Kathleen Butler in a hemp field at Butler Farms in Bourbon County on June 21, 2019. Butler Farms has the first U.S. contract with Patagonia as an organic hemp supplier.
Standing between two rows of thigh-high hemp crops close to the Tennessee-Kentucky border, the retired owner of a New Hampshire convenience store cheerfully recalled why he chose to grow his first hemp crop this year.
Barry Paterno, 67, is a gardener, not a farmer — he likes to grow tomatoes and corn. But he saw on the local TV news that an acre of hemp could bring in as much as $50,000 a year. Paterno, who now lives in Tennessee, was inspired to begin his farming career.
Stories like his have been repeated across the country: Farmers are rushing to plant newly legalized hemp in hopes of striking it rich, or at least making a good chunk of change in a period of low commodity prices. Hemp is a nonpsychoactive form of cannabis.
But as growers across 34 states start to harvest as much as half a million acres of hemp this fall, many newcomers have no idea who will buy their crop or even who will prepare it for sale. Paterno, speaking during a tour of a farm owned by an organic farmer with experience growing marijuana, said he doesn't know what kind of return he’ll get on his $8,000 investment.
So far, Paterno has lost money on seeds that didn’t sprout and flower as promised. Some of the seeds were males even though he thought he was purchasing only the females that produce the cannabidiol, known as CBD, that he wants.
Wearing dark sunglasses, the slender first-time grower said he’s lost 30 pounds working 10-hour days pulling weeds and looking for pests across his 2-acre field. After the harvest, he plans to dry his hemp on his breezy wraparound porch in Middle Tennessee and store it, he said, until there’s less hemp on the market.
“Be prepared to store it till spring,” Paterno said. “No one will have it by then.”
Despite the buzz around hemp — particularly hemp CBD, a cannabis compound that’s become a wellness craze — hemp is harder to grow, process, and sell than many first-time growers realize. And the flood of hemp hitting the market this year likely will lower prices and profits.
“It’s a high-risk crop — it’s hard to find markets,” said Matt Cyrus, the president of the Deschutes County (Oregon) Farm Bureau and a farmer who has been growing hemp for CBD since 2016.
“It’s not like corn or wheat or other commodities, where you just go down to the local grain elevator.”
The Hemp Boom
The most recent farm bill, which President Donald Trump signed in December, makes hemp legal to grow in states with hemp programs. Twenty-one states already had hemp pilot programs under a previous version of the farm bill. This year, 13 states joined them.
Since legalization last year, licensed acreage has increased more than 455%, according to the latest U.S. Hemp License Report from advocacy organization Vote Hemp.
“Right now, farmers are making multiples of the profit they would make in corn or anything else,” said Ian Laird, chief financial officer and general counsel of Hemp Benchmarks, a Stamford, Conn., based financial business and industry data provider. But given the huge increase in hemp production this year, lower prices are on the horizon, he said.
Kentucky approved about 60,000 acres and more than 6 million indoor square feet for hemp cultivation this year, almost four times the acreage and 10 times the indoor square feet approved last year, according to the Kentucky Department of Agriculture. The state licensed about 1,000 growers this year, up from just over 200 last year.
Oregon licensed more than 62,000 acres and more than 10 million indoor square feet for hemp cultivation, almost six times the acreage and 10 times the indoor space licensed last year, according to the Oregon Department of Agriculture. Over 1,900 growers are licensed to grow hemp, more than triple last year’s number.
Tennessee licensed roughly 4,700 acres of hemp last year and already more than eight times as much — 51,000 acres — so far this year, according to the Tennessee Department of Agriculture. The number of licensed growers increased nearly 1,500% this year, from 226 to 3,600.
Getting a hemp farm started can cost tens of thousands of dollars, and harvesting isn’t cheap. Hemp farmers can start seeds in a greenhouse, lay down a sheet of plastic mulch, and plant the seeds and harvest the crop by hand. Growers are scrambling to find field workers amid a broader farm labor shortage.
Meanwhile, banks are still leery of lending to customers who are growing a form of cannabis — which at certain levels of THC is still illegal under federal law — and entering a brand-new, risky market. Hemp is still a brand-new crop, without established planting, fertilizing, and disease-repelling protocols. Some experienced farmers have never seen a hemp plant, let alone know how to grow one.
Farmers battle weeds, pests, crop loss, and uncertainty about when to harvest their crop to assure the levels of the psychoactive compound THC in the flowers stay below the legal limit.
