As the hemp harvest in the U.S. is underway, a timely webinar recently offered by Penn State looked at the business aspects of hemp growing.
“We have seen some harvesting starting,” said Penn State Extension agent Krystal Snyder. “About 30-40% of CBD growers are harvesting theirs. A few are on-farm sales and you-pick. Those are some options if you haven’t locked down some sales yet.”
Growers in New York are also getting involved in hemp production. The New York Department of Agriculture and Markets lists about 58 entities that process hemp in New York. According to Cornell Cooperative Extension, approximately 3,500 acres of New York farmland was approved for industrial hemp research in 2018, an increase of more than double from the previous year.
Snyder said that only a handful of hemp processors operate in Pennsylvania and New Jersey, which has prompted some growers to directly market their hemp.
Alicia Anderson, Penn State Extension agent, said that the proper storage for processing for biomass or to hold for oil is important to maintain quality CBD.
She said that growers need to consider their budget and keep in mind their capacity for trying hemp, along with labor costs.
“Do you have space to harvest the flower and full plant?” she said. “What are your space requirements? Keep that in mind when harvesting.”
Farmers who harvest just the flower material save space, but it costs more in labor to remove just the hemp “cola,” or bud cluster, in the field. A silage cutter can save time in labor in the field, but will require more processing later to get the colas out of the other material.
“You can extend your storage life by limiting ultraviolet light, humidity, temperature fluctuations and oxygen,” Anderson said. “Paying close attention to humidity and if you don’t have temperature fluctuation you can avoid mold. There have been more studies about grain, but CBD is the new commercial crop. We’re learning right along with you.”
She said that hemp may be stored as bales using white bale wrap to reduce the effects of ultraviolet light and air.
“Keep it at 10% or less moisture if storing as silage for fiber,” Anderson said. “When storing it as a dried flower, you want to pay attention to the moisture. When you take your product to a processor because you want to hold your biomass, there are different ways to process it.”
A grower may pay someone for processing or split the crop by giving the processor a portion of the product as payment for processing.
Lynn Kime, Penn State Extension agent, said that the school offers a variety of industrial hemp resources, including an interactive budgeting tool. The downloadable file found at bit.ly/HempBudget allows growers to enter their overhead figures and learn how much they might make as profit for the finished product per acre.
“It will give you a calculated estimate,” Kime said. “We recommend when you’re starting with a new crop, always start with a soil test.
“I anticipate that hemp producers more than likely are more familiar with a horticultural crop than a row crop.”
The calculator also takes into account fixed costs.
Crop insurance will be one expense that hemp growers can’t claim since there’s no federally subsidized crop insurance for hemp.
“For 2020, a whole farm revenue protection policy doesn’t protect production but income for the farm,” Kime said. “It’s based upon your Schedule F. If you’re new to farming, when you file your 2019 taxes, file under Schedule F to have a start of the process for getting crop insurance. If you’ve been in farming for five years, you’ll be able to get whole farm insurance. It hasn’t been used much in Pennsylvania. Hemp production may increase the use of that product.”
Kime added that if hemp tests are higher than the 0.3% allowable limits for tetrahydrocannabinol (THC, the compound that causes a hallucinogenic effect), farmers with whole farm insurance will not receive any benefits for their lost crops.
“This is an option that is changing on a monthly basis,” Kime added. “By the end of November, there could be hemp crop insurance policies out there. Keep your eye on crop insurance.”
Brian F. Moyer, education program associate with Penn State Extension, said that most growers in Pennsylvania — 75% — have no contract for their crop.
“If you’re just starting out, and you’re looking at what the market landscape looks like, it’s growing quickly,” Moyer said.
He added that one-third of consumers surveyed have purchased CBD.
Since lab results can vary, he recommends the Certified U.S. Hemp Authority. Some retailers may require growers to use their lab.
Other growing pains of the industry include obtaining financing.
Moyer said many banks still won’t lend to farmers planning to grow hemp, not only for the stigma related to a cannabis family plant, but also because of the crop’s re-introduction to American agriculture. It’s risky growing a crop that farmers know little about at this point. If a plant pushes past 0.3% THC, the farmer loses it all.
“A number of shippers won’t carry these products,” Moyer added.
Moyer also cautioned against making any claims on products, “particularly medical claims. You can’t put these on the label or in advertising or on social media posts. Those are considered advertising.”
Poor quality CBD has damaged the new industry.
“Put forth a quality product to build consumer trust,” Moyer said. “USDA will come up with minimum testing requirements at some point.”
