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Beer Caucus Brews Up Consensus

If there’s one thing Rep. Peter DeFazio loves, it’s a good, cold beer. But the Oregon Democrat is not interested in those watered-down 30-packs that you see on the shelves of the local grocery store. He prefers either to brew his own or pick up one of the thousands of craft beers produced by brewers across the country.

“I’ve been a home brewer for over 15 or 20 years, and we have — Oregon has — the largest number of craft breweries in the United States, so it’s actually a fairly dignified business activity in our state,” he says.

Recognizing the challenges that small breweries face — commodities prices, excise taxes and Prohibition-era labeling laws, to name a few — DeFazio was inspired to create the House Small Brewers Caucus. The caucus first met in 2007 and was co-chaired by DeFazio and fellow Oregon Rep. Greg Walden (R).

“We started thinking maybe we ought to have more of a focus so we have a group to go to when these issues come up,” DeFazio says.

The United States is home to more than 1,500 small breweries, which employ more than 100,000 people and create $3 billion annually in wages and benefits. In fact, the craft beer industry is one of the few that continues to grow even during these tough economic times.

“There are not many other industries that can make that same claim,” says Bob Pease, chief operating officer of the Brewers Association, a Boulder, Colo.- based group that represents small brewers across the nation. “We are growing. We are the fastest-growing segment of the beer world.”

Today, the Small Brewers Caucus has 67 members from both sides of the aisle and is co-chaired by Rep. Denny Rehberg (R-Mont.).

“Beer is a very bipartisan thing,” DeFazio says.

The group meets twice a year, inviting small brewers to give presentations on issues that they are facing on a daily basis. Most recently the group has been working to shepherd a bill through Congress that would reduce the excise tax on craft beers. Small brewers pay $7 per barrel on the first 60,000 barrels that they brew. The proposed legislation would reduce that tax to $3.50.

“I’m always skeptical when people talk about a beer tax in Washington, D.C. because there’s no such thing,” Rehberg said in a statement. “Beer doesn’t pay tax. What they’re talking about is a tax on small businesses that make beer. And small businesses are the heart of our economy and the engine that will pull us out of this recession.”

In April, Renee and Matt Greff, owners of the Arbor Brewing Co. in Michigan, went before the caucus to discuss what they would do with the money that they would save if the excise tax were reduced.

“We would use part of it for making energy improvements,” Renee Greff said. “We actually had an energy audit done, so we have a wish list.”

The Greffs would switch to LED lighting in the brewery and upgrade their heating, ventilating and air-conditioning system. If the bill passes, the brewery would save about $13,000 a year.

Caucus meetings aren’t always focused on legislation: In December, Greg Engert, beer director at ChurchKey and Birch & Barley, spoke to the group about the interaction between breweries and restaurants. He discussed different ways of serving and storing beer in a restaurant.

“I was able to come in as someone who is kind of in charge and has to take care of continuing the artisanal approach after it leaves the beer house,” Engert says.

The caucus also explored commodities prices at the December meeting and how they are affecting smaller breweries. Large breweries such as Anheuser-Busch and MillerCoors buy up much of the barley and hops grown in the nation. These companies have been around for decades, and they often cut special pricing deals with farmers. Because the crops that they use are guaranteed at a low price, farmers raise the price on other brewers in order to turn a better profit. Weather also affects crops, which in turn affects the prices that small brewers pay.

“There was a hop shortage, there was a barley shortage due to weather a few years ago and all of a sudden prices went really high,” Engert says. “And you can’t raise prices to deal with that. People don’t expect beer prices to change, so a lot of brewers were put in a tight spot.”

DeFazio is quick to point out that Anheuser-Busch and MillerCoors are no longer American companies. A Belgian company owns the former, while a South African company owns the latter. The craft brewers that work with the caucus are all American-owned.

“Think of it this way: Our two largest brewers in America now are both foreign-owned so [the small brewers] are all domestic companies, domestically owned and mostly domestically sourced,” he says. “They’re providing manufacturing jobs, and most of the hops and malt are grown here in the U.S.”

While the Small Brewers Caucus deals with serious issues, it certainly isn’t all work and no play. After the meetings, the brewers, staffers and Members kick back and crack open a few craft beers.

“Beer, and more importantly, sharing beer with friends and strangers alike, is as American as eating a hot dog at a baseball game or waving a flag at a parade,” Rehberg says.

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