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Betting on industrial hemp

Legalization of industrial hemp could help create a new multibillion dollar industry.

November 6, 2018

5 Slides

Chris Adams is making a bet on the future of industrial hemp. He and his father, Steve, of Adams Family Farm Partnership, Grand Forks, N.D., planted 450 acres of industrial hemp in North Dakota and Minnesota this year.

Legalization of industrial hemp is currently included in both the House and Senate versions of the 2018 Farm Bill. Some hemp advocates think industrial hemp could become a multibillion dollar business given the crop’s wide application in medical, textile, food and industrial products.

In 2018, the Adams Family Farm grew industrial hemp in both North Dakota and Minnesota. In North Dakota, they harvested the hemp seeds, which are processed into an oil used in food, soaps and many other products. In Minnesota, they harvest hemp buds. The buds are processed into cannaboidiol (CBD), a non-intoxicating marijuana extract for use in states that have legalized medical marijuana.

The Adams' also grow sugarbeets, dry beans, wheat, and soybeans. They own a dry bean processing plant in Climax, Minn., and market their beans in Europe, the Middle East, Africa and South America.

Industrial hemp is their newest venture.

"We wanted to get in on ground floor," Chris says.

Adapted to Dakotas
North Dakota, Minnesota and about 30 other states have had industrial hemp pilot programs for the past several years.

In 2018, 27 North Dakota farmers were licensed by the North Dakota Department of Agriculture and grew about 3,500 acres of industrial hemp. Their collective experience indicates that industrial hemp is well adapted the Northern Plains and can be grown with current farm equipment.

Industrial hemp can be seeded with either a grain drill or an air seeder. No herbicides are labeled for use on hemp, but hemp competes well with weeds. It can be harvested with a conventional combine. Cylinder, concave and air settings are similar to those used when combining canola and other small seed crops.

One of the biggest production challenges the Adams family had was dealing with the stalks after harvesting the seed. The stalks can be baled, which is how hemp fiber would be packaged for sale as livestock bedding and industrial processing. But baling is a slow and difficult. The Adams’ baler caught fire this year. The stalks wrapped around the baler’s roller bearings, got hot and ignited.

Burning the field is probably the easiest way to manage the stalks and residue if you don’t have a market for fiber, Chris says.

The Minnesota and North Dakota agriculture departments have published detailed reports on what growers encountered trying to grow industrial hemp. See their 2017 summaries online at MDA's website and NDDA's website.

Reports on the 2018 season will be posted on MDA’s and NDDA’s web sites soon.

Market challenges
Selling industrial hemp can be challenging. The hemp market is small compared to the major commodities. It is easy to produce too much hemp, a condition that currently exists.

Prices in the U.S. and Canada are now 40-50 cents per pound for non-organic hemp seeds. That is down 20-40 cents per pound from recent highs. Some Canadian processors are not even buying any seeds now. Some U.S. and Canadian farmers have hemp seed from their 2017 crop still in the bin. Adams Family Farm has more than 700,000 pounds of hemp seed in storage — 200,000 from the 2017 crop and 500,000 pounds from the 2018 crop.

Industrial hemp production costs vary widely among the farmers in the pilot projects in North Dakota and Minnesota. A cost of $400-$500 per acre, with seed costs of $50-$120 per acre, was the most common estimate. Yields in North Dakota in 2017 ranged from 785 pounds per acre in the west to as much as 1,800 pounds per acre in the east.

Not discouraged
Even though there have been a lot of ups and downs in the industrial hemp market lately, Chris isn’t discouraged. The industry is in its infancy.

"At least we have our foot in the door," he says. "We will see what happens."

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