs or that is, you know,
• 1:20:15
  invested slowly over time, right? And then there's
• 1:20:18
  a whole different price that's needed if you
• 1:20:20
  need to go install a new harvesting facility.
• 1:20:23
  And then, okay, and then, okay, if that's a need,
• 1:20:26
  a short -term need, then what happens to pricing
• 1:20:28
  on the back end of that? Should it come down?
• 1:20:32
  Should it stay high? Depends on inflation. Yeah.
• 1:20:37
  It comes back to the royalty question. Do the
• 1:20:41
  royalties at some point in time cover the cost
• 1:20:44
  of developing that variety and getting up to
• 1:20:46
  that point? Should they always continue? Or is
• 1:20:50
  it the royalty now is used to produce something
• 1:20:53
  new? That's a big question. Depends on why they
• 1:20:58
  started the... Well, the worst thing to have
• 1:21:00
  in the proprietary varieties is the public's.
• 1:21:02
  In a sense, vice versa. But more so on the public
• 1:21:06
  side because the lower price of the... Public
• 1:21:10
  varieties puts tremendous pressure on the proprietary
• 1:21:13
  price point. You know, I remember the workforce,
• 1:21:18
  Jim Boyd once said, give me 20 varieties and
• 1:21:21
  I will produce any beer in the world. Oh, you're
• 1:21:24
  talking about fractioning and recombining oil
• 1:21:27
  compounds. Because they all have the same deals.
• 1:21:29
  But what public varieties do is when the price
• 1:21:32
  goes down, it puts tremendous pressure on the
• 1:21:33
  proprietaries. Because the brewery can make the
• 1:21:37
  choice to... switch the recipe yeah and then
• 1:21:41
  as you know when you had when you had static
• 1:21:43
  beer brands things didn't change much because
• 1:21:47
  you had these hops went into it and it never
• 1:21:49
  changed now the beer market's changing so that
• 1:21:52
  allows the breweries opportunity to change to
• 1:21:55
  a new variety but the other the flip side of
• 1:21:58
  that too is that when the market goes wild publics
• 1:22:01
  are going it's a pure supply and demand so they
• 1:22:03
  are going to go crazy price but if the proprietary
• 1:22:05
  companies are managing that well, then they don't
• 1:22:10
  pay the higher price then. True. Going back to
• 1:22:14
  the cost plus and the variety mix question and
• 1:22:16
  all of that sort of stuff, it makes me wonder
• 1:22:19
  if the cost plus model doesn't work with the
• 1:22:25
  big brewers, but it should work really well with
• 1:22:29
  craft brewers. Small to midsize. Yeah, and here's
• 1:22:33
  why. Because it doesn't matter. Over a longer
• 1:22:37
  period of time, macro brewers, your huge multinationals,
• 1:22:43
  have two different regions predominantly that
• 1:22:46
  they can purchase from. And in all likelihood,
• 1:22:51
  one of them is going to be more competitively
• 1:22:55
  priced at any given time. So they are incentivized
• 1:22:58
  to play the game by diversifying because you
• 1:23:02
  always get lower. prices on average so for example
• 1:23:06
  a fascinating fact that i learned a few years
• 1:23:09
  ago is that the swing currently in today's acreage
• 1:23:13
  profile or mix alpha and aroma the german swing
• 1:23:18
  between a good crop and a bad crop is bigger
• 1:23:22
  than the total alpha produced in the u .s oh
• 1:23:26
  wow it's because they don't swing like the u
• 1:23:30
  .s might swing on alpha like what 10 above average
• 1:23:34
  or 10 below germany can go 30 high or they can
• 1:23:39
  go 50 60 low it's a massive swing and so like
• 1:23:45
  right now if germany has a huge crop in 2025
• 1:23:48
  the price is going to fall out the bottom and
• 1:23:52
  it doesn't matter if you have a cost plus model
• 1:23:56
  by and large like no big brewer is going to say
• 1:23:59
  yeah i'm going to lock all my volume into stable
• 1:24:02
  price for that region because like they're not
• 1:24:06
  going to buy all american hops because they can
• 1:24:09
  just wait for the big crop to come in over in
• 1:24:13
  germany and buy them for way less i never thought
• 1:24:18
  about that i hadn't either that's kind of interesting
• 1:24:20
  yeah maybe it seems like most of the times you
