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Hemp offers marketing opportunities, challenges

Hemp has potential as a fiber and grain crop.

When the Agricultural Improvement Act of 2018 made growing industrial hemp legal in the United States, only a small number of farmers were producing it under a research program authorized under the 2014 farm bill.

Current estimates are more than 18,000 people are involved in some form of production of the crop, which, by law, must contain less than 0.3 percent THC — tetrahydrocannabinols — on a dry weight basis.

“The fact that we went from 3,500 farmers to almost 18,000 overnight blew me away,” said Eric Steenstra, president of Vote Hemp, an organization that has been lobbying for the legal growing of industrial hemp since 2000. “I never expected it to grow quite that quickly.”

See, Industrial hemp rules in flux, growers must be wary

Steenstra, who is based in Washington, was a speaker at the Hemp Industry Outlook Update Session at the Mid-South Farm and Gin Show in Memphis, Tenn. The session included a cross-section of producer, researcher, regulatory and marketing representatives.

“I know a lot of people are excited about this crop,” said Steenstra, “but I hope more farmers take the slower approach and are a little more cautious in approaching this.”

As with any new crop, growers are trying to sort out the marketing to make sure they get paid for their investment. Currently, the focus is on extraction of cannabinols for medicinal purposes, but hemp also has potential as a fiber and grain crop.

“Different companies have tried to get fiber off the ground,” said Steenstra. “There are people who are doing it, but it’s still what I would call pilot-scale. I think it’s going to take a major industrial concern probably with a $20 million investment, or maybe you can do it for less. But it’s millions of dollars.

“That’s the challenge. When somebody commits to that then you have to have farmers within a radius of 50 miles less who are willing to grow thousands of acres to provide a consistent supply because transportation is very much a factor.”

A grower in western Kentucky is selling fiber for production of hardwood flooring, according to Brian Parr, a researcher and assistant dean of the Hutson School of Agriculture at Murray State University.

“But he leads with his seed production,” Said Parr. “He’s a certified seed producer for fiber varieties, and he has just short of 2,000 acres of seed. He has to get that fiber off the field anyway. To get it off the field and sell it to the hardwood flooring industry, he round bales it essentially and sells it for about 20 cents per pound.”

Any usage of the crop must make sense economically, said Aaron Smith, associate professor, crop marketing specialist with the University of Tennessee Extension Service.

“Basic economic principles still hold for this crop,” he said. “If you’re going to have a long-term, large-scale viable market, the product has to do one of three things: (1) it has to meet a need not being met by an existing product; (2) it has to have a quality that is superior to the other products in the market; or (3) it has to have a cheaper price.

“If one of those three do not apply, the long-term stability of that market is questionable to say the least. So, again, I’m not saying there is no market here, but the same economic principles do apply in terms of large-scale industrial production.”

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