By now, many in the industry have heard of the chicken-and-egg scenario when it comes to hemp fiber processing: cultivators need to grow more of the crop to spur processing development, but they are hesitant to grow until they know a processor is available. But this year, some major steps were taken to resolve that issue and restore processing capabilities in the U.S.
In the November issue of Hemp Grower, New Frontier Data Analyst Eric Singular wrote that regionally based infrastructure and investment capital around hemp fiber have increased this year. New Frontier Data projects the U.S. hemp fiber market to grow at a 10.5% compound annual growth rate (CAGR) over the next five years to reach $77.7 million by 2025.
“In the past 12 months, a handful of regional fiber processors have broken ground, including South Bend Industrial Hemp in Kansas, IND Hemp in Montana, BioPhil Natural Fibers in Pennsylvania, and Formation Ag in Colorado,” Singular wrote.
Many barriers exist to building out the infrastructure needed to create the thousands of products possible from the hemp stalk, which consists of both the bast (the true “fiber”) and the hurd. In addition to that chicken-and-egg scenario, the technology needed to create products can range from simple, like decorticating the stalk for products like animal bedding, to complex, like decorticating, cleaning, and degumming for products like textiles.
Another challenge compounded by few processors has been a lack of material specifications, crop standards, and standard operating procedures (SOPs) for planting, harvesting, retting, or baling hemp stalks, Singular wrote. He noted, however, that some processors are working to amend this by partnering with farmers to trial different fiber varieties.
With so many challenges, companies dedicated to the industry have had to get creative with establishing processing infrastructure. Many have started with the primary step of decortication.
South Bend Industrial Hemp, for example, is aiming for vertical integration by growing its own hemp in addition to processing. In 2021, the company grew 1,500 plants for CBD along with 160 acres of hemp for dual-purpose fiber and grain production. “The more people we talked to, we [knew there were] growers that want to grow and manufacturers that want to put in hemp lines, but there was nothing to connect those two pieces,” explained South Bend Industrial Hemp co-owner Melissa Baldwin in the July cover story of HG. “So, we started crunching the numbers and [decided to] pursue our own processing facility.”
Santa Fe Farms, the New Mexico-based subject of HG’s August 2021 cover story, is another company working to establish both growing and processing capabilities for a vertically integrated operation that can offer hemp-based solutions to the likes of corporate giants like Amazon and Coca-Cola.
Companies like the Dallas-based Panda Biotech, on the other hand, are focusing on processing and instead working to support local farmers. The company announced in May it was donating more than 60 tons of approved hemp fiber seed to Texas growers to “[seed] Texas’ industrial hemp industry,” said Scott Evans, executive vice president of Panda Biotech, in the news release at the time.
Other companies have turned to outside investment–the Alabama-based industrial hemp fiber processing, manufacturing and technology company BastCore, for example, announced it had received $2.8 million in funding for its first round of venture capital financing in April.
Outside agencies and organizations have been helpful, too, in getting fiber processing off the ground in 2021. Some departments of agriculture, like Missouri’s, are offering grants to do just that. In October, the state announced it was offering up to $200,000 grants for hemp fiber processors, with up to $700,000 available. The grant was created to support the state’s hemp fiber industry, according to the department of agriculture’s website, as well as increase fiber processing capacity and address supply chain issues.
Also in October, the National Hemp Association (NHA) announced its hefty goal to get fiber processing up and running by requesting a $1-billion amendment to the national infrastructure bill. Part of that $1 billion would be dedicated to funding four “regional super sites” to build and bolster the hemp fiber supply chain. The infrastructure bill, which passed in mid-November, did not include the requested amendment. Still, it signals where NHA Chair Geoff Whaling’s head is at when it comes to hemp priorities–and seeing as this wasn’t his first push to build out fiber infrastructure in the U.S., it likely won’t be his last.
“By looking at creating these so-called super sites, it will allow us to really start to research how to scale this industry, which is really starting from scratch,” Whaling told HG Digital Editor Eric Sandy back in October. “Although it’s frustrating and challenging at times, it is very exciting to say, ‘This must be what it was like years ago when the movers of the steel industry were starting to build it out.’”