• 1:24:23
  think about cost plus on larger volumes maybe
• 1:24:26
  there's a limit to yeah because a craft brewer
• 1:24:29
  that's using an aroma variety like let's say
• 1:24:32
  you are a million barrel which there's only a
• 1:24:34
  handful of them but let's say you're a million
• 1:24:37
  barrel half million barrel doesn't matter craft
• 1:24:39
  brewery you're still only using for your brands
• 1:24:43
  hops in all likelihood that are produced in a
• 1:24:47
  certain region like if you're buying or if you're
• 1:24:50
  using galaxy you're not going to substitute something
• 1:24:52
  for that so it's only coming out of australia
• 1:24:55
  or if you're using cascade it's coming appreciably
• 1:24:58
  out of the pacific northwest somewhere and so
• 1:25:01
  you're kind of incentivized to stabilize your
• 1:25:03
  pricing where alpha is just alpha yep i mean
• 1:25:10
  i think you look at the market you know you have
• 1:25:12
  what we call varietal demand so what you were
• 1:25:16
  speaking to from like say galaxy as an example
• 1:25:18
  is from australia so there's a need for that
• 1:25:21
  that particular variety then you have generic
• 1:25:25
  that you spoke to also generic is one that's
• 1:25:28
  kind of the wild card you know everybody dumps
• 1:25:31
  if you got something extra dump it into the generic
• 1:25:32
  market then you start getting into i think these
• 1:25:35
  all these products coming out the next level
• 1:25:39
  of product research and product names how can
• 1:25:43
  you even keep up with what those are it's crazy
• 1:25:46
  i mean they're all generally speaking the same
• 1:25:50
  yeah or most of them are Like the same general
• 1:25:53
  idea? Yeah. There's just 50 different brands.
• 1:25:57
  Of the same thing. And the thing is, going back
• 1:26:00
  to the cost plus model, which goes back to my
• 1:26:03
  earlier statement about we as an industry, and
• 1:26:07
  that includes worldwide, we need to have a price
• 1:26:10
  average over a period of time to give us a profit.
• 1:26:14
  We have to. There's just no way. There's times
• 1:26:16
  when we lose money, and there's times when we
• 1:26:19
  make a crap load of money. And that was what
• 1:26:22
  keeps every grower going. It's like that one
• 1:26:25
  shot in golf. I'm coming back because I made
• 1:26:28
  that great shot. That's not what keeps me going.
• 1:26:30
  No. But it's an illustration and it resonates
• 1:26:33
  with me, I'll tell you. Absolute horrible golfer
• 1:26:37
  that still goes back for more pain. I'm like,
• 1:26:41
  no, I can make that shot again. Yeah. So, I mean,
• 1:26:45
  is there, I don't know, you know. Like Michael
• 1:26:49
  said earlier, I said, you know, free market versus
• 1:26:53
  managed market or whatever. I mean, I've done
• 1:26:57
  the full gamut from being an advocate for management.
• 1:27:01
  But in the end, you can never do it. There's
• 1:27:05
  too many players. You know, the breweries like
• 1:27:08
  Cost Plus because when they put it in, it was
• 1:27:11
  when the prices were high, so we put this in
• 1:27:13
  to bring the price down. And the growers... When
• 1:27:17
  the price goes 3x, growers are going to go, I
• 1:27:21
  don't like this cost plus. I can give two craps
• 1:27:25
  about that. When a market goes wild, if we can
• 1:27:30
  just chip away a nice little profit, you would
• 1:27:34
  never go broke? So you're advocating for a managed
• 1:27:39
  system? Well, I'm not advocating for a manipulated
• 1:27:43
  system. I'm advocating for... And maybe I'm just
• 1:27:50
  not completely burnt out on this idea yet, but
• 1:27:52
  I'm advocating for a model where it's more of
• 1:27:55
  a win -win and fair and sustainable. And we can
• 1:28:02
  focus on other issues that arise in our businesses
• 1:28:05
  because they always do and not have the relationship
• 1:28:08
  be drugged down by this back and forth, up and
• 1:28:11
  down. There's a certain amount of it that's unavoidable
• 1:28:14
  and that's fine. That's the game. That's the
• 1:28:19
  business. But let's try and limit that as much
• 1:28:22
  as possible. That's what I'm advocating for.
