NewsHempTough First Year For Emerging US Hemp Industry

Tough First Year For Emerging US Hemp Industry

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THE passing of the Farm Bill in 2018 saw a massive increase in hemp farming with total acreage under cultivation rising fivefold.

Licences issued for hemp cultivation increased to more than 400,000 acres in 2019, from 80,000 acres in 2018.

However, recent estimates suggest 2019’s US hemp harvest will come in between 115,000 to 138,000 acres.

Whilst still a US record, an increase of 50% it is hardly of the same magnitude as the licensing round had initially indicated.

And the increase in supply has seen prices plummet from $40 a pound in July, last year under $10 a pound in February, 2020.

It’s been a tough year for this industry, with a combination of depressed prices, bad weather, seed issues, a lack of processing facilities and punitive rules on THC-content combining to depress even the most optimistic spirits.

Seed Sex Issues

With most farmers looking to grow hemp to supply the booming CBD market  there was a move away from the seeds familiar to the industrial hemp industry.

Some farmers claim these new seeds just simply failed, while others have seen them produce ‘hot’ crops.

The Department of Agriculture (USDA) Interim Final Rules, published in October, last year, state that crops with a THC (delta-9 tetrahydrocannabinol) level of 0.3% are illegal and must be destroyed.

Over in Europe the THC content is restricted to 0.2% and this means most hemp plants are monocieous – both sexes on the same plant – producing CBD levels of around 3%. 

Seeds with a 0.3% THC bring opportunities to breed dioecious, or female plants, with much higher levels of CBD – up to 15%.

However, US industry ‘Bible’ Hemp Benchmarks carries reports from dozens of farmers who are in dispute with seed companies over poor  genetics; ‘for providing non-feminized seed sold as feminized, as well as for seeds with low germination rates’, it says. 

Hot Crop

One large Kentucky business is suing an Oregon seed company for $44m after purchasing millions of ‘feminised’ seeds – to discover ‘70% were male’. 

The Kentucky crop was destroyed to avoid pollinating other nearby hemp crops, resulting in losses for farmers and processors, say reports.

These difficulties are compounded by the USDA’s Interim Final Rules released on October 31 which takes a harsh approach to THC levels.

This is a major irritant for US farmers as they include in their calculations not just THC, but THC’s non psychoactive cannabinoid cousin THC-A (the acidic form of THC).

With this included in total THC levels – on a dry weight basis –  this can boost total THC content to well over 0.3%.

Recent reports from Arizona have demonstrated the extent of this problem with nearly 40% of its farmers’ plants failing the THC test.

The Arizona Department of Agriculture’s Plant Services Division, say that since early December, 53 of the 130 hemp crops tested failed, on a total of nearly 700 acres, equating to $13m in losses.

Buyers’ Retreat

Arizona, Colorado, Oregon, Montana, Tennessee and Kentucky are amongst the largest hemp growing states in the US.

The Hemp Benchmark Alliance monthly reports on the state of the growing industry makes for interesting reading.

In the last report of 2019 its summary of the year discusses the oversupply of CBD biomass, depressed prices and the concerns of anxious farmers looking for buyers.

It highlights the frustration of one Oregon cultivator who says that along with depressed hemp prices one of the biggest concerns is the growing number of slated buyers backing out of contracts. 

This report bleakly continued: “With many farmers experiencing difficulties and taking losses growing hemp this year, along with the perception that the USDA’s regulations will make it more difficult to bring in a compliant harvest, how much acreage will be planted in the coming year is also an open question.”

New Trade Group

Associated Press reports that USDA estimating that 20% of the country’s hemp crop will fail under the proposed regulations. 

One agricultural commentator told the Associated Press: “There are 46 states where hemp is legal, and I’m going to say that every single state has raised concerns to us about something within the rule.”

In an effort to help the industry speak as one voice more than 300 farmers, the US Hemp Farming Alliance, First Crop, HiLo Seed, GeoCanna and Farm Journal have come together to form the U. Hemp Growers Association.

Former Hershey, USDA and Organic Trade Association official Cara Wilcox will be its first executive director.

One of its first issues will be to deal with are the hemp testing rules which mandate that a crop must be harvested within 15 days of its THC test.

Hemp Hurdles Ahead

Farmers are lobbying for a 1% THC limit and a 30-day harvest window to give them more flexibility, along with calls for improved crop insurance cover. 

There is also the issue of seed genetics and the need to overcome the issue of hot crops.

On the latter point a Spanish hemp seed known by Panakeia is one of the first THC-free ones of its kind to be developed.

Developed by Hemp Trading and the Universidad Politècnica de Valencia reports are emerging of US suppliers sourcing these seeds for future growing seasons.

ENDS

1. https://www.hempbenchmarks.com/wp-content/uploads/2019/10/hemp-henchmarks-spot-price-index-report-october-2019.pdf

2. https://www.oregonlive.com/news/2019/09/after-hemp-crop-tanks-cbd-producer-sues-oregon-hemp-seed-seller-for-44-million-lawsuit-says.html

3. https://www.washingtontimes.com/news/2020/jan/19/tests-find-some-early-arizona-hemp-crops-have-too-/


Peter
Peter McCusker is an experienced news and business editor, who believes it’s time to fully embrace the multiple, proven, medical benefits of the cannabis plant.

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