Oregon farmer Steve Fry inspects hemp in the drying barn on his family farm. Lack of drying space has slowed the pace of harvest for many growers in Oregon this year.The Pew Charitable Trusts PHOENIX, Ore. — Ajit Singh strode across his 16-acre hemp field toward a broken-down harvester. He’d been hoping all day that the mechanic now crouched beside the machine could get it back up and running.It was late October and Singh still had thousands of stinky green and purple cannabis plants across 425 acres to pick, dry and sell before winter. Like many hemp growers here in Jackson County, Oregon, he was harvesting slowly, facing a mold problem and unhappy with prices offered by potential buyers.
“We want a better price,” said Singh, a soil scientist and former garden store owner — and, he said, he was prepared to hold out for one. He sold 50 acres of hemp for $70 a pound last year and now was being quoted prices less than half that.
Hemp growers nationwide scaled up this year after Congress legalized the non-psychoactive cannabis. They hoped to cash in on the booming market for cannabinoids such as wellness darling CBD, an ingredient in oils, tinctures and salves. But as harvest winds down, it’s likely that many growers will go bust.
More than half a million acres were licensed for hemp production this year, though Vote Hemp, a hemp advocacy nonprofit based in Washington, D.C., estimated in September that less than half that was planted.
“People went in thinking they’d be instant millionaires. But the reality is, they’re broke.”
Matt Ochoa, founder JEFFERSON PACKING HOUSE
Some of the more than 16,000 licensed growers will profit from their crops and say hemp is a better investment than traditional commodities such as corn. However, because of crop failure and other factors, Vote Hemp estimates that between 40% and half of the crop planted this year won’t be harvested.
“People went in thinking they’d be instant millionaires,” said Matt Ochoa, founder of Jefferson Packing House, a cannabis drying, processing and distribution business in Medford, Oregon. “But the reality is, they’re broke.”
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Dreaming Big for a Risky Hemp Crop
In late October the mood was so grim in Jackson County, home to about a quarter of Oregon’s 1,957 licensed hemp growers, that rumors were swirling of husband-wife growing teams divorcing, farmers selling in a panic to low bidders and despairing entrepreneurs dying by suicide (the Jackson County Sheriff’s office told Stateline that it investigates all suicides in the county and is not aware of any involving hemp growers).
“I’ve literally had a tightness in my chest from all these failures the past few days,” said Mark Taylor, founder of the Southern Oregon Hemp Co-operative, when he met with Stateline at a Medford restaurant last month. He still thinks the hemp industry has a bright future but worries that a lot of the crop planted in Oregon this year isn’t going to make it. “I believe we’ve lost a substantial amount of hemp,” he said.
Nationwide, bad weather, mold, disease, pests and inexperience have crushed some crops. Now lack of capital, harvesting equipment and drying space — challenges affecting rookie and veteran farmers alike as growing expands — means that some healthy plants may not make it out of the ground.
“People can’t get it out [of the fields] because there’s not the infrastructure, the capital or the labor to get it through,” Ochoa said.
Wholesale hemp prices, while higher than for other agricultural commodities, are expected to decline for key cannabinoid products this year as new suppliers flood the market, according to Washington D.C.-based cannabis industry research firm New Frontier Data. And even farmers who thought they had buyers lined up are finding there are no guarantees.
Singh is optimistic that he’ll find a buyer for the crop he spent millions of dollars planting, even though much of it is blighted by mold. Moldy hemp, while less valuable than the unblemished stuff, can still be processed into CBD oil.
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Cannabis Banking Challenges Go Beyond Pot
Other parts of the country have faced different diseases and pests. Bipolaris leaf spot, which limits the photosynthetic area of the plant, was widespread in Tennessee, said Katy Kilbourne, a plant pathologist with the state’s agriculture department.
Zach Hansen, an assistant professor in the entomology and plant pathology department at the University of Tennessee in Knoxville, has seen about 10% crop loss in worst case scenarios to another fungal disease, Southern blight. “It’s basically a death sentence for the plant,” Hansen said.
