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September 25, 2015 CapitalPress.com 13 Craft brewers insulate farmers E. Idaho festival from global beer titan merger lauds spud harvest By JOHN O’CONNELL Capital Press Experts examine proposed combination of AB Inbev and SABMiller By MATEUSZ PERKOWSKI Capital Press The proposed merger of two global beer titans isn’t likely to harm hop and barley producers, who are increas- ingly selling to craft brewers, experts say. Anheuser-Busch InBev, a Belgium-based brewer with $21.5 billion in annual sales, recently confirmed that it has proposed a union with SAB- Miller, a brewer based in the United Kingdom that gener- ates $26.3 billion in annual revenues. The combined entity would control roughly 70 per- cent of the U.S. beer market, which is bound to spark an- titrust concerns with federal regulators, said Bart Watson, economist for the Brewers Association, which represents craft brewers. Worries about the influence this behemoth would have over beer ingredients are tem- pered by the competition from craft brewers, Watson said. While craft brewers only produce about 11 percent of the beer consumed in the U.S., they use a disproportionately large amount of hops and bar- ley — particularly specialty varieties that are largely ig- nored by industrial brewers, he said. “It’s hard for a large brew- er to use market power when they’re not participating in that market,” Watson said. As the number of major companies in an industry shrinks, the remaining buyers have every incentive to wield their power and try to reduce prices for ingredients, said Pe- ter Carstensen, a law profes- Mateusz Perkowski/Capital Press A worker cuts hop vines in preparation for harvest in this Capital Press file photo. Hop and barley growers aren’t likely to suffer from a proposed merger between two major beer companies due to competition for ingredients from craft brewers, experts say. sor specializing in agricultural antitrust at the University of Wisconsin. However, this phenome- non is less of a concern when producers have alternative sales channels, he said. “If there are a lot of oth- er outlets, then it won’t have as much effect on them,” Carstensen said. Large brewers traditionally used a quarter pound or less of hops per barrel, but craft brew- ers use an average of nearly 1.4 pounds — roughly sixfold more, said Ann George, ad- ministrator of the Hop Grow- ers of America trade group. Historically, about two- thirds of U.S. hop production consisted of “alpha” hops, which are used to impart bit- terness and are favored by large brewers, said George. Now, roughly two-thirds of the hops grown are “aro- ma” varieties that are popular among craft brewers, she said. These specialty cultivars are responsible for the up- swing in hop production, which has grown more than 50 percent since 2012 to 45,500 acres, George said. “That buildup in acreage has been attributable to the demand from the craft sector,” she said. “It makes a huge im- pact on our hop industry.” Craft brewers also have an outsize footprint in the market for malt, which is produced from barley, said Watson. About 1.4 billion pounds of malt are used in craft brewing, which is 35 percent of the total amount. Large brewers aren’t as re- liant on barley malt because they also use brewer’s rice and corn syrup, he said. “These beers are not the ones that are going to be heavy demanders of hops and premi- um ingredients,” Carstensen said of the most popular brands produced by AB InBev and SABMiller. Nonetheless, the combina- tion of the two companies is problematic from the perspec- tive of consumer choice, he said. A telling sign is that the stock price for all major brew- eries rose after the merger proposal was announced, Carstensen said. This increase may indi- cate that these companies are expected to collude more ef- fectively after the merger, he said. “The market is expecting to see less competition in the beer industry.” Given these concerns, it’s likely U.S. antitrust regulators will block the merger unless the combined company di- vests its stake in MillerCoors, a joint venture between SAB- Miller and Coors Molson, said Watson. “Everyone’s assumption is they’d be forced to sell their stake here,” he said. SHELLEY, Idaho — This small Eastern Idaho town doesn’t take its favorite cash crop for granted, centering its major community event around the potato harvest. For the 87th time, the City of Shelley hosted Idaho Spud Day on Sept. 19. The community of about 4,400, a few miles south of Idaho Falls, typically draws around 18,000 visitors for Spud Days, estimated Mayor Stacey Pascoe. “It’s a small community, but a couple of times a year we get a lot of people here,” Pascoe said. Just about every farm in the area produces potatoes, Pascoe said. “The farming community is very