With the passing of the 2018 Farm Bill, hemp is poised to become a multi-billion dollar mainstream commodity in the United States, boosting state economies and the revenues of farms, big and small. However, in keeping with the birthing — or, in this case, the rebirthing — of an industry fraught with regulatory challenges, it is vital that state and territorial departments of agriculture, growers and processors work together to avoid unnecessary and potentially costly missteps.
As one of the industry’s leading innovators and trusted providers of advanced aerial image-based data collection and analytics solutions for the precision farming and sustainable agriculture markets, AgEagle is intent on leveraging our expertise to champion the use of proven, advanced web- and map-based technologies as a means to streamline and ultimately standardize hemp cultivation regulatory oversight, compliance and enforcement. Growers need to be registered/permitted; crops need to be monitored and inspected; and enforcement operations must be established to ensure compliance with anticipated new state and federal mandates.
Through the introduction of our HempOverview solution, AgEagle represents the first agriculture technology company to bring to market an advanced Agtech solution that is designed to meet the unique complexities of the emerging American hemp industry and the needs and demands of its key stakeholders.
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On December 27, 2019, the U.S. Department of Agriculture (USDA) approved the first plans for the domestic production of hemp under the U.S. Domestic Hemp Production Program submitted by the states of Louisiana, New Jersey and Ohio and the Flandreau Santee Sioux, Santa Rosa Cahuilla and La Jolla Band of Luiseno Indian tribes. Since then, three more state plan submissions – Delaware, Nebraska and Texas – have been approved, and four more tribal nation plans have received the thumbs up.
Collectively, there are an additional 11 state plans currently under review by the feds, four pending resubmission and seven states still actively drafting their plans for submission soon, which include California, Florida, Hawaii, Illinois, South Carolina, U.S. Virgin Islands and Utah. Several other states have elected to continue operating under their 2014 pilot program plans which provides for licensing of growers registered under the states’ existing hemp research programs. Those states include Arkansas, Colorado, Kentucky, Maryland, Minnesota, Missouri, New Mexico and Vermont.
On the tribal front, 18 Indian nations have plans under review or are currently in active drafting mode of their plans.
So, what does all this planning activity mean for growers, processors and the domestic hemp industry, at large? From our point of view, it is demonstrating that legislative momentum is building and gaining notable strength as the new 2020 hemp planting season fast approaches; and shows notable legislative support and enthusiasm for reestablishing industrial hemp as a robust U.S. commercial crop staple and ultimate boon for our nation’s economy.
However, while establishing the nation’s overall regulatory framework is essential to the success of the industry – and AgEagle plans to work in close concert with federal, state and tribal administrators, alike, to achieve this aim; there is much more work that must be done and realities that must be acknowledged by industry stakeholders before U.S. hemp cultivation can realize its full and most promising growth potential.
In a 2019 New York study by Cornell University, researchers estimated that that total costs of industrial hemp production in that state averaged $546 per acre when harvesting for fiber only, $486 for seed (grain) only and $491 for both fiber and seed. These costs include variable expenses such as labor and seed and fixed costs like equipment, tractors and family management. Estimated returns above total costs for 2019 averaged $248 per acre for acre for fiber, $624 for seed (grain) and $867 for both fiber and seed. It is important to note that the report excluded estimates for harvesting biomass for CBD oil, which subject growers to higher labor costs and potentially higher returns above costs, depending on the prevailing market price for CBD-rich biomass, which has seen its wholesale price negatively impacted over the past six months due to a lack of infrastructure and transparency in the emerging hemp-derived CBD industry.
Last year when hemp CBD was touted by industry research group Brightfield Group (among other bullish market prognosticators) as capable of generating over $40,000 per acre, as opposed to an average of less than $1,000 for corn, the frenzy to plant hemp for CBD became priority one for many growers – big and small. However, few continue to take the time to understand the steep learning curve and the need for a high risk tolerance associated with the multiple challenges in growing the plant for use in CBD products. Consider the following:
There continues to be great difficulty in acquiring reliable, certified feminized seeds and clones — unpollinated female plants yield the highest levels of CBD. Moreover, though extensive testing has proven that planting female clones ensures all female hemp plants, clones come at a high cost and are also not widely available. With the shortage of certified feminized seeds and clones, many farmers have purchased alleged feminized seeds without guarantees that they will be male-free or high in CBD content, resulting in disappointing and costly outcomes.
Pollen drift and cross-pollination of male plants (grown for fiber and grain) and female plants (grown for CBD) can occur if they are planted too close together, leading to lower CBD yields and/or unacceptably high THC levels that would require the crop to be destroyed.
There has yet to be material innovation in CBD hemp harvesting equipment by farm equipment manufacturers, causing many growers to retrofit their existing machinery to harvest hemp for floral material, where the CBD content is the highest
There is no legitimized market or platform for the organized buying and selling of CBD hemp to assure growers full price transparency, much less proven credibility, reliability and accountability of buyers.
