Over at the Oregon Economics Blog, in his beeronomics posts, professor Patrick has been analyzing beer markets of one kind or another. Jeff at Beervana occasionally does the same.
A century ago, hops were even bigger than they are today, and many column inches were spent on hop updates. Here's part of a January 1st special insert in the Statesman of 1903. It featured portraits of "some of the leading hops dealers of Salem, Oregon": John Carmichael, Squire Farrar, E. C. Herren, Louis Lachmund, Kola Neiss, H. J. Ottenheimer, and T. A. Livesley. Livesley is the only one we really know today, and we remember him for two buildings, Mahonia Hall and the Livesley building.
In the Oregonian article, John Foyston notes that in 2007/08 hops cost from "$2 and $3 a pound to more than $30 in some cases." In 2008, the total value of the hops crop was about $38 million, a little over 6,000 acres were planted, and 10 million pounds harvested.
By comparison, in 1902...
The Willamette valley has again demonstrated to the world the superior quality of its soil and climate for the successful raising of choice hops over all other hop growing countries, and the year 1902 has been a very prosperous one for the Oregon grower…The unnamed writer says that in 1903 growers hope not contract harvests in advance any more, but to rely on the spot market demand at and after harvest to keep the prices up. Not sure if that worked...
In the cost of production everything is in favor of Oregon, where it is estimated that it costs from 8 to 9 cents per pound to raise hops. In New York state it varies from 10 to 12 cents, and in England it is claimed that the average cost is from 12 to 15 cents per pound, and that in a year of short crops such as this season, the cost in a great many cases reaches as high as 20 cents per pound. It will therefore be readily seen that Oregon is destined to be the hop growing country of the world, and that ultimately New York State and England will have to abandon the field to her and her sister states, California and Washington….
Probably one-third of the crop was contracted by the growers in the spring at prices ranging from 12 to 15 cents per pound, and the bulk of the balance sold at 25 cents, leaving a good margin over the cost of production. In fact, some large fortunes were made in hop growing this year, and growers not only got out of debt, but put money in the bank. However, the money that was made this year will hardly offset the losses of previous years, when many of our substantial farmers almost lost their farms, due to the series of low priced years. It is believed that the era of low prices has passed and that the future will see a higher plane of values. In fact, such a condition is essential for the welfare and success of the industry, because wages and material have advanced considerably in recent years and, in addition to this, the price of all lands in Oregon and especially hop lands, has gone up….
There is at present about 17,000 acres devoted to the culture of hops in Oregon, from which a crop of 80,000 bales or 15,000,000 pounds was harvested. At the average price of 20 cents per pound, it will be seen that the income from this source amounted to three million dollars.
As with many agricultural products, the yields are much higher today: 6,300 acres and 10 million pounds vs. 17,000 acres and 15 million pounds. Hops are susceptible to fungal diseases, and modern industrial chemistry has helped with fungicides, pesticides, and fertilizers. Hops are one of those crops that CT sometimes doesn't want to know too much about...there has been signficant debate over the fact that "organic beer" usually doesn't contain organic hops and is not required to.
In any case, hops are a commodity, and the prices have oscillated through many booms and busts, and even just from year-to-year. The cycle of shortage-glut in just a couple of years is hardly unusual. We'll likely see it again many times, over-n-over.