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These Hemp Farmers are Making a Killing on the CBD Industry

After it was legalized in December, hemp has become one of the most lucrative crops for US farmers.

Blue Forest Farms used to grow hundreds of acres of kale, squash and pumpkins. But it has since switched its focus to a different cash crop: hemp.

The farm, which is located in Erie, Colorado, has dedicated 150 acres to growing hemp so far -- and it's still planting. "We're now expanding it to 1,000 acres," said McKenzie Mann, Blue Forest's production manager.

About 500 acres will come from land previously used to grow kale and squash.

Farmers across the United States have been rushing into hemp ever since President Donald Trump signed the Farm Bill into law in December. The legislation removed hemp from the government's controlled drug category, triggering a surge in demand for cannabidiol, or CBD, a chemical that is derived from hemp and marijuana plants.

CBD is non-psychoactive, meaning it won't get you high. (THC, or tetrahydrocannabinol, is the chemical in cannabis that does that). Instead, CBD extracted from hemp is marketed for everything from pain relief to reducing inflammation, stress and anxiety, and it is sold in an array of products from shampoos and oils to pet treats and granola.

Farms that were already growing hemp are seeing both demand and profits surge, while farmers who have never grown hemp before are rushing to plant it in their fields.

"There's a lot of excitement in the farming community because hemp is seen as a high-return crop. There are many farmers around the country who are struggling to make ends meet and they're looking for an alternative like hemp to boost revenue," said Eric Steenstra, president of VoteHemp, a non-profit that advocates for the commercial sale of hemp.

Mann has been fielding multiple calls a day from farmers around the country. "They're corn farmers, wheat farmers. They want advice on how to grow hemp," he said.

Blue Forest charges $35 to $40 per pound for the high-quality hemp it sells for CBD extraction. That compares to about $1 a pound for the kale it sells. The company declined to disclose its total sales of hemp last year but said the category is very profitable for the business and it expects its hemp sales to double this year.

Mann said the price of hemp went up slightly after the Farm Bill was signed. Industry watchers say the price could stay at these levels or inch even higher if supply for CBD doesn't meet the demand.

But if too many farmers get into the hemp business, the market could become saturated and prices could start falling, Mann noted. Last year, just over 78,000 acres of hemp was grown in the US, up from 9,649 acres in 2016, according to VoteHemp's 2018 Hemp Crop Report.

More than just CBD

Total sales for hemp-based products in the US were about $1.1 billion in 2018, and are expected to more than double by 2022, according to New Frontier Data, a market research firm focused on the cannabis industry.

Much of those gains will stem from demand for CBD products. But hemp can also be used for a variety of other products, such as fibers, clothing, rope and building materials.

"It's important to take a longer-term picture of the hemp market," said Steenstra. "Right now, CBD is the hot commodity and is a significant driver of the market and profit for farmers. But as an agricultural crop, hemp has significant market potential for grain and fiber."

Andy Rodosevich is cofounder of Hemp Depot, a Colorado Springs, Colorado, business that operates its own farms and is a distributor of CBD and hemp products.

The company planted 5.2 million hemp plants in 2018. "This year we are planting three times that number. We're trying to keep up with demand for CBD and scale up production," said Rodosevich.

Hemp Depot charges $35 to $40 for a pound of the high-end hemp it sells for CBD products. Last year, the business sold about 25,000 pounds of hemp, helping the farm log a total of $10 million in sales. This year, he expects to sell 350,000 pounds with total sales crossing $50 million. Rodosevich said the goal for next year is to sell 2 million pounds.

He says he's also gotten calls from enthusiastic farmers asking for advice on how to grow hemp. He understands the excitement but tries to set reasonable expectations for them.

"While hemp is unbelievably profitable for farmers, growing it has its challenges," he said.

For starters, the seeds aren't cheap. Good quality seeds guaranteed to provide high CBD levels and low amounts of THC that fall below the federally mandated 0.3% threshold, can range from $1 to $2 each.

Hemp farming is also labor intensive. While large-scale farms use machinery for growing traditional crops like wheat and corn, specific machinery for planting and harvesting hemp is still lacking. So hemp farms rely on manual labor for planting, harvesting and removing weeds.

Randy Wenger, a corn and wheat farmer whose 5,000 acre farm in Yuma County, Colorado, has been in the family since 1919, tried hemp farming for the first time last year.

