Growing of Hemp Proves a ‘Tough Go’

Many farmers, and wannabe farmers, in Arkansas were excited when the federal Agriculture Improvement Act of 2018 made hemp farming legal.

And why not? Cannabidiol (CBD) oil, extracted from hemp, had become increasingly popular in the country, desired for its purported healing properties, and since hemp does not contain the psychoactive tetrahydrocannabinol (THC) levels of its cousin, marijuana, it was legal across the board.

But the early rush into hemp farming in Arkansas has proved problematic. Agriculture experts and farmers said the difficulty lies in a combination of problems that include basic supply and demand economics and inexperienced farmers.

“They realized it wasn’t unicorns and rainbows,” said Brad Fausett, the co-owner of Hawg’s Hemp Farm in Birdtown (Conway County).

In 2019, the Arkansas Department of Agriculture issued 125 licenses to prospective hemp farmers. By 2021, that number had plummeted to 49.

Those fewer farmers are also tilling fewer hemp acres. In 2019, farmers were licensed for slightly less than 4,000 acres across the state; two years later that number was 586.

“I think hemp was definitely overhyped in the beginning, but I also think Arkansas was really late to this ballgame,” said Caleb Allen, the hemp program manager for the state’s Agriculture Department. “In 2019 when Arkansas comes into the ballgame, we are several years late by that point.”

Allen said that even of the almost 4,000 acres licensed for hemp production, just 1,818 of those acres were planted and less than 850 were harvested. By 2021, the number of hemp acres harvested had fallen to 190 acres out of 586 licensed and 276 planted.

Those state numbers parallel national numbers. Hemp Benchmarks, an industry consultant, reported more than 580,000 licensed hemp acres in 2019 and about 195,000 in 2021.

“You can see that in some of the numbers from 2019 to 2020,” Allen said. “2019 was the year most hemp was produced in the United States, and a lot of it just sat in storage across the United States. The CBD market bubble burst.”

Experienced Hand

Bill Morgan said the key to hemp farming is efficiency and a solid business plan.

Morgan, 72, grows hemp on 1 acre in west Fayetteville, using a mixture of outside and greenhouse planting. Hemp planting season generally begins in late April and runs into early summer, with harvesting happening in the fall.

On Tuesday, Morgan showed to a reporter his bins and buckets of dried hemp flowers from his 2021 crop, when his 420 plants produced 826 pounds of hemp buds. Each 10-pound bin can be processed into 1 pound of oil, which Morgan then turns into CBD products. He estimates he can make as much as $30,000 per bin.

He sends the flower to a Little Rock processor but does most of the work himself.

“I’m a small player going for the top amount of dollars on the smallest amount on ground,” Morgan said. “It’s a supply and demand commodity. A lot of people got into it because they were greedy. Now they are sitting on it because the value of the biomass is not worth your time.

“At today’s market value, on 1 acre I can produce $1 million. I still have to prove it out, but I have that much in inventory. It’s not for everybody because it is real labor intensive.”

Morgan sells his final products through his Ozark Mountain Medicine brand using vendors with whom he has contracts. While his buds sit in storage, Morgan at least knows that there is a market for them as he turns them into CBD oils and salves.

“I’m a long hauler,” Morgan said. “I know this plant; I know how to grow this plant and get the most out of it. Most people walking into it don’t have a clue.”

‘Unicorn Chasing’

Fausett said his group plans to cultivate about 20 acres this year.

Hawg’s Hemp is a vertical operation; Fausett’s group has a processing facility and a line of CBD products, the most popular of which is for animals. Fausett is also the co-owner of Green Remedies Group, a medical marijuana dispensary company.

Fausett did pilot research on hemp farming in 2014 in Oklahoma so he knew what it was all about. His main focus was on a good genetic seed that would grow well in Arkansas, while working to line up an end market for the crop.

“A lot of people got into it, spent a lot of money on it and then had to burn it,” Fausett said. “There was a whole lot of unicorn chasing. When we got into it, I had been in the CBD market for a while. I knew the 2018 farm bill would crash the market and it did; it crashed down to nothing.

“We were selling $3,000 liters of oil when it started; now I can get $300 a liter. CBD production doesn’t make a lot of sense unless you have a brand that can reach out in all the markets. It’s hard to make any money with it.”

Vic Ford, the associate vice president of agriculture and natural resources at the University of Arkansas Division of Agriculture, said hemp has a future in Arkansas but it needs experienced farmers, more processing capacity and defined end markets.

“Anybody who grows anything from the soil knows it’s not easy money,” Ford said. “Nobody realized that with specialty crops — and this is a specialty crop — you have to have your markets lined up. It’s a tough industry that is slow to develop.”

All Dressed Up

Hemp is not marijuana, Allen stresses whenever he gets a chance, like the time a school principal called him to complain that a hemp farmer was growing marijuana in his county.

It has been grown for centuries across the world for its versatility. It can be used to make rope, or fabric, or grain for animal feed. It can be used for construction material and a host of other items.

That didn’t matter when the United States banned the growing and cultivation of hemp in 1970 in the midst of anti-drug fervor. Hemp was lumped in with marijuana, which has levels of THC sufficient to get users “high.”

Hemp is classified as having less than 0.3% of THC, generally considered much lower than any level needed for intoxication. Federal lawmakers shelved hemp as a legal commodity anyway.

“This country ran on industrial hemp from 1620 until 1930,” Morgan said. “Hemp was king. It is going to find its way back in.”

It took 40-plus years for the fervor to weaken, and the U.S government approved pilot research programs for hemp in 2014 as long as the THC levels in hemp remained below 0.3%. Hemp was made fully legal — and there is growing debate about moving the THC level up to 0.5% or 1% — in the 2018 farm bill.

By the time Arkansas growers placed their hemp seeds into the ground, the tide had already turned. The CBD market, like other meteoric markets, overheated and supply drowned the demand and prices dropped.

“Quite frankly, I am tired of the CBD oil conversation,” Allen said. “It’s the only profitable market; I get it. Everybody forgets about that word in front of hemp: industrial. I am very industrial minded. I want to see construction materials. I want to see clothing fibers.

“Hemp seed is very nutritious. To my knowledge, there is no farmer in the state producing a hemp seed crop for human consumption.”

Allen said he got a call from a hemp farmer last week complaining about finding someone to process his crop. His 2019 crop.

“Hemp is a very tough go right now,” Allen said. “My armchair expert opinion is farmers were prepared to grow the crop, and of course some of them were not prepared to grow the crop, but the growers who successfully produced the crop had nowhere to legally sell it.

“My biggest fear is I don’t want anybody betting the family farm on hemp production. It is just not feasible.”

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Hemp Production in Arkansas