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.
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