Farmers across the nation who produced hemp this year are using any means necessary to sell crops that are either still waiting in their fields to be harvested or drying postharvest.
From posting hemp for sale on LinkedIn to working with brokers, farmers this season are looking for strategies to profit from hemp even if they didn’t secure buyers before planting. Others are looking for additional buyers.
Experts say that profit opportunities aren’t lost even for those who haven’t yet sold their hemp crops – as long as cultivators are able to harvest and take steps to protect their hemp from dampness, mold and other potentially ruinous dangers.
Hemp Industry Daily talked to hemp experts across the country to find out the best strategies to optimize profit from growing hemp in 2019. Here are six they suggest:
Pre-processing and storage
First things first, farmers must get their hemp off the field and dried before it can be sold.
Joel Bedard, CEO of The Vermont Hemp Co. in Corinth, Vermont, recommends hang-drying plants in clean, well-aerated barns.
“If they can keep it together for a couple of months, I think we’re going to see the demand start to peak, probably by the end of this year,” Bedard said.
Next, farmers who can’t sell their raw crops immediately or get them to an extractor should try to do as much preprocessing as possible to buy themselves some time, he said.
Preprocessing machines that can help include:
- Buckers, machines that strip the biomass off the stalk;
- Hammermills, which grind the biomass; and
- Pelletizers, which press milled hemp into pellets that can be stored.
Preprocessed dry material can be stored in large white sacks or totes and plastic bins until farmers find a buyer or an extractor for further processing, Bedard said.
But even well-stored, dried material shouldn’t be kept beyond six months, Bedard said.
Processing to crude oil
Farmers who can get their hemp to an extractor for processing should try to have it processed into winterized, decarboxylated crude oil.
That’s because it’s the most efficient way to condense the crop for a longer shelf life while preserving cannabinoids and terpenes that can degrade with heat and light exposure, according to William Goodall, CEO of Denver-based Eco Extract Labs, a company that works with smaller farmers to process and sell their crops.
“The sooner that you can extract it and get it into a concentrated oil and then sort in a barrel, preferably a cool location, the more you’ll get out of your plants,” Goodall said.
Farmers may have the option to do a tolling split, in which the farmer pays for processing. But they should only pursue this if their team has the bandwidth to market it, according to Julie Lerner, founder and CEO of Denver-based online trading platform PanXchange.
“In some cases the processing facility will sell the oil and then share the profit with the farmers, so it can go either way,” Lerner said.
However, most processing centers or extraction facilities are at capacity and can’t handle or buy any additional crops, Bedard said.
That could change as demand increases, which is what happens in more mature markets, according to Lerner, adding there is no guarantee that prices will increase.
Network, network, network
Some farmers have found that posting photos and details of their crops on social media can help move preprocessed material.
Wesley Ray, co-founder of Combined Hemp in Bend, Oregon, actively posts photos and updates from his farm on LinkedIn.
“Comments turn into (direct messages) and then eventually farm visits,” said Ray, who noted he has two visits lined up in the next week based off LinkedIn connections.
But it’s not easy out there, said Allison Justice, co-founder of The Hemp Mine, a South Carolina CBD wholesale company. Justice recently posted hemp crops for sale from a farmer in Kansas.
“It hasn’t been very useful, to be honest,” Justice told Hemp Industry Daily in an email.
Justice’s business partner, Travis Higgenbotham, agreed – with one caveat.
“For gaining brand awareness and attention from prospective customers and interested parties … that’s a different story,” he said.
Farmers selling on social media must be wary.
“If someone asks for tens of thousands of liters or kilograms (of product), you should just hang up the phone,” Eco Extract Labs’ Goodall said.
Online hemp exchange platforms
Crops can be sold and purchased in a variety of forms through online exchange platforms, which vet buyers and sellers.
Companies offering online trading platforms include:
- The Hemp Marketplace, which began operating two years ago;
- Hemp Exchange, which began facilitating deals in March;
- PanXchange, which opened its online trading platform in August;
- Swissx Bank of Cannabis, a cryptocurrency exchange that includes a hemp-trading platform and launched in July; and
- Kush.com, a marketplace and events company that launched this summer.
Auctions are another sales avenue.
While common for commodity crops like tobacco, auctions are new to hemp and give farmers another way to sell their crops.
For example, a hemp auction planned next month in Nashville, Tennessee, touts the ability to see and sample help before buying.
But auctions bring other unknowns, said Lerner.
“As far as sampling, who’s to say you didn’t grab the jar of bud off from your neighbor’s car?”
Even if a sample is genuine, “that’s not a guarantee that the entire (lot of products) are that quality,” she said.
“You need to be able to focus more on negotiable terms than sight, smell and sample.”
Stay aware and be smart
Savvy marketing is key to getting the best price, and it’s critical to stay informed on prices, demand and processing bottlenecks, Lerner advised.
Farmers shouldn’t be afraid to ask potential buyers tough questions about how long their businesses have been around – or for proof and references for verification.
Finally, farmers should consider selling close to 80% of their target price and not wait for something better.
“A rule of thumb in trading is, never try to pick market bottom or top – you’ll miss it,” Lerner said.
Bedard, the Vermont hemp business owner, said trading challenges faced by hemp producers this year may not be as dreary as some feared.
Despite the widespread worries of a glut of hemp produced for CBD, Bedard says he’s not convinced there will be an oversupply this year. That’s because of weather-related crop loss and inexperienced farmers who may not get their crops out of the field.
“We’re probably not going to (see) anywhere near as much quality product as people thought,” he said. “I think the processing will be able to handle it, but it’s going to need to be stretched out.”
Laura Drotleff can be reached at [email protected]