IHGC meeting in Paris 
March 2 - 3, 1998 

Monday,  2^nd  March 1998  (13.00)
 
Meeting of the IHGC Economic Commission and the Joint Trade Commission (IHGC/European Hop Merchants’ Association - EHMA)

Agenda:
1. Opening by the President
2. Reports from the IHGC member countries
3. Report of the EHMA
4. Common discussion about the Hop market (reality and perspective)
5. Others

Monday,  2^nd  March 1998  (16.00)

Meeting of the IHGC-Technical Commission

Agenda:
1. Opening by the TC Chairman
2. Program of the Congress
3. Others

Tuesday, 3^rd  March 1998 (9.00 AM)

Meeting of the IHGC Executive Committee

Agenda:
1.  Appointment of members of the IHGC Executive Committee
2.  Approval of minutes of the meeting in Prague on Aug. 4^th,1997
3.  Election of the President and three Vice-presidents
4.  Report of the President of the Economic Comm. about the meeting in Nuremberg 

     Dec. 3^rd,  and March 2^nd, 1998 in Paris
5.  Report of the Chairman of the Technical Commission
6.  Hop legislation in the EU
7.  Debtors problem and financial situation in IHGC
8.  The Hop congress 1998 in the USA (information)
9.  The Hop congress 1999
10. Proposals for the Hop Orders 1998
11. Sundries
 

Chairmanship: Mr. Frantisek Chvalovsky – President

The meeting of the Joint Trade Commission took place at the same time as the meeting of the Economic Commission of the IHGC.

The French delegation gave the participants a résumé of the harvest reports from the IHGC member countries. These individual reports were found to be laid out in a very clear, informative manner and therefore very suitable for analysis. The following comments were made on the reports from the individual countries:

President Chvalovsky summed up the result of the crop reports and ascertained that the figures were rather disappointing. Every hop-producing country is definitely aware of the existing situation regarding overproduction. An appeal should be made to all producing countries to observe at all events the figures or forecasts given to reduce acreage in order to avoid a further drop-off in prices. He addressed the request to the hopsters that they show more responsibility when selling to the breweries also bearing in mind that the hop-growers‘ livelihood must be safeguarded.

Mr. Raiser referred to the considerable overproduction which has been known for a long time now. A massive reduction in the world acreage by up to 30% seems to be urgently needed at the present time. This is the best way to achieve the market’s recovery. He put the question to the growers as to whether they are maybe in a position to set up a sort of ”Hop OPEC” with the purpose of controlling the market volume. At the present time this is not possible due to the competitive situation, which can be observed between the individual producing countries.

President Kares stressed the necessity for further cooperation between hop-growers and hopsters in the future. The figures developed by Mr. Feldmann and his colleagues constitute an significant contribution. It would be desirable to have these figures analysed even further (e.g. development of alpha-acid, shift in proportions of aroma/bitter compounds etc.).

When first studying the figures it becomes particularly clear that the forward contract situation tends to be declining. From the figures available there can be seen to be very small amounts of forward contracts even as early as 2001. It is to be feared that the hop market will come under further pressure.

Mr. Norman Batt The present situation has been found to be even worse than it was last year (1996/1997 season). With an eye to the 1998 crop it is not difficult to imagine that there may be an extremely negative market situation again.
It is expected that in 1998 an even greater amount of spot hops and therefore alpha-acid will be available. It is a task for the trade organizations to ”educate” the hop-growers affected in their own countries by pointing out this difficult situation. The growers must be enlightened precisely and comprehensively about the overproduction as well as its negative economic consequences, so that they can draw their conclusions and attain a reduction in acreage.

Mr. Schrag remarked that despite the reduction in acreage to be expected in 1998, probably the same alpha quantity as 1997 will be produced with all the negative consequences resulting from this for the hop market.

Mr. Grauvogl pointed out that the participants have gained their knowledge as experts in the field of hops, but that up to now there has been no sound basic research on the subject of overproduction and future development (e.g. brewing industry’s requirements). In reviewing the whole situation the behaviour of the brewing industry and its future should also be included. A market analysis could/should be drawn up by an independent third party with appropriate perspectives for a period over the next 10 years and then the results of this analysis could be put into effect.

Mr. McEwan-Cargill referred to the free forces in the market and the self-regulation resulting from them. He does not consider it necessary to have basic research carried out by a third party.

Mr. Schrag pointed out that the FRG has taken the first steps necessary to reduce acreage. This was also the result of numerous and various attempts to obtain support in Brussels at the EU Commission. Due to the readiness of the EU Commission to continue to grant the subsidy also for closed-down hop areas one important objective in reducing acreage has been reached.

Mr. Raiser made it clear that based on the present figures available worldwide in effect a total acreage of 20,000 hectares must be cleared in the long run. The present reduction in acreage of altogether approx. 6,000 hectares is far too little and will to a great extent put pressure on the hop market as early as 1998. A definite threat is that the 1998 market will again take a very negative course.

Mr. Schrag explained, that the FRG sees no possibility at the present time to make recommendations to the hop-growers other than to advise them to close down areas under hops (temporary shut-down).

Over the past months in Germany the hop-growers have already been advised not to work any hops in 1998 for which no contract exists.

Mr. Raiser put forward the proposal that certain amounts of hops be taken completely off the market, if necessary, in order to reduce the expected quantity considerably and therefore adjust the hop supply to the brewing industry‘s demands.

Mr. Kares added that an urgent recommendation should be made to all hop-producing countries, even those outside the European Union, that they reduce their hop acreage considerably. Under no circumstances should their hop production be increased. All the hop-producing countries must be urgently warned against this.

Mr. McEwan-Cargill also supported the proposal that the hop producers should only work their hop yards when they have the corresponding forward contracts for the sale of their production.

Mr. Ingwiller posed the question, whether the hop-trade also has additional means of influencing the hop-producing countries outside the European Union and outside the USA. The support of the hop-trade would be useful here, so that at all events there is a reduction in acreage in these producing countries.

Mr. Schrag supplemented his proposal that the brewing industry should also be enlightened as to the existing overproduction. Here it could be specified that no hops should be trained without a contract and maybe when the 1998 crop is ready, no hops should be harvested for which no contract exists. In addition to this the individual producing countries should first work on today’s result of the discussion internally. Then the discussion can be continued at the International Hop Industry Congress in the USA.

At the end of the meeting Mr. Chvalovsky passed the chairmanship of the Joint Trade Commission in turn onto Mr. Jaroslav Kares.

End of the Meeting approx. 5 p.m.
Paris, 02.03.1998

Josef Grauvogl
- Secretary -

International Hop Growers’ Convention
IHGC - Economic Commission: Paris,, march. 2^d ,1998
IHB-Wirtschaftskommission: Paris, den 2 3. 1998
CICH - Comité Economique: Paris, le 2. mars 1998

There was no other business for discussion
 
 

 Dr. Gregory K. Lewis
Chairman - Technical Commission