Hemp has the potential to change many aspects of our melting world. So, why hasn’t it yet — what’s the hold-up?
The hemp industry is facing a sharp downturn at the moment, and many farmers feel there is no other option than to slash their crops for good — or at least for the foreseeable future.
Hemp is legal in the US, thanks to the 2018 Farm Bill. We were knee-deep in the CBD craze back then, and farmers rushed to grow hemp to produce more of the cannabinoid du jour. Flashforward four years, and the market is oversaturated and plant prices have bottomed out. Hemp producers are scrounging for other opportunities to utilize their crops beyond CBD. But it’s not that easy because the industrial hemp market has yet to take off. Hemp processing facilities in the US are scarce — New Frontier Data says there are no more than 10 in the country — and ample supply chains don’t exist yet. All of this has deterred numerous hemp farmers from pursuing future harvests.
“The market can only bear so much CBD. That’s why it’s busted,” said Justin Eve, a farmer and hemp grower from Sutter County, California, who serves on the state Industrial Hemp Advisory Board, to Ag Alert. “But the market can bear livestock feed, textiles, clothing, oil, and paper products.”
Tom Pires, a Kings County, CA, farmer who manages a cotton gin in Riverdale, CA, is experimenting with a hemp supplier to create hemp fiber. His goal is to grow hemp for seed to get the best varieties and cultivars for the San Joaquin Valley, then get farmers to grow hemp for fiber.
Access to reliable seeds is crucial for growing healthy plants and producing quality hemp products. But great seeds only come from excellent genetics. Researchers in the US are just starting to develop hemp seed genetics that deliver consistent crops, according to Pew Environment. The lack of dependable genetics and seeds, planting calendars, and replicable growing techniques are other factors inhibiting the market growth for hemp products.
Getting farmers to grow hemp for fiber and other industrial materials is an uphill crusade. Pires told Ag Alert that he’s looking for contracts and buyers willing to pay some costs upfront. Why? Because farmers need a safety net in order to grow hemp in the current market. Greg Tesch, a Kern County farmer, says he will not grow hemp again unless he does so on contract. “We are farmers; we like to gamble, but there’s no more gambling in the hemp thing,” he said.
Farmers say that the framework outlined by the Farm Bill is rigid and borderline unbearable. Over-regulation is deterring farmers from growing hemp and, thus, stifling the market altogether. Besides various rules for planting, growing, and moving crops that farmers already follow, hemp growers are subject to hemp-specific requirements in state and federal law.
Under federal law, industrial hemp can’t contain more than 0.3% THC, the compound in marijuana that gets people high. Municipalities and counties are responsible for testing the crop for THC prior to harvest, and the crops that test above the legal limit are required to be destroyed.
“It makes it really difficult for the grower,” said Lisa Herbert, Sutter County Agricultural Commissioner, to Ag Alert. “They have their CDFA program that they’re responsible for; that’s all the laws and regs. But then the county can put additional restrictions or fees on them.”
The lack of supply chain and established markets for the industrial hemp industry leaves little to no incentive for farmers to withstand the federal, state, and local regulatory hoops. Derek Azevedo, executive vice president of Bowles Farming Co. in Merced County, CA, planted an experimental crop in 2019 to see if hemp would be a good fit for the operation. Azevedo said he learned the industry was too undeveloped and the markets for the crop were too undefined. He said the risk was too big, so the farm never went further.
“A lot of folks would be less likely to take a flyer on hemp today,” he said because crop pricing is higher, and input costs are far more expensive. “You’re risking more chips on the table today.”
Growing hemp for CBD still remains the most lucrative avenue for farmers interested in cultivating the plant. Not only are there buyers, but processing facilities and supply chains are stable features of the industry. The juice currently isn’t worth the squeeze for growing industrial hemp. The market is embryonic and the financial support — let alone ROI — isn’t there yet. As the industry matures and hemp processing facilities open up, farmers expect this to change.
“That’s where we need to be for the hemp industry,” Azevedo said. “We’re getting closer to that point.”