After the harvest, growers face a drying phase. Without an immediate buyer, they need storage space. All the while, mold can grow and the level of CBD, the legal chemical that makes the hemp valuable for use in extracts, can decline.
Experts who watch the industry expect prices to drop as more hemp hits the market. Cyrus, of the Deschutes County Farm Bureau, said he sold his hemp CBD crop for around $40 a pound last year. He expects that price to drop closer to $20 or even $10 this year.
On the other hand, the hemp market is growing. New Frontier Data, a technology company focused on the cannabis industry, forecasts $1.8 billion in U.S. hemp sales this year and as much as $5 billion in 2022.
And Beau Whitney, the firm’s vice president and senior economist, said that if farmers struggle to get their crops to market, there’s less of a chance that the market will be saturated and prices will crash. He expects prices to stay stable in the short term, but plummet in the long term as the supply chain matures.
Many farmers face a more immediate problem: As harvest gets underway, they don’t yet have a buyer lined up.
Have a Long-Term Plan
Earlier this month, first-time hemp growers flocked to the Southern Hemp Expo, held in a massive arena south of Nashville that hosts annual rodeos and guitar shows, hoping to figure out how to sell their crops. They asked around, looking for processors and buyers. Some showed industry insiders on the expo floor pictures of their crop and asked them when to harvest it.
Meanwhile, speakers on the expo stage swung between lauding hemp as the greatest opportunity in agriculture to forecasting that loose regulations and possible market saturation will cause investors to lose money.
“If anything, I found it a bit encouraging that the so-called experts don’t really seem to have a better grasp on what’s going on with the market than anybody else,” said Chris Tuggle, whose parents have planted 20 acres of hemp and invested $30,000 in their venture outside of Bell Buckle, Tenn.
Experts, including state agriculture officials, have for months been urging growers to get buyers lined up for their crops as early as possible. A lot of statistics indicate that farmers are instead thinking of hemp as a field of dreams, Whitney said in a presentation at the expo: They’ll plant the hemp and the demand will come.
“But in reality, farmers really have to figure out their supply chain, what their product line is, what their target market is — before they even plant it,” Whitney said. “Otherwise, they may be setting themselves up for disaster.”
Some farmers say that kind of planning is unrealistic.
“Every speaker starts out with, ‘Don’t put a plant in the ground unless you have a buyer,’” said Michelle Shelly, a first-time hemp grower in Liberty, Tenn. “As a grower, I don’t see how someone would buy my product, though, if I don’t know how to grow it.”
State agriculture officials say their departments aren’t set up to help connect individual sellers and buyers. “Postharvest, we’re not really involved,” said Will Freeman, spokesman for the Tennessee Department of Agriculture.
Sunny Summers, the cannabis policy coordinator at the Oregon Department of Agriculture, said she’s received messages from farmers who have grown hemp but don’t know how to sell it. All she can do is send them a list of hemp handlers registered in the state, recommend they reach out to Oregon State University’s new Global Hemp Innovation Center, and tell them to talk to others in the industry.
A team of Oregon State University employees spreads hemp seeds in a field using a tractor at a research station in Aurora, Ore., that's part of the university's newly announced Global Hemp Innovation Center.
Some in the industry are trying to set up marketplaces and cooperatives that will bring buyers and sellers together.
The Southern Oregon Hemp Co-Operative, a group with some 50 members based in Jackson County, has been helping farmers access seeds, irrigation help, and equipment — and try to find buyers. Connecting buyers and sellers is probably about 60% of what the co-op works on, founder Mark Taylor said.
Saving the Family Farm?
Yet, many first-time hemp farmers are undeterred. On the Sunday after the expo, three busloads of hemp enthusiasts — about 150 of them — paid $100 a head to tour two sprawling hemp farms in Middle Tennessee.
There were old farmers, new farmers, and those who professed farming ran through their blood even if they lacked firsthand experience. They traveled from as far as Georgia, Mississippi, North Carolina, and Virginia to gather information and pepper experienced farmers with questions.
At the second stop, attendees lunched on pork from a visiting food truck. While eating a sloppy Joe and baked beans, Alice Bolden, a financial officer with a Georgia hemp company, compared the dawn of hemp to the cotton boom. “This is the first time to be here in the United States and to watch the world change.”
On a hot, sunny day, these hemp believers walked up and down rows of hemp crops and imagined a future where hemp saved the family farm and replaced staples like paper, plastic, and cotton, just as they acknowledged that the price of hemp will eventually collapse.
Even the tour guides with more farming experience don’t have all the answers, Paterno said. But he soaked up the advice. “Anybody who wants to go into this better research very carefully.”