In August, industrial hemp products were allowed to be produced and sold for the first time, although no one can grow hemp until the state Department of Agriculture releases final regulations.
On Nov. 16, MU Extension held an industrial hemp workshop in St. Charles County to give potential growers an overview of the industry. The session covered grain and fiber hemp, producer perspectives, budgets, processing and the industry outlook.
Hemp was popular in manufacturing during the 1860s and 1870s, before federal drugs laws limited its production. Today, potential hemp producers need to establish contacts and do their homework before venturing into hemp territory, participants in the workshop were told.
“There’s been a lot of hype in the hemp industry, and we just want to make sure we get people the facts that they need to be successful if they do decide to get involved with this crop,” said Justin Keay, who organized the event.
Federal law began allowing states to organize pilot programs and research industrial hemp production in 2014. Missouri began such a program in 2018, and Congress then dropped hemp from the list of controlled substances.
Once the Farm Bill was passed by Congress in February 2018, Missouri rewrote its law, repealed the pilot program and began to draft regulations that would authorize permits for those who want to grow and sell industrial hemp.
The public comment period for proposed industrial hemp regulations ended Dec. 1, and the state Department of Agriculture will issue the permits over the winter.
Hemp is not pot
By law, industrial hemp must contain less than a 0.3% concentration of THC, the psychoactive compound in marijuana. The versatile crop can be made into thousands of products, from CBD oil to clothing, rope, wood, flooring and particleboard.
Tyler Morgan, president and founder of Sky Trace Farms, is a board member of the Missouri Hemp Trade Association and helped write the proposal for statewide industrial hemp. He said he sees more acceptance of hemp products, which is paving the way for more business success.
“The plant itself isn’t just demonized in the background as it has been for the last 80-something years, and I think that starts to change people’s attitude toward each other,” Morgan said.
MU Extension economist Ray Massey led a presentation in November on crop enterprise budgets after studying the crop for six months and gathering information from across the U.S. and Canada.
“The problem with hemp is we haven’t grown it before; we haven’t done research on it,” Massey said. “So when I say that you’re going to have 5 tons of hemp fiber per acre, I really don’t know if you are.”
It could be the most profitable crop grown in Missouri for those who are successful, Massey said. But he also warned potential growers that they could lose several thousand dollars per acre if unsuccessful.
“I actually hope to kinda scare them,” Massey said. “If you listen to the popular press, there’s just thousands of dollars to be made growing hemp, and I’m wanting to say, ‘Wait a minute, you’ve never grown this, and why do you think you’ll not lose money on it?’”
Massey also matched the agricultural practices that are best suited to hemp production:
• Forage producers have the equipment and skills necessary for fiber hemp.
• Corn producers have the equipment and skills necessary for hemp grain, and producers used to long hours of labor are more suitable to growing CBD.
“Everybody’s most excited about CBD, but my budgets estimate that it takes about 240 hours of labor per acre,” Massey said. “So the people that are used to 200 hours per acre of labor are vegetable producers and tobacco producers, but corn producers use about one hour of labor per year.”
Total sales for hemp-based products in the U.S. 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.
“You can only be successful when you stop treating this plant like a dollar bill,” Morgan said.
“You always have to remember, no matter what, that what you’re making ends up in the hands of somebody who’s going to use it, and not just the next company or the next deal.”
In order to prevent prospective growers from losing money, presenters at the workshop touched on the challenges and risks involved in the industrial hemp industry.
“You’ve got to have a really good plan regardless of what product you’re going after because every step of the way, you can completely mess it up,” Morgan said.
Hemp benchmarks have estimated that only 35% of all the hemp planted this year will be harvested.
“Nobody is an expert in this,” said Greg Luce, coordinator of the Industrial Hemp Working Group at MU.
While there are no experts, MU is working to provide unbiased information to those interested in producing industrial hemp in the state, he said.
“In talking to the people in Kentucky that have been working on this for five years, that’s one of the things they like to say.”
Risks include fraud, not having a contract and lack of well-developed crop insurance mechanisms for this new crop, Keay said.
“The other risk is that the CBD market has been trending downward over the past number of years.”
Workshop participants were told that it is up to them to establish a network and be smart about deciding if this crop is worth pursuing.
“I know a lot of people want to become the next hemp mogul, but it doesn’t seem to work that way,” Morgan said.
“It really works with strong partnerships, strong plans and making sure whatever section of the industry you want to be in that you’re passionate about it,” he said.
“This is a brand new startup across the board.”