Home > News > Hemp-Farmers Ahead of Processors

A shortage of buyers for hemp produced for CBD oil extraction is causing growers to look at different markets for the versatile crop.

Many large-scale CBD processors in the middle of the country are still under construction, and they’re preparing to come online during a time when extracted oil prices have been halved over the course of the growing season.

“We’re currently seeing there just aren’t enough processors to purchase product from the surge of farmers and cultivators who entered the marketplace in 2019,” says Rob Lee, managing partner and chief innovation officer of GA Xtracts, a CBD extraction facility in Georgia due to go online by early next year.

As Illinois entered its first year growing the crop and other more-experienced states increased production in 2019, growers learned by October that their premium for hemp grown for CBD extraction was halved, along with oil prices. Hemp pricing service PanXchange reported biomass selling from $1.61 to $2.71 per percentage point of CBD content per pound in late October.

“Most folks planted without any thought of who was going to buy their materials,” says Win Phippen, a Western Illinois University professor who focuses on alternative crops. He recalls a late-September meeting of 200 or so growers where he asked if anyone had lined up buyers.

“Not one hand went up. Not one,” he says. “They’re scrambling — they were promised hundreds of dollars a pound for high-quality biomass, but at the moment, there’s no one buying.”

Growing for smokable flower

Phippen estimates that 75% of growers entered the season looking to sell for CBD oil extraction, but that some farmers started to grow for smokable flower in addition to the oil market, as the premium for the inhalable product remains intact at $200 to $400 a pound.

It’s smoked by consumers in items such as hemp cigarettes, or “hempettes,” as one manufacturer labels them. But like extracted CBD oil, it can’t contain more than 0.3% tetrahydrocannabinol, or THC — the hallucinogen present in hemp and cannabis.

Hemp varieties such as Cherry Wine and Boax can be used for either purpose, but they have to be managed differently in-season and during harvest.

“It’s a hell of a lot of work,” adds Marty Mahan, a Glenwood, Ind., farmer and hemp chapter president for the Indiana Farmers Union. While he wanted to produce for smokable flower, he says some of his crop went to seed, and he didn’t think it’d make for a viable product.

Hemp grown for smokable flower needs to have its apical meristem trimmed right before the flowering growth stage, so that five or six large colas grow out over the remainder of the season rather than 20 to 30 small buds. This ensures less energy goes to growing leaves that need to be trimmed off ahead of selling the product as smokable flower.

“If you’re just doing bulk, that’s not needed, because you’re just going to throw the stems, the leaves and the flower together in the bin anyway,” Phippen says, adding that smokable flower also requires a slightly higher moisture content of 12% to help develop flavor over the storing process.

Waiting on markets

Mahan says he’s going to hold on to his CBD grown for oil extraction until prices rise, like many of the farmers Phippen has talked with.

“One of the challenges I’m facing is that the processors I’ve talked with want a minimum amount,” Mahan says. “They want 5,000, sometimes 10,000 pounds. I had 500 plants, and they average a pound a plant. I’m not going to be anywhere near to what these people are looking for.” Mahan says he’ll start looking for smaller-scale buyers as more processors come online and notes he also has a fiber harvest to sell.

“In the next five years, I think you’re going to see a lot more fiber production, and you may not really see a decrease in the amount of CBD production, but I think you might see a decreasing number of farmers,” Cox says.

Hemp growers and processors can fill out a form at go.illinois.edu/hemp as the state develops its hemp supply chain. The tool will link buyers and sellers.

Source: Austin Keating, Prairie Farmer

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