"I was looking for an alternative crop that could be profitable for me and wouldn't break the bank," he said.

Even though he sought advice from other hemp farmers and researched farming techniques online, it was still a challenge. He was surprised at how much manual labor was needed to tend to hemp. "You can spend a lot of money just on the labor," he said.

The hemp he was growing for CBD didn't turn out to be the best quality either. 'It was a total failure," said Wenger.

Nevertheless, he is willing to try again.

"CBD is a popular topic," said Wenger. "But my advice to farmers is, learn as much as you can about it and then enter at your own risk."

Five Questions Non-Operator Landowners Should Ask Their Farmers about Soil Health

Posted by Elisa O'Halloran, Natural Resources Conservation Service in Farming Conservation

More than half of all cropland in the United States is rented . This means the person who owns the land – a non-operator landowner – is often separate from the farmer making daily management decisions that have long-term impacts on the land.

If you are one of those landowners, you may not be thinking about your soil and how it is managed. Your soil is your most valuable asset, and building soil health is a capital improvement. It is an investment – in your land’s long-term productivity and resiliency.

How can non-operator landowners and tenant farmers work together to build land that’s healthy, resilient, and productive?

Barry Fisher, an Indiana farmer and nationally-recognized soil health specialist with USDA’s Natural Resources Conservation Service, recommends that non-operator landowners ask their farming partners these five questions.

1. Do you build organic matter in the soil?

Organic matter – carbon – may be the most important indicator of a farm’s productivity. The amount of soil organic matter often determines the price farmers will pay to rent or buy land.

“Finding a farmer who is interested in building organic matter by using practices like no-till and cover crops is like finding a bank with a better rate on a Certificate of Deposit,” Fisher says.

2. Do you test the soil at least once every four years?

Optimizing fertility and pH levels is important to your farm’s productivity. Regular soil testing can give an indication of trends in soil fertility, pH, and levels of organic matter in a field. These tests help determine the amount of fertilizer each field needs and potentially saves money for farmers on fields with adequate or high fertility.

New soil tests that indicate active carbon levels and populations of important soil biology are also available to help monitor soil health. If a field has a history of manure application and very high fertility, for instance, a farmer could potentially plant cover crops to keep those nutrients in place rather than applying more nutrients that may not be needed.3. Do you use no-till practices?

Some landowners like the look of a clean-tilled field in the springtime. But that “nice look” can be very short lived.

“The reality is, a field that has bare soil is subject to erosion and loss of organic matter since it no longer has the protective cover from the crop residue on the surface,” Fisher says. “No-till farming utilizes the crop residue to blanket the soil surface and protect it from the forces of intense rainfall and summer heat. This protective blanket will conserve moisture for the crop and prevent loss of soil from wind or water erosion.”

4. Do you plant cover crops?

Cover crops provide a green, protective blanket through the winter months or fallow times.

“The green-growing cover is collecting solar energy, putting down roots and providing habitat when the soil would otherwise be lifeless and barren,” says Fisher. “This habitat provides food and shelter for a broad population of wildlife above ground and beneficial organisms below ground.”

Cover crops hold onto nutrients left from the previous crop and release them to the next crop. The solar rays these plants collect are powering photosynthesis, taking in carbon dioxide from the atmosphere to produce food for organisms living in the root zone. Cover crops also build nutrient-rich organic matter in the soil and improve the soil’s ability to take in water.

5. What can we do together to improve soil health on my land?

According to Fisher, the duration of the lease agreement is perhaps the most critical matter in encouraging the adoption of soil health management practices.

“Farmers can actually build the production capacity and resiliency of their landowner’s soil, but it may take several years to realize the full benefits of doing so,” Fisher says. He suggests that landowners consider multi-year leases to provide tenure security for the tenant. Longer tenures give both landowners and tenants more opportunities to improve soil health and benefit from the resulting production and profitability gains.

“Improving soil health can provide long-term, stable dividends for you, your family, and your farming partner,” Fisher says. “Improving soil health also can decrease the effects of flooding, make food production more resilient to weather extremes, and improve the health of water and wildlife.”

Fisher encourages landowners to learn more about the basics and benefits of soil health management systems and begin the soil health discussion with their farming partners right away.

“Whether you own or rent your land, everyone has a great stake in improving the health of our soils,” he says.