• 1:28:25
  I think there's maybe a model out there in the
• 1:28:30
  future. The problem that we have is we're dealing
• 1:28:33
  with an agricultural crop that has variability.
• 1:28:36
  Exactly. So why focus on trying to limit that
• 1:28:41
  variability in the field? But if you're constantly
• 1:28:43
  all over the board trying to manage all these
• 1:28:45
  other pieces of the business, then that variability
• 1:28:48
  can increase. Then you have variability on variability.
• 1:28:51
  So it's like at the end of the day, and that's
• 1:28:55
  where it's not a black and white thing, no risk
• 1:28:58
  versus a lot of risk or variability versus no
• 1:29:04
  variability. It's that at the end of the day,
• 1:29:06
  we are an agricultural company, and we're always
• 1:29:10
  going to have variability due to weather and
• 1:29:13
  other things, execution. I think it'd be a lot
• 1:29:18
  healthier if there was a little bit less market
• 1:29:21
  volatility. Yeah, I think it'll get to that eventually.
• 1:29:26
  I mean, the only other option, if you don't get
• 1:29:29
  to that, is massive consolidation, where you
• 1:29:33
  get into just a handful of players again. In
• 1:29:37
  some ways, I don't know how unavoidable that
• 1:29:39
  is, and in other ways, I don't know if that's
• 1:29:41
  a bad thing. That's the way it's going. And that's
• 1:29:46
  the way the world works is we hear that from
• 1:29:49
  brewers. They were expecting, you know, people
• 1:29:52
  are naming what we did with Crosby as consolidation,
• 1:29:56
  which not right or wrong or, but I mean, either
• 1:30:02
  way entities working together or one entity buying
• 1:30:06
  another or something so that you can get away
• 1:30:09
  from some of this perpetual whack -a -mole that
• 1:30:13
  we play. There's definitely going to be consolidation
• 1:30:17
  slash hopefully it's more collaboration in the
• 1:30:21
  independent space here in the upcoming years.
• 1:30:24
  I think the brewery, I think there's a better
• 1:30:28
  education of the breweries and to some degree
• 1:30:32
  the merchants. I think people are starting to
• 1:30:34
  understand there is a need, let's call it sustainability
• 1:30:36
  or whatever, sustainable pricing. God, history
• 1:30:42
  is littered with... or systems that tried to
• 1:30:47
  do that from England comes to mind. Prior to
• 1:30:52
  involvement in the EU, they had requirements
• 1:30:57
  that English beer and English hops, which worked
• 1:31:00
  out well. The farmers did okay, but there was
• 1:31:05
  no incentive for them to improve because it was
• 1:31:09
  a cost -plus model. Yeah, that is one of the
• 1:31:12
  tricks is how do you build I think for us or
• 1:31:15
  for me, it's kind of easy because that's in my
• 1:31:20
  DNA. It's in our DNA to always look for a better
• 1:31:22
  way to do it. And so cost plus model, performance
• 1:31:26
  -based model or not, I think I know we're always
• 1:31:31
  going to be looking for ways to improve. Yep.
• 1:31:33
  Well, I think that some of the later models or
• 1:31:36
  iterations of the cost plus. I think it's performance
• 1:31:39
  -based, isn't it? I don't know. There's a different
• 1:31:42
  terminology. Obviously, it's just the easiest
• 1:31:43
  one to use, was that you had to have a gain of
• 1:31:48
  efficiency over time. You couldn't just keep
• 1:31:51
  going, the price going higher and higher. There
• 1:31:53
  had to be benefit to both sides. And that was
• 1:31:55
  a good idea. And, you know, when the prices go
• 1:32:00
  low, the breweries want, you know, they don't
• 1:32:02
  like it. When the prices are high, the growers
• 1:32:05
  don't like it because you... You have to get
• 1:32:07
  into a mindset of the opportunity. It's kind
• 1:32:12
  of a static world. So as a farmer, if you're
• 1:32:16
  in a cost plus and you just have this static
• 1:32:18
  price point going forward, what's the excitement?