Corn earworm, a common pest to sweet corn in the South, has transitioned to hemp nicely, according to experts, prompting growers to hire people to walk up and down hemp rows and hand-pick the pests off individually.
‘The Money Is in the Plants’
In Southern Oregon and other regions where hemp production exploded this year, people up and down the hemp supply chain are feeling the pressure.
Ochoa is a tall man with a gentle smile who radiated calm as he walked through his 100,000-square-foot hemp-drying warehouse, fielding nonstop phone calls, video calls, emails and urgent questions from his staff.
His Zen demeanor is misleading, however. “I’ve never been this stressed in my life,” he said as he headed from the curing room, a cool space where dried hemp lay in plastic-lined packing crates, to the cavernous hall where freshly harvested plants lay drying on racks.
Not only was Ochoa trying to manage a rapidly growing business, but like his hemp grower clients, he was squeezed for cash. “The system is out of money,” he had explained earlier, in his bare-bones office. “The entire industry segment is all in. All the money is in the plants right now.”
Ochoa said buyers are out there, but it’s hard to know who’s serious. In other parts of the country, even farmers who entered into contracts well ahead of the growing season also are having problems.
Kentucky farmer Michael Calebs poses in February with farm manager Kim Henson in front of two box barns that he planned to convert from tobacco to hemp. Calebs thought signing a contract with a hemp processor would guarantee a market for his hemp crop, but in September he learned that his processor is unable to pay growers.The Pew Charitable Trusts
When Stateline met Michael Calebs earlier this year, he proudly wore a clean gray cap emblazoned with the green, upside-down V logo of the company that processes his hemp, Atalo Holdings. With a contract, Calebs wasn’t worried about investing $200,000 in hemp seed, clones, fertilizer, land, diesel, insurance and labor across 33 acres in London, Kentucky.
In September, Atalo CEO William Hilliard sent its growers a letter alerting them that an investor had pulled out, and it could not offer a “specific or dependable date” for when growers could expect to get paid.
“Matter of fact, they recommend if we can find a place to sell our crop to sell it,” said Calebs, who’s also thwarted two attempts by thieves to steal his hemp. “That’s scary, isn’t it? That could bankrupt us.”
Hilliard told Stateline that Atalo continues to seek funding and intends to pay in full about 80 growers, including Calebs, who collectively this season planted about 1,700 acres in Kentucky and neighboring states. Hilliard attributed Atalo’s challenges to specific investors and outside forces, such as news of overproduction that has investors wary of getting involved, lackluster financial results among cannabis companies and uncertainty in the vaping industry.
“Our enthusiasm for the hemp industry has not dampened at all,” Hilliard said.
STATELINE STORY February 27, 2019
Farmers Hope for Hemp Riches Despite Risks
Meanwhile, GenCanna — another heavyweight in growing and processing industrial hemp crops — is being sued by a group of hemp farmers in Kentucky over a deal that fell through to create a drying facility and pay an increased price for processed hemp.
The farmers want $5 million, but GenCanna disputes their claims, according to the Lexington Herald-Leader. In addition, there are at least 37 liens against a property the company leases in Mayfield, Kentucky. Records show the company owes just shy of $52 million, according to Tammy Flint, Graves County clerk.
Neighboring Tennessee licensed roughly 4,700 acres of hemp last year. This year, it’s an astounding 51,000 acres, according to the Tennessee Department of Agriculture.
The number of licensed growers increased nearly 1,600% this year, from 226 to 3,800, “and that has had some catastrophic effects,” said Bill Corbin, a third-generation tobacco farmer in Springfield, Tennessee. Corbin fears he’s made a “massive mistake” by forgoing tobacco this year to grow hemp exclusively.
Corbin suggests Tennessee institute a narrow window for growers to obtain licenses and restrict growers’ hemp acreage and pounds based on averages from previous years of documented production. “That should be the case with hemp, so we don’t travel this path again.”
