Photo credit: Water Street Creative
Paul Mitchell is a professor with the Department of Agricultural and Applied Economics at UW-Madison. He’s also the state specialist of cropping systems and environmental management of the UW-Division of Extension and serves as director of the Renk Agribusiness Institute. As part of a hemp research team put together by the UW-Division of Extension, along with the College of Agricultural and Life Sciences, Mitchell is researching the economic side of hemp, considered one of the state’s specialty crops along sweet corn, soybeans, cranberries and potatoes.
Mitchell recently spoke about hemp economics at the Wisconsin Agricultural Outlook Forum and at the Shepherd Express-sponsored Wisconsin Cannabis Expo on Saturday, Feb. 8. Like most of his colleagues on the UW-Extension hemp research team, Mitchell didn’t know much about hemp because the crop had been illegal for so long. Last summer, he issued a grant to UW-River Falls associate professors Amber Remble and Shaheer Burney, of the Agricultural Economics Department, to collect data from focus groups and discussions. Remble and Burney assembled a four-page report consisting of economic data and considerations for growers. The report is available on the Renk website: renk.aae.wisc.edu.
Although Wisconsin got a late start in the current hemp industry, Mitchell is optimistic that Wisconsin can eventually catch up to other states—and even lead. “I’m not worried about our ability to do hemp. We’ll figure out the agronomics side of it,” he affirms. “We’ve done that for other crops; we’re the world’s largest producer of cranberries, we do ginseng, potatoes and processing vegetables, like sweet corn.”
He adds that Wisconsin has excellent farming infrastructure and the support of experienced farmers willing to try specialty crops, along with a strong food processing industry. As examples, he cites Wisconsin stalwarts like Standard Process, the Palmyra-based, whole food supplement company; Penzeys, producer of high-end spices; as well as cheesemakers and organic dairy and vegetable farms. “That’s a major advantage for us,” he says. “States like Colorado or Oregon don’t have that major industry like we do.”
One of the biggest economic challenges he’s observed is how quickly prices for cannabidiol (CBD) hemp had plummeted. “The days of high prices for CBD are gone, at least for a long time. One thing we learned in the assessment we did this past summer was that growers complained of a lack of a grower network,” he says. “Two-thirds of the farmers growing hemp last summer didn’t have a place to sell it yet, and they are still sitting on plants.”
Mitchell also notes that seed availability, as well as the high cost of seedlings, plants and actual seeds, add to challenges. He heard about some people who purchased seeds below market value, only to get seeds that were poor quality, non-feminized or “hot”—meaning the THC level was too high to be viable. “Cheap seed is typically non-feminized, or it might be just bad marijuana,” he emphasizes.
A lack of reliable labor was another challenge, Mitchell notes, as well as a lack of specialized hemp farming equipment. Hemp farmers also dealt with issues that stymie farmers of all crops—weather, disease and insects. “In the longer term, I think crop insurance will help with some of that,” he adds.
Mitchell predicts that plunging hemp CBD crop prices will continue into 2020. Because hemp CBD plants, when dried properly, are storable, some in the industry will work through this past year’s production of plant biomass. “If you’re going to grow CBD this coming season, you’d better have a market already contracted with a reputable buyer who wants fresh stuff,” he advises. “Otherwise, I’d say CBD is a risky market right now.”
Because CBD is not technically a medicine, companies cannot make specific health claims, thus hindering the sale of CBD to larger markets. Mitchell notes that CBD hemp cannot be used in livestock feed, either. But he’s optimistic about hemp’s uses in food items such as hemp seeds and protein powders.