• 1:32:21
  What is the excitement? For me, it's the dirt.
• 1:32:24
  It's farming well. I've gotten drugged down by
• 1:32:29
  the toxicity of the industry over the years,
• 1:32:32
  generally speaking, and it's... to some degree
• 1:32:36
  it's it's changed my enthusiasm now with in a
• 1:32:42
  roundabout way with the chaos right now comes
• 1:32:45
  opportunity and so that's exciting the creativity
• 1:32:48
  that comes with the opportunity right now but
• 1:32:51
  i know when the dust settles it's there's going
• 1:32:55
  to be relationships that have been built in relationships
• 1:32:58
  that have hopefully not been destroyed but challenged
• 1:33:02
  and so that's going to be a hard one to reconcile
• 1:33:06
  in my brain. But at the end of the day, I can
• 1:33:11
  easily go back to being excited about farming.
• 1:33:15
  But all of the other toxicity, I do not like.
• 1:33:19
  Yeah, I mean, farming is something that's being
• 1:33:22
  involved in the land day in and day out is exciting.
• 1:33:27
  It's been one of the highlights of my career.
• 1:33:30
  I mean, those little... incremental gains, you
• 1:33:34
  say, oh, I can do it this way, and it works.
• 1:33:37
  And that takes a lot of time, too, and focus.
• 1:33:41
  And in the end, I don't think there is a solution
• 1:33:43
  to, a big solution to this problem, but there
• 1:33:46
  might be incremental solutions that make it better.
• 1:33:50
  I will say, too, one of the things we've always
• 1:33:52
  been good at is problem solving with brewers.
• 1:33:55
  Yep. And so chaos aside, there's always going
• 1:33:58
  to be problems, and then that's where... communication
• 1:34:02
  relationships problem solving those will continue
• 1:34:06
  on and so even if you removed all the market
• 1:34:11
  dynamics and i guess excitement to some i think
• 1:34:16
  the problem solving will always be there and
• 1:34:18
  that's that's exciting too yeah which goes back
• 1:34:21
  to i think that's absolutely right you need it's
• 1:34:25
  a win -win it has to be a win -win for both parties
• 1:34:27
  it's like this collaboration with Crosby. It's
• 1:34:30
  a win -win for both parties. The breweries, you
• 1:34:32
  know, it's not a I win, you lose deal proposition,
• 1:34:36
  which has been with the breweries in some cases.
• 1:34:38
  It's like you say, solving their problems. They
• 1:34:40
  have problems too. We have problems as farmers.
• 1:34:43
  You share the problems and you work through it.
• 1:34:45
  I mean, it may not be equal at times, but generally
• 1:34:48
  the conversation itself creates a better place.
• 1:34:54
  Yeah, I think. listening to this and talking
• 1:34:57
  through this and then you know the responses
• 1:34:59
  we've got from other podcasts that we've done
• 1:35:03
  it seems to point towards or shows that I think
• 1:35:08
  this show has a purpose because it's leading
• 1:35:15
  to more conversations and discussions about how
• 1:35:18
  can we do this better and we said on that first
• 1:35:21
  episode that Part of the goal of all of this
• 1:35:23
  is so that us and others in the industry, brewers,
• 1:35:28
  growers, merchants, can start doing this in a
• 1:35:30
  way that is sustainable and beneficial to the
• 1:35:37
  entire supply chain. It's not going to be a perfect
• 1:35:40
  solution. It's never going to be perfect. And
• 1:35:42
  that's where people get hung up sometimes. It's
• 1:35:44
  like, well, why even try? It's not going to be
• 1:35:46
  perfect, and you're not going to be able to solve
• 1:35:47
  everything. It's like, well, that's the wrong
• 1:35:49
  attitude. Perfection doesn't exist, and if you
• 1:35:53
  never start, you're never going to move forward.
• 1:35:56
  Move forward isn't moving forward to perfection.