So, while the positive progress being seen at the legislative level of the industrial hemp revolution is cause for excitement, much more forward-thinking planning, innovation and execution must be brought to the fore on multiple fronts if the United States is to ascend to material prominence as the world’s leading industrial and CBD hemp producer. At AgEagle, we are very proud to be playing such an important, trusted role in helping to define standards of excellence for the U.S. hemp cultivation industry through adoption of HempOverview; and look forward to working with many more like-minded stakeholders and technology innovators who share our commitment to bring enduring economic prosperity to U.S. hemp farmers, processors, states and tribal nations.
Now that the U.S. Department of Agriculture (USDA) has published its interim final rule for domestic hemp cultivation in compliance with the passing of the 2018 Farm Bill, interest in planting hemp in the upcoming 2020 growing season is skyrocketing nationwide. In fact, at least 47 states have now enacted legislation to establish industrial hemp cultivation and production programs. However, hemp has a few unique growing characteristics when compared to traditional row crops to be considered when hoping to successfully cash in on the projected multi-billion dollar crop. Here at AgEagle, we have a variety of information and software tools to help you navigate the production pitfalls of this emerging commodity.
According to Vote Hemp, in 2019, 34 states issued 17,800 licenses to farmers and researchers in the wake of hemp’s legalization, more than quintuple the 2018 figure. Of the half a million acres licensed, an estimated 295,000 acres were not planted because of limited access to seedlings and clones, a lack of financing and a “huge number “of inexperienced growers. Vote Hemp estimates that about 50% to 60% of the planted acres, or 120,000 to 144,000 acres, will actually be harvested, once crop failures, non-compliant plants and other factors are factored in.
To help improve the odds that you will be successful, here are five critical things you should consider now – well in advance of the 2020 planting season commencing:
1. State registration, licensing and testing.
Consult with your state or tribal nation department of agriculture to first ensure that it is legal to plant hemp in your area; and if so:
Understand how to register and license acreage that you will be dedicating to hemp cultivation. Some states, such as the State of Florida which is implementing AgEagle’s HempOverview platform, may offer online registration and licensing; while others may require manual submission of required information.
Some states may subject growers to a criminal background check, so don’t be surprised if you need to book an appointment for fingerprinting with you local police department if that is a requirement.
Learn and plan now what will be required to meet your state’s hemp flower sampling regulations – understand how to take a hemp flower sample and identify what state approved CBD/THC testing facilities are available for you to utilize.
2. Planting and harvesting strategy.
HempOverview can help you here as well with a variety of crop monitoring solutions that will track your progress and inform your field operations from planting to harvest. Whether using AgEagle’s tools or your own, its best to develop a detailed strategy for how and what you will be planting and harvesting on your designated hemp acreage.
Choose whether you will be producing hemp for the fiber markets or the potentially more lucrative CBD markets. The quantity of biomass that hemp produces can be used for livestock feed, biofuel production, paper and textiles – in fact, it is estimated that there are 25,000+ known uses. The seeds sold for next years planting, or for processing into seed oil (like sunflower or canola oil), require special consideration as food grade agricultural products. CBD oil derived from the flower is considered to be one of the most profitable industries.
Determine whether you will be planting transplants or seeds. If seeds, what type will you be using: state certified, feminized, out-of-state? Do your homework to ensure that you are choosing a seed varietal that is compatible with your region/planting environment and have been specifically bred to produce the type of hemp that you will be growing.
Commit to a specific timeline for harvesting and drying at the ‘right’ stage in your planting region to optimize your outputs.
3. Get your soil tested.
Hemp is a natural concentrator of heavy metals, so ensure that your fields are free of contaminants and that soil nutrients are amended, as necessary.
Hemp is particularly adept at removing heavy metals present in soil and storing them in the flowering portion of the plant. These heavy metals can easily be transferred to the end consumer during inhalation or ingestion.
Hemp grows best in well-drained soils that are high in organic matter.
4. Identify your processor!
Market your hemp before you plant. Identify hemp processor(s); meet with them to understand their quality expectations, planting and harvesting expectations, et al.; and contract in advance, if possible.
5. Playing it safe.
Consider purchasing hemp crop insurance, which is now available to growers under the Whole-Farm Revenue Protection (WFRP) program for the 2020 crop year. In August 2019, the USDA’s Risk Management Agency announced insurance coverage is available for hemp grown for fiber, flower or seeds, which is available to producers who are in areas covered by USDA-approved hemp plans or who are part of approved state or university research pilot programs.
To be eligible, among other requirements, a hemp producer must comply with applicable state, tribal or federal regulations for hemp cultivation and have a contract for the purchase of the insured industrial hemp.
Provisions further state that hemp having THC levels above the compliance level (0.3%) will NOT constitute an insurable loss, nor will hemp qualify for replant payments under the WFRP program.
