Could Hemp Be a Cash Cow for Dairy Farmers?

“The prices are so bad that it’s not even worth being a dairy farmer anymore,” he said.

Now, as many small dairy farms are struggling to survive, Grossen is trying out a new crop on his farm: hemp.

Sustained low milk prices and operational costs have been devastating for many family-sized dairies. Wisconsin, once the heart of the nation’s dairy industry, lost 638 herds in 2018. Meanwhile interest in hemp is booming; the number of applications for licenses to grow the new crop in the state’s ballooned from 250 in 2018, the first year, to more than 1,400 in 2019. Dairy farmers in need of some much-needed cash are prime candidates for the crop.

But some early experiences suggest that the transition will take some work.

Expectations of the young industry in the United States got a boost when a decades-old federal ban on growing hemp was lifted in last year’s farm bill. Limited cultivation had already started, after a 2014 federal policy change cracked the door open for some states to begin working with the crop—which can be used for food, fiber and, popularly, the compound cannabidiol, or CBD—on an experimental level.

Some forecasts say the nation’s hemp industry, which was estimated at $800 million last year, could skyrocket to $20 billion by 2022. Now, more states are opening up to the crop—at least 41 have created some kind of hemp program—and many are expecting it will infuse fresh vitality into the agricultural sector.

Potato farmers in Maine are looking at hemp as a side crop. Kentucky, where the agriculture sector has been hit by the decline of tobacco, is trying to mold itself into a hemp powerhouse. In Wyoming, historically a center for sugar beets, farmers are also eyeing hemp as an economic booster. And in areas where small dairy farms are flailing, many see hemp as a potential buffer against unstable milk prices.

In Pennsylvania, dairy farms of different scales are starting to work with new hemp companies, according to Rob Barley, the chair of the Pennsylvania Milk Marketing Board. Star Rock Farms, in which Barley is a partner, is beginning to grow hemp for fiber, while some smaller-scale operations are starting to grow the crop for CBD production. “I think there’s opportunity,” Barley said, “but it’s so young.”

Wisconsin Representative Tony Kurtz, a sponsor of the hemp pilot program enacted there in 2017, envisions the crop playing the same role in the state’s family-sized dairy farms that tobacco once did.

“It was a crop that was very lucrative; a lot of dairy farmers would have an acre or two for extra money,” Kurtz said. “And I do think hemp could have that potential.”

‘An Altogether Different Farm’

Dale Grossen and five other nearby farms in Green County, Wisconsin all got started growing hemp at the same time last year.

Grossen’s son, Ben, and cousin, Mark Hubbard, led the push to launch GroHubFarm. Hubbard, who has a background in Washington’s cannabis industry, brought in an assortment of hemp varietals to experiment with in the region. Across five farms near Monroe, they put in 36 acres of the crop, experimenting with factors like placement and irrigation. Grossen planted 16 acres on his land.

“It’s an altogether different farm than I’m used to,” he said.

There were practical challenges, like keeping weeds down and preventing the plants from being pollinated, which lowers their value for CBD. To keep up with the workload—which piled up on top of Grossen’s usual routine running a dairy farm—they brought in workers.

Then, as harvest time approached, testing determined that most of their plants contained more than the state’s limit of 0.3 percent tetrahydrocannabinol, or THC, the psychoactive compound in marijuana. Many of the varietals they had selected turned out to exceed the legal THC content level, though that wasn’t clear until they were mature. Because the crops wouldn’t pass inspection, Grossen took his chopper to his plot and burned it.

Including investments in equipment, it cost about $400,000 to get the full 36-acre project started. Only six acres—or 17 percent—were salable. Still, on the plants that turned out, the financial return was high enough that Grossen remains optimistic. “If it had all been that way, we would be fairly good off,” he said.

‘Don’t Bet The Farm’

Liz Binversie, an agriculture educator with the University of Wisconsin-Madison’s Brown County Extension, urges cautious optimism for dairy farmers considering diversifying with hemp.

The infrastructure and the plants themselves can be very expensive, so start-up costs are substantial. There’s also a lot of labor involved in growing it, from managing weeds in the plot to harvesting it, which often must be done by hand if the hemp is for CBD. There’s also risk involving the quality of the plants farmers obtain—the market is young, and farmers can easily inadvertently purchase seeds that don’t meet state quality standards or won’t perform well in their location.

Binversie warns that hemp is not for everyone, particularly farms in financially precarious situations. At a recent information session the extension ran, one farmer described growing hemp as like having a second full-time job—a heavy burden for already overworked dairy farmers to take on.

“I just hate for anyone to think that it’s just this easy-going crop,” Binversie said. “That’s definitely not the case from what we’ve seen.”

It can also be hard for hemp producers to sell their harvest, as there are not many processors in operation yet. But Kurtz, the state lawmaker, expects that as the nascent sector matures, it will become easier for farmers to find buyers. The number of applications for hemp processing licenses in Wisconsin jumped from 100 last year to nearly 700 this year.

A farmer himself, Kurtz planted his first fiber hemp crop this year, adding it to his rotation of soybeans and corn. But despite his optimism, when other farmers ask Kurtz about getting into the business, he sounds a note of caution.

“You need to take it slow,” he said. “Don’t go bet the farm on it.”

Will The Bubble Burst?

Attracted by the financial promise of hemp amid sustained low milk prices, second-generation dairy farmer Joel Pominville planted 13 acres of hemp for fiber at his Middlebury, Vermont, farm in 2017. The next year, he grew 22 acres for CBD production.

But Pominville won’t grow it again. With more producers entering the market, he believes that the bubble may soon burst. Vermont’s hemp industry has grown exponentially since its launch in 2013, when there were only 175 acres registered with the state. In 2018, that number had risen to nearly 3,300 acres.

Vermont Agency of Agriculture official Cary Giguere notes that dairy farmers in the state often experiment with side crops, like milkweed for fiber and sunflowers for oil. Giguere sees hemp as another promising option.

But Pominville disagrees. The cannabis plant, he recalled, was “miserable” to work with. The fibrous plant got tangled in his equipment, which meant time spent modifying his gear. The “tremendous” workload, on top of milking 200 cows, required him to bring in 30 workers at harvest time. He also had to dry the crop with a heater that cost thousands of dollars in propane to run. Pominville estimated he spent half a million. He’s sold off some of his equipment. Some of it, like an old combine, is so beat up he’ll just dismantle it for parts.

From Pominville’s viewpoint, hemp is an unrealistic side crop for dairy farmers. “That’s crazy talk,” he said.

But others are more optimistic. In Wisconsin, GroHubFarm is gearing up for its second season. They’re drawing on lessons from their first try; for example, they’re using clones, not seeds, which is a better guarantee of the plant’s quality. Hubbard expects better results: “This year’s a totally different situation,” he said.

Grossen, who recently decided to sell his herd this fall after 35 years of running the farm, advises other dairy farmers considering diversifying with hemp to start small. The best harvest GroHubFarm got last year came from a single-acre plot, he said. There’s a high learning curve, he explained.

“We’re trying it this year because, well, do we fold up? Or do we continue and do it better yet?” Grossen said. “We’re getting a little smarter every year, I’m hoping.”