• 1:36:00
  It's just moving forward. Progression. Progression.
• 1:36:05
  I think everyone's got the same problems, and
• 1:36:09
  that's why we're talking about this international
• 1:36:10
  component. You share problems, and out of that
• 1:36:14
  comes maybe incremental gains, maybe a grand
• 1:36:17
  solution, but generally not, just incremental
• 1:36:20
  gains. For everybody. Having been through two,
• 1:36:24
  three, how many? Three, four cycles. I mean,
• 1:36:28
  major cycles like the one that we're in right
• 1:36:30
  now. Four? What's the number? Yeah, probably
• 1:36:32
  four. Four. And I imagine that it's just a variation
• 1:36:36
  of the same thing. So in your mind, what, if
• 1:36:40
  anything, can we do as an industry or can we
• 1:36:44
  do as a supply chain to maybe come out of this
• 1:36:48
  with a step forward? Well, I think communication,
• 1:36:53
  talking about what you're doing. I think it's
• 1:36:57
  interesting. I was thinking back in the early,
• 1:37:00
  early days, the merchants did not want the brewers
• 1:37:03
  being growers. I mean, there was just like a
• 1:37:05
  firewall there. I mean, it wasn't the absolute
• 1:37:09
  firewall, but it was a firewall. And then I remember
• 1:37:12
  when, as Hop Growers of America, I was involved
• 1:37:16
  in the very first. hot promotion where we were
• 1:37:18
  bringing brewers to this area to look at our
• 1:37:22
  industry merchant side as well as the grower
• 1:37:25
  side it was very controversial at the time but
• 1:37:28
  i think you know things have changed a little
• 1:37:30
  bit so more open to that the breweries requested
• 1:37:32
  it so they want to know where where it came from
• 1:37:36
  that's how the craft so the craft beer movement
• 1:37:39
  has had some positive effects on on i think on
• 1:37:42
  our industry and the industry worldwide being
• 1:37:46
  involved with knowing the growers, knowing the
• 1:37:49
  product. And there's nuances between growers.
• 1:37:53
  The same variety, sure. Just where we farm in
• 1:37:56
  Moxie is different than, say, Topnish or Prosser
• 1:37:59
  or even Idaho or Oregon. They talk about terroir.
• 1:38:04
  Well, yeah, it's there. You can study it. But
• 1:38:08
  the fact is it's grower -based, it's elevation
• 1:38:11
  -based, it's latitude -based. One of the things
• 1:38:16
  we were talking about coming out of CBC was there's
• 1:38:19
  a person for everyone. Yeah, there is. Yeah.
• 1:38:23
  There's something for everybody in there. Like
• 1:38:26
  you say, it's not going to be a grand solution.
• 1:38:29
  I think that you find your place and you go forward
• 1:38:33
  and both sides win. It's a win. I wish I could
• 1:38:38
  come up with a grand solution. I don't think
• 1:38:41
  there is one. No. I think there are better solutions
• 1:38:44
  and progressive ones. Yeah. Yeah. Hopefully that's
• 1:38:47
  what we're doing here. Yeah. Now, I think, you
• 1:38:50
  know, the only question is, you know, like these
• 1:38:52
  varietal differences, like let's say Galaxy from
• 1:38:55
  Australia or it's Magnum from Germany or it's
• 1:38:59
  Azaka or Citra or whatever it may be from the
• 1:39:03
  United States or, you know, maybe also whatever.
• 1:39:05
  Those are always, I always struggle with how
• 1:39:08
  those varieties. manifest themselves into the
• 1:39:12
  system you know are they that good or is a brewery
• 1:39:16
  just looking for diversity of supply those are
• 1:39:18
  problems i think there's really a the studying
• 1:39:21
  of that is has value it's like the germans right
• 1:39:24
  now we had this discussion the other day is the
• 1:39:27
  infrastructure there's so much infrastructure
• 1:39:29
  been put in place in the last 10 years and the
• 1:39:34
  cost of it and how does it go from costing 10
• 1:39:38
  million to zero value And so the extraction facilities
• 1:39:44
  available worldwide, this thing can't get too
• 1:39:47
  far out of whack. It can't. We need the facilities
• 1:39:50
  and their balance to say between north, south,
• 1:39:54
  east, west. I mean, I remember it wasn't so long
• 1:39:57
  ago when a hot picket machine had zero value
• 1:40:00
  on the market, zero. I think there's probably
• 1:40:03
  a couple of those on the market right now. Yeah,
• 1:40:05
  it's probably, we're back there. Then when you
• 1:40:08
  start doing your financials, all of a sudden,
• 1:40:11
  The pick machine value was based on its replacement
• 1:40:14
  cost. I think we're back to that, too. Yeah.