Meanwhile, hemp prices are all over the place. Pete Gendron, president of the cannabis advocacy group Oregon SunGrowers Guild, says he’s seeing a range of prices nationally — from about $12 a pound for hemp with low cannabinoid concentrations to $1,000 a pound for top-quality flower that can be rolled into joints and smoked. Last year’s price range, he said, was also huge.
Many hemp growers in southern Oregon, even experienced ones, aren’t going to be able to sell for premium prices this year, thanks to early rains that spread mold across hemp fields.
Stormmy Paul, a longtime cannabis entrepreneur who runs a hemp drying business in the area, said mold can turn a $250 a pound crop into a $25 a pound crop. Because hemp is so expensive to plant and harvest, he said, once prices drop below $20 a pound, farmers start losing money.
It generally costs between $8,000 and $20,000 an acre to grow hemp, not including harvest costs, Ochoa said. Many rookie growers underestimate the expense. “People think they can grow it for $4,000 to $8,000 an acre, and then they get in,” he said, “and all they can do is keep borrowing money all the way to the finish line.”
By late October, between 75% and 90% of the viable hemp crop in Oregon should have been out of the ground and in drying barns, Gendron said. But in the Rogue Valley, a cannabis-growing mecca near the California border, hemp fields were still bursting with plants toward the end of the month. Many fields, such as Singh’s 16-acre plot, were partially harvested. “Not everything that’s sitting in the field right now is going to be harvested,” Gendron said.
Singh is pushing on, despite mold, harvest challenges and the accidental fertilization of the Phoenix field by male hemp plants from a neighboring farm — which filled Singh’s once-pristine hemp flowers with seeds.
He initially planned to pay field workers to hand-shuck the hemp flowers, but that proved prohibitively expensive. Mukesh Sheoran, Singh’s business partner and cousin, said that an initial crew of 100 workers for the Phoenix field put the company back $20,000 a day.
Determined to cut down on labor costs, the hemp growers, both in their mid-40s, bought a green-bean harvester from a farmer in Idaho and modified it to suck up hemp leaves and flowers. Even with the machine, the harvest has proceeded slowly, because the cousins can only harvest as much hemp as they have space on the farm to dry.
The harvester’s breakdown, thankfully, was short. After conferring with the mechanic, who welded adjustments to the machine in the middle of the field, Singh climbed gingerly into the cab and worked the harvester slowly round until he could drive it along a line of hemp plants.
Sheoran watched silently as the harvester inched its way down the line, spitting hemp debris into a tank at the back of the machine. “We had very high hopes. See the amount of flowers we had?” he said, looking out at the top-heavy plants. “It’s all seedy.”
Oregon hemp grower Ajit Singh pulls a hemp flower apart to show where mold has set in. Hemp crops across the Rogue Valley have been blighted by mold after unusually heavy rain in September.The Pew Charitable Trusts
Even longtime farmers are facing challenges. Steve Fry, a 68-year-old organic vegetable farmer in the Rogue Valley, grew about 20 acres of hemp last year and twice as much this year. “We did so well last year that we thought we’d do more. That’s how dumb farmers are, you know,” he said, sitting on the tailgate of a truck parked beside his red barn on a glorious October afternoon.
Fry estimated that he’d harvested about 15% of his hemp crop, which also has been afflicted by mold. He said he’s wondering whether it’ll be worth harvesting the most damaged plants, given the prices they’re likely to command. “I’ve got to talk to my processor guys,” he said.
Next year, Fry said, he’ll be better prepared, with more drying space ready to go early in the season as well as modified harvesting machinery.
And this harvest, while disappointing, won’t be crushing. Conventional crop prices are so low, he said, that even if he harvests only some hemp he’ll be better off than if he had planted vegetables. “We’re still going to do better than we would have if the whole place was in veg,” Fry said.
Fry said he hasn’t made a profit on vegetables in three years. Last year’s hemp, not carrots and squash, is paying the bills on a new food processing building on his family farm. “Thank God hemp came,” Fry said.
Post time: Jul-16-2020