4 Tips to Navigate the Hemp Gold Rush

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cannabisGold fever. About 171 years ago, 300,000 people made a pilgrimage to California to hew those precious nuggets from the earth. Today, green is the new gold, and like those miners of the past, farmers must constantly guard against fool’s gold in this new marketplace. Here’s what you need to know to protect your investment even as smart leaders work to tame the Wild West hemp marketplace into a new and exciting crop for the family farm.

1. Understand certified seed. “In this industry, ‘certified’ refers to the maintenance of genetics to ensure cultivar performance, including, in the case of cannabis, THC (tetrahydrocannabinol) compliance,” says Tom Dermody, vice president of operations for Bija Hemp in Denver, Colo. “The certification process is enforced by vested members of the Association of Seed Certifying Agencies (AOSCA) within North America and by complimentary orgs like the Organisation for Economic Cooperation and Development (OECD) and the International Seed Testing Association (ISTA).”

Heritage seed varieties—for example, those farmers saved from previous harvests—tend to be less reliable. The biggest benefit of certified seed, Dermody says, is that it helps protect farmers against hot crops—those exceeding the 0.3% THC limit outlined in the 2014 farm bill.

“In 2016, 25% of Colorado’s industrial hemp acreage failed for being ‘hot,’ noncompliant with federal THC limits,” Dermody says. “In 2017, that number fell to 7.8%. The Colorado Department of Agriculture found the majority of ‘hot’ acres were from heritage seed varieties.”

David Williams, a professor of agronomy with the University of Kentucky Department of Plant and Soil Sciences, is a participant in the Kentucky Department of Agriculture’s Industrial Hemp Program charged with investigating the agronomic parameters affecting field-scale production of industrial hemp.

His work started in 2014, with the passage of the 2014 farm bill, but their efforts that year were small, and he says they didn’t learn a great deal. Work started in earnest in 2015, and Williams says there is still so much that is unknown four years later.

“Acquiring the right genetics is by far the biggest challenge,” Williams says. “But every single year, even for people like me who plan months and months in advance, it doesn’t always go without issue. Until we have domestic certified seed production on a much larger scale than it exists today, I suppose that will remain a challenge for the future.”

Starting with the right genetics and a line that tests regularly at legal levels is the best approach, Williams says.

2. Choose a science-based approach. Williams says he predicts the current production model for cannabidiol (CBD) is not sustainable.It’s based on marijuana production, and there’s no scientific evidence these models are efficient for broad-acre production of CBD.

“If the bud is the harvestable component of interest, if that’s what you want to harvest and sell, then these current production models are totally valid,” he says. “But if the molecule CBD, for example, is the harvestable component of interest, or what they like to call the whole-plant extract, simple mathematics can be used to extrapolate greatly increased yield per acre of molecule from a drilled production model than the current spaced plant production models.”

Another area where farmers are perfectly poised to produce hemp: harvest time and drying. Currently, the infrastructure doesn’t exist to do that well, Williams says, so his team has been doing some work on ensiling with positive results.

“So if we can grow a high CBD germplasm as a row crop and chop it with a silage chopper and ensile that material until the processor calls for it, then we have a far more efficient production model,” Williams says. “Now clearly that’s going to have a negative impact on the price as well, but as long as it remains somewhere slightly above corn and soybeans and wheat—and it’s still economically and biologically a good thing to have the different species of plant in your rotation, in addition to spreading the risk in your operation. Additionally, some re-engineering of the extraction process will be necessary to accommodate the reduced efficiency of extracting from more extraneous materials in silage relative to the much cleaner bud material used today.”

Hence, farmers are much like Samuel Brannan, a merchant who purchased all of the pickaxes, pans, waders and prospecting gear he could get his hands on and sold them to the 49ers hopeful of striking it rich in the gold rush. Farmers possess the critical tools—in this case knowledge and infrastructure—to put reliable farming practices into action for hemp production.

3. Make a solid plan. Start by checking whether your state has the infrastructure and capacity to process your crop. Many states do not currently have the ability to support this crop or scale up to the processing capacity to support large crops, Williams says. You’ll also want to review your latitude and ability to irrigate to help you decide what type of crop you’re going to grow, whether it’s fiber or a dual purpose grain or a grain only or CBD dual purpose.

“It all boils down to a farmer being able to receive a check, and it’s not valuable enough to ship very far, with the exception today of the oil material for CBD,” Williams says. “But if you’re growing for fiber or grain you need to have a processor within a couple hundred miles.”

Also remember environments in every state will often be different, so each state will have to learn some things for themselves. Williams says we can also look to our Canadian and European neighbors for help, because they’ve had active industries for the last 20 years.

The bright side, Williams says, is hemp really isn’t that difficult to grow.

“Honestly, as a row crop, like corns and beans it’s really not that difficult to grow,” Williams says. “There are some potential issues during establishment that producers need to be aware of. But once the canopy’s established, it’s a pretty durable crop, and it’s very much like corn in many regards. It doesn’t like poorly drained soils, it reacts well to nitrogen, so a lot of the same thinking towards a successful corn crop would to a successful hemp crop as well.”

4. Don’t invest more than you can afford to lose. Like the gold hunters of yesteryear who bet the shirts on their backs to make it big in the gold rush, farmers must realize there’s no protection if you roll the dice, because crop insurance doesn’t currently exist for hemp. “We always recommend that farmers not enter into a program unless they can afford to lose 100% of their investments, and that’s happened on many occasions,” Williams says. “That’s definitely possible, especially with brand new processors and brand new producers.”

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