Source: thelandonline.com
Legacy Hemp has an industrial hemp operation near McVille, N.D.
Mike Zabel of Zabel Seeds near Plainview, Minn., grew industrial hemp in 2017 to produce certified industrial hemp seed in a fledgling industry. A participant of the Minnesota Department of Agriculture Industrial Hemp Pilot Program, Zabel plans to grow industrial hemp this year too.
“We planted and harvested it and got it in the bin. We haven’t proceeded to clean it and package it yet,” Zabel said.
He is doing preliminary testing on the seeds. His certified seed, to be branded as Legacy Hemp’s cultivar X-59 Hemp-Nut, will be needed at the end of May.
The industrial hemp market is growing, but more demand is still needed as are processing facilities.
There are many uses for hempseed, also known as the grain, in the form of hemp hearts, protein powder, oil and skin care products. Food manufacturers pose a major market for this latest superfood that offers plant protein with healthy omega-6 and omega-3 fatty acids.
Certified seed production requires more intensive management. Legacy Hemp was an excellent resource in Zabel’s first season.
“It wasn’t such a nightmare that we won’t do it again. We learned some things,” Zabel said. “Overall, from planting to harvest the whole process is relatively simple and pain-free.”
Zabel researched the crop and visited Minnesota Hemp Farms during harvest. He talked to some Canadian farmers as the country has an established hemp industry. In fact, the majority of Minnesota farmers plant certified seed from Canada. Producing certified industrial hemp seed in the United States is a logical next step.
The Minnesota Crop Improvement Association board approved the guidelines for certified seed production for industrial hemp in 2017.
“Hemp is a prolific pollinator,” Zabel said. He added that when hemp becomes more of a commodity, isolation of fields for certified seed production will become an important issue. Isolation is addressed in the guidelines.
The fertility in the fields were good to begin with so additional fertilizer was not applied. Zabel used existing equipment, including his soybean head for harvesting. He said that harvesting is slow and tedious since you must clean the grain in the field prior to storage because there is a large amount of foreign material with the seed. The seed must be dried as well.
“It’s imperative that you clean it before you put it in a bin for storage,” he said. “You either need to have equipment available to do that or you need to hire somebody with a mobile cleaning apparatus or facility.”
Zabel advises: “Before you plant it, make sure you’ve got a market for it.”
Minnesota is one of 34 states where farmers can grow hemp, but it is only one of about 14 that have a pilot program set up to study hemp. U.S. hemp competes globally against Canada, European Union and China. Most will agree that American-grown hemp grain is preferable to importing the ingredient from other countries.
According to the MDA’s Industrial Hemp Pilot Program annual report, none of the growers had reported any profits or had received money for their harvest. Growers reported a contract price of 50 cents a pound for conventional and $1.08-$1.18 per pound for certified organic. The report states that the average cost per acre was about $500, which does not include land rent. Across the 1,100 acres harvested, the average yield of cleaned grain was 790 pounds per acre, but some growers reported 2,000 pounds on the high end.
Key market findings from the report are: certified organic hemp grain is preferred over conventional grain in the food market; achieving food-grade purity was difficult for Minnesota hemp farmers; growers were frustrated at season-end when they had nowhere to sell their grain.
At this time, there are no industrial hemp processors in Minnesota and participants expect it will take time and money to establish in industry reported the MDA.
Infrastructure
The 2014 farm bill allowing industrial hemp production ushered in entrepreneurs who want to be on the ground floor of the industry. Ken Anderson of Prescott, Wis., founded Legacy Hemp which operates in Minnesota, Wisconsin, Kentucky and North Dakota.
Legacy Hemp began in certified seed sales and production and moved into being a wholesale distributor of grains, selling to companies that will add it to food products or package for consumers. His focus is on certified organic hemp grains.
“We sell the farmer the seed. We contract the acreage and we buy the whole yield back,” Anderson said.
Anderson has been using a third party processor for the grain, but this year he is building a food-grade processing facility in Wisconsin. He has a target date of December to be operating and processing this year’s grain. He plans to open three satellite receiving areas to clean, dry and store grain. Organic farmers do not tend to have on-farm storage, he noted.
When talking with farmers, he estimates profits by yield and product. Anderson estimates $1,000 per acre for organic grain and $200-$400 per acre for conventional grain. The biggest profit comes with growing certified seed.
Legacy Hemp currently has a waiting list of farmers who wish to grow for the company. As Anderson continues to get more contracts, he encourages farmers to apply. Anderson is looking for capable farmers that can handle post-harvest cleaning, dry down and storage.
“The grain does really well while it’s on the plant. If you don’t handle it properly in a fast manner, it will spoil,” Anderson said.
In fact, four growers in the pilot program reported grain got hot and spoiled when it didn’t get on air immediately for dry down.
The total retail value of all hemp products sold in the United States was estimated at $688 million in 2016 and projected to grow to a $1.8 billion market by 2020, according to the Hemp Business Journal.
Besides a lack of processing facilities, Anderson sees the need to expand the market so more American farmers can grow hemp.
“The better job that we do of expanding the market, it will be sooner that it (hemp) will be treated as a commodity. Right now it’s not the reality,” Anderson said. “If you grow, you better know who your buyer is at the end of the day.”
By 2020, Anderson plans to establish stalk processing for industrial hemp building materials and textiles.
“We want to make everybody profitable with grain. Then we can put up fiber processing,” Anderson said.
In 2016 and 2017, entrepreneur John Strohfus, of Minnesota Hemp Farms near Hastings, grew hemp. In 2018, he plans to grow 200 acres and contract a couple thousand acres. He contracts both conventional and organic grain. In addition to growing, Strohfus is a certified seed supplier for the Minnesota Hemp Pilot Program. His business model is to buy back every acre of seed he sells.
“Our goal is to be the number one hemp bulk ingredient supplier in the United States in 2018,” Strohfus said.
His Field Theory hemp hearts are available in major grocers and food cooperatives in the Twin Cities. Hemp hearts are hulled hempseed known for their high nutritional value and nutty flavor. They can be added to cereal, protein shakes and more. Strohfus knows all aspects of hemp: seed sales, agronomy, harvest, processing and market.
“We had a market this year. We are able to offer a market where we didn’t have one in 2016. That was really through the work I had done since starting the company by developing relationships, partnerships and business agreements,” he said.
The biggest challenge he faces is food-grade cleaning of the grain. In fact, he said it may be more important to build a cleaning facility rather than a processing facility in Minnesota.
In addition to marketing hemp, Strohfus is studying the agronomy of hemp. He noted that the crop is nitrogen sensitive and likes well-drained soil as opposed to heavy, wet clay soil.
“It’s an amazing plant. It will grow on most soil, but it doesn’t grow well on every soil type. It needs the proper nutrients and fertility to have a productive revenue,” he said.
Law
Industrial hemp is a form of Cannabis sativa L. and classified as a Schedule I drug under the Controlled Substances Act of 1970. However, hemp contains less than 0.03 THC, the psychoactive ingredient that gets people high. The Industrial Hemp Farming Act of 2017 is a bipartisan bill to remove hemp from the Controlled Substances Act and classify it as an ag commodity. Previous legislative attempts have failed.
Anderson expects to see movement on this legislation this summer. The bill will put industrial hemp under the jurisdiction of the U.S. Department of Agriculture. When hemp is no longer a controlled substance, it can become a traded commodity, he said.
“If you are against industrial hemp, you are either ignorant or corrupt. Farmers are not interested in growing drugs, and hemp does not produce any (drugs),” Anderson said.
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