important to our com- munity,” Pascoe said. “Even though they don’t live in city limits, they bring a lot to the city.” Pascoe recalled Spud Days used to feature boxing match- es. Nowadays, it centers on family activities. Volunteers from local schools served about 6,500 complimentary loaded baked potatoes, donated by Basic American Foods. The festival, sponsored by the local Kiwanis Club, also includes a foot race, a pancake breakfast, a children’s parade that’s bigger than the commu- nity’s Fourth of July parade, a street dance, games, food vendors, live music and acts, an old-fashioned harvesting competition and a tug-of-war over a pit of instant mashed potatoes. During the week leading up to the event, Shelley High School crowned Miss Rus- set, who appears at various community events, including tasting the mashed potatoes before declaring that the Spud Day tug-of-war can com- mence. John O’Connell/Capital Press Children compete in the World Spud Picking Championship during Idaho Spud Day in Shelley, Idaho. Shelley youth Hanna Hoskinson said the local chil- dren have developed their own tradition following the tug-of-war. “After the tug-of-war over the potato pit, all of the kids go and play in (the potatoes). I did it last year,” Hoskinson said. Miss Russet also receives a $1,000 college scholarship. Shelley High School stu- dents have long taken great pride in their school’s mascot, the Russet, explained Margy Blackburn, a member of the organizing committee for the Class of 1970 reunion, hosted during the celebration. In Shelley, students still get a two-week break to assist local growers with potato har- vest. When Margy Blackburn worked potato harvests during school breaks, she recalled students had to dig spuds by hand. The reigning Mrs. Idaho, Natalie Jangula, also has ties to Shelley and attended the event wearing a potato sack dress adorned with costume jewelry that she made. Jan- gula explained Mrs. Idaho is also expected to have a community service platform. Jangula chose to serve as a wish granter with the Make- A-Wish Foundation, which strives to meet the desires of children with life-threatening medical conditions. Iowa company gets first USDA license for bird flu vaccine Associated Press DES MOINES, Iowa (AP) — The first license to devel- op a bird flu vaccine has been awarded by the U.S. Depart- ment of Agriculture, a crucial step toward preventing another devastating outbreak like the one that led to the destruction of 48 million chickens and turkeys this spring. The conditional license giv- en to Ames, Iowa, company Harrisvaccines authorizes it to continue testing the vaccine’s effectiveness and stand ready if the USDA gives the order to be- gin manufacturing. The license does not mean the vaccine has been approved for responding to the bird flu yet. Here are some questions and answers about what the vaccine licensing means: What was developed? The vaccine targets the H5N2 virus that circulated ear- lier this year by using the ge- netic code of the virus to grow it in specialized cells, extract and purify it and formulate it into a vaccine. The company’s process, licensed last year by the USDA for the porcine epi- demic diarrhea virus that wiped out millions of pigs, eliminates the need to handle live viruses, making the vaccine safer. Harrisvaccines will be able to update the vaccine quickly if the H5N2 virus mutates, as viruses often do. It’s also de- tectable in poultry as a vaccine, which means trade partners can tell the difference between an infected animal and one that has been vaccinated, possibly preventing some countries from shutting off all U.S. poultry im- ports during another outbreak. How effective is it? Testing shows a single dose is 95 percent effective in adult hens and 93 percent effective in day-old chicks, Harrisvaccines Vice President Joel Harris said Monday. Testing continues on chickens and turkeys. What does it mean? Another widespread out- break could drive chicken, egg and/or turkey costs up higher than they already are. Egg pric- es more than doubled this year after about 10 percent of the nation’s egg-laying chickens were destroyed by the H5N2 outbreak, while some cuts of turkey meat are expensive and in short supply. Why is the government in- volved? Vaccine development is part of the USDA’s preparation plans should the bird flu virus return this fall as wild birds mi- grate south. The federal agency began accepting bids for vac- cine development last month. Why did the company re- ceive a conditional license? A conditional license is is- sued in circumstances where rapid development of a vac- cine is necessary, allowing the company to continue research and prepare for rapid produc- tion if needed. BUYING 6” and UP Alder and Maple Saw Logs, Standing Timber www.cascadehardwood.com 36-7/#24 By DAVID PITT 39-2/#14