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Hop Contracts
All about forward contracting hops
WHO TO CONTACT ABOUT YOUR HOP CONTRACT
Simply fill in the contract request form below and we will then be able to advise you on availability and prices.
WHAT ARE FORWARD CONTRACTS?
A forward contract is a financial agreement between two parties to buy or sell a specified asset at a predetermined price on a future date and has an expiry date.
These are commonly used in commodities and forward contracting enables buyers and sellers to lock in prices, reducing the risk of price fluctuations over time. Unlike futures contracts, forward contracts are typically private, customisable, and traded over-the-counter.
This tool is widely used for risk management and hedging, helping parties plan and secure costs or revenues despite market volatility.
With hop contracts – otherwise referred to as Hop Crop Contracts, Forward Hop Contracts, and other synonyms – work with hops as the commodity. You are agreeing to buy a specified quantity of a specific years hop harvest (crop) at a specific price from the hop merchant. They are agreeing to sell you those hops in return.
WHY CONTRACT?
Put simply;
- Growers have one customer for hops and that’s breweries.
- It takes a whole year and a lot of input, effort and expense to grow, pick, dry and pack a crop of hops.
- If no contracts are forthcoming – unlikely a grower will risk spending money by overplanting.
- Turning it on it’s head if growers are unable to judge future requirement, it could result in underplanting. When harvest is done, it’s done for another year. Unlike manufacturers, we can’t just make more.
- If a grower doesn’t grow the hops the brewer has nothing to brew beer with.
- A contract secures hop supply for the brewer and a sale for the grower. If mother nature determines a shortfall, you will be first in line for those harvestable cropsit’s
Do I need to contract?
- If your recipes are not dependent on certain varieties you could risk it and buy totally from the spot market.
- However some brewers have been struggling to get hold of the varieties they need and found out how painful it could be when they can’t get the varieties required.
- At the same time the other breweries (with long-term contracts) were getting everything they needed at reasonable prices.
WHAT IS THE SPOT MARKET?
When placing an order, why do charles faram ask if i have a contract or am buying on spot?
- Buying on spot is like buying off the shelf rather than having a specified amount, price, and sometimes – batch number
- Growers generally aim to produce over and above their contract so that in a poor year they can still supply the contracted volumes.
- Spot hops are the hops grown over and above contracted volumes.
- Buying off the spot market is risky as in a poor year you may not get any of the hops you need.
- In a good year there may be hops around that you can buy at a lower price than your contract.
- The contract acts as an insurance policy making sure you get your hops from the market first; at a fair price to you and the grower.
HOW DO PROPRIETARY BRANDS HOLD THE PRICES UP?
- The owners of the proprietary hop brands have very strict contracts with their growers which legally bind the grower to pull out the hops if instructed to do so.
- We are hearing that even now growers are being instructed to pull out Citra®.
- If production is controlled in this way it will be close to or slightly under contracted volumes.
- Therefore there will be no spot hops available, prices will remain high and brewers will be keen to place contracts.
- If overproduction occurs the brand owners store the stock or extract it and keep it until it is needed. They do not sell at distressed prices which is what might have happened before proprietary brands were introduced.
MANAGING YOUR CONTRACTS
- An annual review is essential. Assess your stock, your likely brewing schedule and the contracts you have in place.
- If you are buying large quantities contract ahead on a decreasing volume and review the contracts annually topping up where necessary.
- Using this method you can adjust volumes up or down depending on beer sales.
- If you are buying smaller quantities contract ahead for only one year and review the contracts bi-annually topping up where necessary.
- If you are not worried about the varieties you use you can risk the spot market.
- Contracts are a great way to ensure supply and sustain the farms.
- Please support our growers by giving them the confidence to grow their hops and invest for the future.
- We have dedicated Sales Managers on hand to help our customers.
WHAT DO YOU NEED TO KNOW ABOUT CHARLES FARAM HOP CONTRACTS?
- Charles Faram & Co Ltd strongly recommends forward contracting your hops for your security of supply.
- All hop contracts are based on a calendar brew year. As an example, northern hemisphere 2025 brew year hops will be primarily from the 2024 crop, although we reserve the right to supply the previous year’s crop against a contract.
- All hops will be contracted in 5kg or 20kg increments.
- Our total contract minimum is 40kg and these can be mixed varieties.
- We do not buy back your “unused” hops. You are expected to purchase and pay for ALL the hops that you contract. At our discretion, any stock released from a contract will be subject to a 20% charge of the value of the amount released.
- Hop growing is a long-term business. Each plant crops once a year and if you have unused hops then, as a general rule, we may not be able to help you to find another home for them before the next crop arrives. However, we’re famous for our flexibility at Faram’s and we will always listen to your contract amendment requests to try and find a mutually beneficial solution. Some varieties will be easier to make changes to than others.
- Hop varieties mature and are harvested at different times so there is no way to predict when the new crop of a specific variety will arrive at our stores. Priority will be given to varieties that we are out of or low on stock.
- Varieties that are protected by a registered trade name can and do sell out quickly.
- All of our hop prices are based on a sustainable pricing model to encourage growers to grow the hops for you.
- All of our prices are ex-cold store Newland and may be shipped with other brewing ingredients.
- All of our hops are rotated on a first in first out basis.
- Prices and availability for spot hops (quantities left over after contracts are fulfilled) are subject to change on a daily basis which is why we suggest that you consider contracting your hop needs.
Northern hemisphere hop contracts
Let us have your contract request for northern hemisphere hops by the 30th of June.
The year of the contract goes by when the hops were harvested, see the contract dates table for examples.
All products must be shipped by the 30th of November of the year following the contracted harvest year. At any time following the 30th of November of the year after harvest, Charles Faram & Co Ltd may declare the full outstanding amount due and payable and mitigate its damages by selling the contracted product.
Free storage until the 30th of November of the year following harvest then a £0.05 per kg per month fee will apply.
The Northern Hemisphere harvest normally begins in late August and ends in Early October, however shipment to our stores and pelleting and packing typically runs from November to February.
New Zealand
hop contracts
Let us have your contract request by the 30th of November.
The year of the contract goes by when the hops were harvested, see the contract dates table for examples.
All products must be shipped by the 30th of June of the year following the contracted harvest year. At any time following the 30th of June of the year after harvest, Charles Faram & Co Ltd may declare the full outstanding amount due and payable and mitigate its damages by selling the contracted product.
Free storage until the 30th of June of the year following harvest then a £0.05 per kg per month fee will apply.
New Zealand hops are harvested in March each year and typically arrive at our store by early July, pellets take longer and can arrive as late as mid-August.
USEFUL DATES: CONTRACT NAMES AND CROP YEARS
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