Whether or not you believe that the economy has entered a recession, inflation is undeniable. An enormous increase in transport expenses due to the rise in fuel prices has resulted in an increase in the price of products and services across all categories. On top of that, the American dollar has become severely devalued. These two factors alone spell disaster for any company.

Disaster is brewing in the world of beer making.

Inflation is not the only issue affecting brewers. Since early fall 2007, brewers have been faced with an unprecedented worldwide shortage of hops and an unusually short supply of malted barley. And it is only getting worse.

American brewers are dealing with a 10- to 15-percent shortfall in the worldwide supply of hops, largely caused by farmers cutting back on the crop. Recently, rain and drought added to the shortage by significantly diminishing yields. Organic hops are almost impossible to find.

In early October 2007, fire destroyed a 40,000-square-foot warehouse operated by hop company S.S. Steiner. An estimated four percent of the U.S. hop crop was lost at a cost of between $3.5 million and $4 million.

The craft-beer industry is at the edge of turmoil, as high expenses cut into profits and threaten the closure of several microbreweries and brew pubs. Craft brewers across the country are scrambling to adjust recipes.

A hops shortage is not the only problem facing brewers. A reduction in the production of malted barley has more than doubled the of the average price for barley in the past two years.

Climate change may be one factor in the shortage of both hops and malted barley. Both barley and hops have turned into global commodities, driving up prices and further reducing the supply.

How long will this shortage last? Well the good news is that, accompanying the high cost, hops has become an enticing crop for farmers. Unfortunately, it takes three years for hop crops to fully mature, so the shortage will continue for a bit longer.

It is important to note that the rising costs of both beer and food also impact restaurants, especially the smaller, local establishments. Do not be surprised to see a spike in menu prices over the year.

As much as it may hurt the wallet, we need to make sure we keep spending money on craft beers. It will help insure that some of our favorite small craft breweries will still be around a year from now!

HERE is an excellent article about the Hops shortage in Home Brew Beer Magazine.