Qualifying Hemp Crop Losses: Q&A with Eric Steenstra
Dmytro Sukharevskyi | Adobe Stock

Qualifying Hemp Crop Losses: Q&A with Eric Steenstra

Vote Hemp President Eric Steenstra discusses why the organization estimates close to half of the hemp planted this year didn’t make it to harvest, from a flood of new growers to unpredictable weather.

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November 29, 2019

As the first growing season since passage of the 2018 Farm Bill comes to a close, farmers are likely to evaluate plans for next year after counting their losses. Vote Hemp, an advocacy group based in Washington, D.C., pegs those losses at a significant amount—the organization estimates anywhere from 40-50% of the hemp planted in 2019 wasn’t harvested.

Eric Steenstra, the president of the organization, talked with Hemp Grower about the causes and implications behind those losses and how farmers can work to mitigate them in future growing seasons.

Hemp Grower: How did you come up with the figure on the percentage of crops lost, and how accurate do you think that figure will play out to be?

Eric Steenstra: We won't know for a little bit yet. We’re waiting to get reports back from the states on harvested acres, but I still believe the numbers are pretty solid. They’re predictions, and we realize it’s sort of hard to be perfect with something like that, but based on the history and what was happening this year, we have some pretty good reasons to expect that was a good range. 

For example, in 2018, there were 3,544 licenses nationally. In 2019, there were almost 18,000. So, we had over 14,000 new [licenses] issued. Most of those were people that had never grown hemp before and are getting started for the first time. A lot of them maybe had plans to grow more than they realistically could for various reasons, whether they couldn’t get the amount of seeds they needed or it was more complicated to plant than they thought. 

The amount of new licenses that were issued this year was just a massive increase—it was almost a 500% increase in the number of people growing hemp—and there's a pretty significant learning curve with this crop. Not only that, but we've heard a lot of reports about late plantings and weather situations--everything from hail destroying crops in Colorado and Oregon to snow in Montana and North Dakota. A lot of things that played into this. I think we won't be way off, but we'll have to see when the final numbers come in from the state departments of agriculture [sometime around mid-December].

HG: What are some of the major factors that played into the loss?

ES: I think there was a sort of a rush to get in, and some of it was less well thought-out than maybe it should have been. We were definitely recommending to farmers that they start with the market to figure out where there was a potential buyer, find out what the specifications were for that buyer, and then try to work backwards to production versus just planting and hoping that somebody would be there once they'd harvested it. I think a lot of people didn't necessarily follow that path. People we spoke to just jumped into this.

The other challenge we see with some of the small farms is the difficulty in getting those to market. If you're a processor, you simply can't deal with hundreds of farmers. You look at a place like Tennessee, where they had over 3,000 licenses, and a lot of those crops were brought in at a small quantity. They might've had 500 or 1,000 pounds total. Just finding a processor that can deal with that many different people coming in and testing each crop [is challenging]. 

Basically, the processors are looking for a much simpler situation. They want to be able to buy larger batches that are tested from a known supplier, and so it's going to be difficult for some of the small players to bring their crop to market.

 

HG: Do you think the flood of people trying to enter the CBD market, as opposed to growing for grain or seed, played a part in the loss as well?

ES: Yeah, I mean, there's no question. Probably more than 95% of all the licenses were people that were jumping into CBD, and there was just a lot of hype around CBD because people are seeing it everywhere. Farmers are hearing stories about people making a lot of money on it, and I think that's starting to change. There were some farmers that made a lot of money maybe last year, and maybe more the year before if they were successful, but it also takes time to figure this out. It's a very labor-intensive process. People underestimated the amount of work that goes into this. Even 10 acres of CBD hemp, if you're harvesting it all by hand, it can take a long time to bring it in. You're not going to do it in a day or two.

So, it's a significant learning curve with growing, especially for CBD and getting the right genetics, and a lot of farmers struggled with that, and they got genetics that didn't perform the way they thought. There's the risk that the genetics can go hot [meaning they have more than the 0.3% tetrahydrocannabinol (THC) limit set by the U.S. Department of Agriculture for hemp plants]. We did hear a number of stories this year of farmers that ended up testing hot and had to have their crops destroyed, so there's a lot of risks here.

HG: Are there any regions that experienced more loss than others?

ES: One area where there was a lot of hemp planted that I heard some stories about was in Montana. I don't know exactly how much of a loss there was, but they did have a very significant amount of snow that came early in October. I think it melted off fairly quickly, but I did hear of some crop losses there, or certainly devaluations of the crop that were caused by the snow and freezing. I heard in Indiana, they struggled a lot with the weather. Some people weren't able to get their crops in nearly as quickly, some places it was too muddy. There's a lot that goes into it depending on weather conditions. 

There were some regions where people had more success than others. I went to this event a couple of weeks ago here in Maryland, and I talked to a number of first-time growers that had pretty good success, but they had a really dry year here in Maryland.

HG: Do you know how much loss that accounts for in dollar terms?

ES: I don't have that yet, but I did hear a story recently that was a little discouraging. There was a so-called hemp auction held in Tennessee, South of Nashville, and farmers were encouraged to bring their crops there, and they tried to get buyers to come and make offers on the crops. They were saying that the farmers were pretty disappointed. There weren't a lot of buyers, and prices were being offered real low, and some of the farmers just left with their crops and weren't going to sell it for prices offered. I don't know whether they did a good enough job or whether that's the right model for processors since it was the first time, but it was certainly an indicator. And then there's another organization out there that's been tracking pricing, and we've been seeing a steady sort of a decline in biomass prices have in the last four months, so how much is that going to stabilize?

HG: Do you think anyone anticipated such a significant level of loss?

ES: I think there was a sense that there were a lot of people getting into it, but I don't think anybody realized quite how many or how many acres were contracted. In the states that we did get reports from, there were over 527,000 acres of licensed, and last year we had about 112,000, so it was almost a 500% increase, so that's a lot. And again, my sense from talking to people is that a huge number of those were just without any plan. 

There were a significant number of farmers in the market that had some experience, had already developed a sales pipeline and had people that had already contracted to buy their crop. It's not all negative news, but I do think that because hemp is not yet really a commodity, it's not super helpful to have a ton of speculative growing, and we did have a lot of people grow purely on speculation this year without a contract.

HG: Do you have recommendations that any farmer can implement to alleviate loss?

ES: The number one recommendation I would emphasize is finding the market first—going to a processor, or multiple processors, and finding out who's looking to buy and the minimum amount that they want to buy. Also, are there particular varieties that they prefer and can they help source the seed? What requirements do they have for the crop? Does it have to be prepared or dried in any particular way? You have to look at all those different things. I think that a farmer being really thoughtful and responsible is going to start from that and figure out what is it that the market needs. It's critical for farmers to start at the market and try to figure it out from there.

We also think it's a good idea to start smaller to learn and take less of a risk. We don't think anybody should plant enough that if they fail, it's going to cost them their business or their farm or something like that.

HG: Are you anticipating the same level of loss over the next few years?

ES: I'm sure we're going to see some reshuffling in the market. I mean, some of the farmers that grew it this year for the first time may have decided this wasn't for them. Maybe it was more than they thought or there were bigger risks than they thought. Some of those people will drop out, and maybe some of the people that were more successful will continue on. 

I think that there are a lot of events that are going on, there are a lot of groups trying to help support farmers, and we'll see farmers start to become more successful over time, hopefully with better quality genetics and getting started earlier. I just think a lot of people rushed into the market this year.

Author's note: This interview was edited for clarity.