One final recommendation: become an expert. To be a successful hemp producer, it is important that you take full advantage of educational resources being made available to you by state, territorial and tribal hemp program administrators. Further, corporate and state-sponsored workshops, conferences and trade shows are routinely being hosted around the country, representing another valuable channel for learning more about domestic hemp production in your region. And, of course, there are countless articles being published on the Internet virtually every day. Take the time to learn and plan and your odds for success should grow exponentially.
Based on a new report just released by research firm New Frontier Data in collaboration with Vote Hemp, 34 U.S. states have reported licensed hemp cultivation acreage totaled 511,422 in combined cultivation land area in the first half of 2019, which is a 5X increase over total land area of barely over 100,000 acres reported for all of 2018.
Key findings of the report highlighted include:
At least 70% of the 2019 U.S. hemp harvest is intended for CBD extraction purposes;
Colorado leads the nation in hemp cultivation and processing land area with over 80,000 acres reported;
Oregon, Kentucky, Tennessee and Montana lead in hemp program expansion initiatives;
Tennessee leads in total hemp licenses issued in 2019; and
California is expected to be the top-producing hemp state for both conventional and organic production as thousands of acres have already been planted this year.
Of the 500,000+ acres licensed for hemp cultivation across the country, it is expected that an estimated 115,000–138,000 acres of hemp will be harvested.
In a story recently published in The Philadelphia Inquirer, Ian Laird, chief financial officer and general counsel of Hemp Benchmarks, a Stamford, Connecticut-based financial business and industry data provider, stated, “Right now, farmers are making multiples of the profit they would make in corn or anything else.” This opportunity to materially improve the return on acres planted with hemp is serving to significantly drive interest from growers across the country – growers which range from highly sophisticated farming operations to young upstarts who want to cash in on the escalating hemp boom.
The total number of states with hemp programs now stands at 46, as only Idaho, Mississippi, New Hampshire and South Dakota have yet to establish legal frameworks to support hemp industry value chains. However, managing the registration, oversight and compliance of hemp cultivation is quickly proving to be problematic for many state departments of agriculture as they scramble to prep for what many believe will be an onslaught of growers seeking licenses to grow hemp.
Florida State Director of Cannabis Holly Bell just informed the Senate Agriculture Committee earlier this month that the State is on track to begin issuing permits to grower just after the first of the year, noting that 8,000 applicants are expected, with roughly 3,000 farm operations qualifying. Soon enough, homegrown hemp will be in the Sunshine State’s soil and Bell predicts a “several million dollar industry that will become hundreds of millions in the next two years.”
Florida is not alone in its bullish outlook.
For instance, Agricultural Commissioner Edmund Williams in Ventura County, California projects that if no one loses a crop in the 4,100 registered acres in his county, the gross estimated value would reach at least $100 million this year and likely much more than that.
Most state agriculture officials recognize that there remain numerous challenges to efficiently manage registration/permitting, oversight and compliance of this burgeoning new market; and AgEagle has been working diligently to provide the simplest, technology-based solutions to readily overcome those challenges.
Just speaking to the development of Best Management Practices, we believe that any software designed to collect, analyze and deliver accurate and relevant information to farmers must come from a solutions provider with significant experience in the agricultural commodity analysis field. The solution must help farmers – especially smaller farmers with less resources and greater risks – adapt quickly, avoid costly mistakes, increase yield and maximize profitability. Data collected and scrubbed for sensitive personal information must be able to be shared with in-state research institutions that are developing seed variants, farming practices, and other technologies that can help in-state farmers and be exported worldwide.
Our HempOverview software utilizes a flexible, user friendly map-based interface to visualize field boundaries, satellite imagery, and weather data for a farmed location. Interface design makes information very accessible to users. Growers can maintain and view data about their farm to make more informed decisions and track how the field responds to various practices. The web portal and mobile app allow users to provide field scouting details and to seamlessly share that information with their respective supply chains. These georeferenced points can be utilized and tagged for CBD/THC testing, pest scouting, and soil sampling, among other key metrics and analytical capabilities. A grower can also track information related to their irrigation, pest and weed control methods, and fertilization. This can be useful when analyzing data on productivity, profitability, and establishing best management practices on a field by field basis.
The referenced data points collected in HempOverview are searchable and will be available to the user in the application year over year. This type of detail and location information helps build a robust database for the real-time creation of BMPs. Growers and researchers can collaborate on this data collection during the year to expose early warning signs of broader crop problems. The ability to layer in the known status of the crop with satellite imagery illustrates where, when, and to what extent productivity or damage is occurring. This becomes a key driver to the success of a particular seed variety and the overall hemp operation in the state.
AgEagle knows of no other SaaS solution on the market that provides the multi-faceted level of support and services that HempOverview offers to all stakeholders in the hemp industry, matched by the level of experience and expertise of a specialized technology company that has been serving the global agricultural industry for nearly a decade.
