As I’ve proposed and delivered presentations to farm and agribusiness groups the past year, I’ve been struck by the intense interest in industrial hemp as an alternative crop across the country. This summer I attended an all-day event in Springfield MO that was packed. Tuesday’s monthly meeting of our St. Louis AgriBusiness Club drew another full house. On Saturday Jan. 18, the University of Missouri Extension is offering yet another all-day Industrial Hemp Workshop in Hillsboro, MO open to anyone at $55 per person. Topics to be discussed will include:
*Legislative Summary & Regulatory Update
*Agronomic Practices & Pests: CBD, Fiber, Grain
*The industry outlook into 2020 and beyond
*Producer perspectives & crop enterprise budgets
*Processors and contract offered
Questions? contact Debi Kelly to register by Jan.16 at email@example.com. or call 636-797-5391
Tuesday’s 4-person panel for St. Louis AgriBusiness Club members at the St. Louis Science Center was sponsored by FieldWatch, a non-profit group specializing in monitoring fields of tightly regulated specialty crops for compliance. (They’ve just added industrial hemp to their registry.)
Longtime St. Louis Club member Dave Drennan is Board Member of the Missouri Hemp Association. He described industrial hemp as “a very old crop now making a comeback.” It was grown commercially for strategic uses during the WW II era, but then made illegal for decades due to being visually indistinguishable from marijuana. Now that there are ways to test for the hallucinogenic THC content, industrial hemp with less than 0.3% THC is in high demand for CBD oil in the seeds, as well as dozens of other uses for the fiber. But just before he introduced the other panelists, Drennan warned interested farmers (and lenders to farmers) that “you don’t know what you don’t know” and that unless they invest plenty of time learning what’s involved before they put a seed in the ground they’re more likely to be on the “bleeding” edge than the “leading” edge of profitable hemp production.
Dale Ludwig is Executive Director/CEO of the Midwest Hemp Association. He echoes Drennan’s advice for both farmers and farm lenders to study the ins and outs of hemp production intensely before putting a seed in the ground. Even then, because production and labor cost is so high and yield so variable, Ludwig said to “start small” on just an acre or two, and only if you have a contract for purchase from a reputable buyer. Aside from CBD oil in the seed, he told attendees that in paper production, for example, the fiber baled from an acre of high-yield hemp can replace an 8-year growth of pulpwood on that same acre.
Danielle Houdashelt, COO & Co-Owner of the Hemp CBD Superstore and Co-Founder of the Missouri Hemp Company that helps local farmers learn how they can grow hemp, echoes both the promise and peril of growing hemp. She warned the permitting process alone can be nightmarish. State regulations are often in conflict with federal regulations because some states are trying to address both industrial hemp and medical marijuana production with the same regulations when there are completely different goals and reasons for the two crops, similar only in outward appearance.
Next Tyler Morgan, President and Founder of Sky Trace Farms, had Club members riveted to slides documenting his own experience in hemp production and processing from seeding, to processing, to packaging. Morgan has learned the growing, processing and marketing hemp through both intense study and the school of hard knocks. He showed trays containing 130,000 hemp seedlings in a greenhouse essentially “cooked” (killed) in two hours for lack of temp controls and ventilation. Next came a slide of a very large field of hemp with a potential value of $8 million badly yellowed, stunted or drowned by a prolonged wet spell. Despite highly specialized equipment used, he said labor requirements average about one man per acre for the season.
Is Morgan discouraged about the future for industrial hemp? Not at all. He believes the high production cost, regulatory and permitting hurdles, plus intense management and marketing skills required will limit the number of farmers willing to grow it while demand growth is just beginning. The determined farmer-innovator quipped “I even trashed our kitchen cooking up a hemp-based bioplastic I developed, but managed to get the mess cleaned up before my wife got home!”
As an ag economist, I’m equally cautious but unwilling to dismiss hemp as a “passing fad” because unlike the Jerusalem Artichokes debacle of the 80s, where the crop was touted as wonderful feedstock for the budding ethanol industry (but little else), the uses for hemp are myriad and it appears to more one of growing demand seeking suppliers than growing supply seeking buyers. That’s a world of difference right there. The other big difference: Costs and required skills in hemp production are a significant barrier to entry among farmers; whereas any farmer willing to buy Jerusalem artichoke seed to grow, harvest and sell to ten other farmers as seed was promised up to $6,000 per acre in a classic Ponzi scheme, similar to the ostrich and emu ranch craze in the 90s: Only those selling breeding stock for for new ostrich and emu ranches ever made money because buyers and processors were scarce for a “new red meat” consumers weren’t asking for.
The biggest obstacle for hemp to take off is the classic “which comes first; the chicken or the egg” dilemma. Those eager to build a costly processing plant won’t do so until they find high grower interest in a given area; whereas even the most adventurous, skilled and innovative growers are being warned not to put a seed in the ground until there’s a processor offering contracts.
Interestingly, at Tuesday’s St. Louis AgriBusiness Club meeting, panelist Dale Ludwig of the Midwest Hemp Association speculated the best solution to this “chicken or egg” dilemma may be a “30-within-30” concept where “30 farmers within 30 miles of each other pool funds to build and staff a hemp processing plant; then share in the processing profits while supplying the feedstock at market prices.
As someone raised on an Iowa hog farm myself, I watched the co-op idea successfully developed among neighborhood farrow-to-finish hog farmers who were adept at growing feed and finishing hogs, but not competitive with farmers skilled at the farrowing side in producing feeder pigs. Groups of such farmers would pool resources to build and staff a centralized farrowing co-op that would produce and sell them feeder pigs at market prices. Owners would then share in the co-op’s profits when feeder pig prices were high while improving their finishing profits when feeder pig prices were cheap. Old-timers will remember early promoters of ethanol used a similar model before major players like ADM or POET got into large-scale ethanol production. Hemp may just be “the next big thing” birthed by that model.
Dan Manternach, President
Perfect Fit Presentations, LLC
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