• 1:40:18
  Or wait. No, the other side. Yeah, yeah, we're
• 1:40:20
  back to the other side of that. Mm -hmm. That
• 1:40:23
  was part of the challenge with some growers is
• 1:40:28
  they're carrying it on their balance sheet at
• 1:40:30
  replacement value. Yep. And essentially what
• 1:40:34
  that did, it allowed them to leverage up higher.
• 1:40:36
  Mm -hmm. Over leverage. Over leverage. But you
• 1:40:40
  had to to keep up with the growth too. Yeah,
• 1:40:42
  yeah. Well, what are your final words? Hit us
• 1:40:47
  with some wisdom. Proud of you guys. Oh, thanks.
• 1:40:52
  I think to bare your soul to the industry, to
• 1:40:57
  share what you consider to be not only our benefit,
• 1:41:02
  but benefits for the industry is good. It needs
• 1:41:06
  more of that. Love it. Just carrying on in the
• 1:41:09
  tradition of Les Roy relationships. Absolutely.
• 1:41:14
  Well, thanks for coming on. Glad to be here.
• 1:41:18
  And maybe, hopefully, you'd invite me back again.
• 1:41:21
  You did good. Oh, yeah. Not too many squirrel
• 1:41:23
  movements. A high degree of behavior. It's that
• 1:41:27
  little slingshot you used to hit me every time
• 1:41:29
  I started to talk. You're not supposed to talk
• 1:41:31
  about that. Yeah, you're not supposed to talk
• 1:41:32
  about the buzzer we had hooked up to you. We
• 1:41:35
  got it at Petco. Speaking of that, Andy did that
• 1:41:39
  once. Do you remember that? Yep. Did you ever
• 1:41:42
  hear about that? Andy put a dog shock collar
• 1:41:44
  on. I think it was like at Christmas. Well, we
• 1:41:46
  had gotten one for the little yapper that mom
• 1:41:49
  had. It was a, what was it? It was a schnauzer.
• 1:41:52
  And so we got a little collar you put around
• 1:41:56
  there. When they bark, it gives them a little
• 1:41:59
  tingle. It stops him from barking. So Andy put
• 1:42:01
  it on, and he started barking. And then it goes
• 1:42:03
  like, beep, beep, beep. And he barked again,
• 1:42:05
  and he was like, ah. Didn't that drop him to
• 1:42:08
  the ground? I don't think it dropped him to the
• 1:42:09
  ground, but it was obvious that it didn't feel
• 1:42:11
  good. All right. Very good. Love it. Thank you.
• 1:42:16
  Thank you. No dirt, no flowers. Hi, everyone.
• 1:42:21
  Andy here. Just wanted to chime in at the end
• 1:42:24
  to offer a little clarification. Yes, I did put
• 1:42:27
  on the dog shock collar. when I was younger,
• 1:42:30
  and for those of you who don't know, I am an
• 1:42:34
  avid animal lover, and so there was a part of
• 1:42:36
  me that was wondering, concerned, what our beloved
• 1:42:40
  Arnie Schwartzensnauser was feeling when he got
• 1:42:42
  shocked. So, after a little bit of liquid courage,
• 1:42:45
  I put the collar up to my neck, and I barked,
• 1:42:49
  and it beeped, and then I barked again, and it
• 1:42:52
  promptly shocked me. So, just chalk it up to
• 1:42:56
  my... never -ending quest for life experiences
• 1:43:00
  and curiosity. I do this so you don't have to.
• 1:43:04
  So at the end of the day, highly do not recommend.
• 1:43:09
  There you go. See you next time.