Central Oregon hemp farmers pivot to other crops as market prices tank

Published 4:30 pm Sunday, May 1, 2022

BEND, Ore. — For the second year in a row, Ekena Farms on Bear Creek Road in Bend won’t be planting hemp.

At $1 a pound, the farm can’t grow enough to cover expenses. In its heyday, hemp sold for $40 a pound.

At another farm in Central Oregon, the Triple C Farm LLC, hemp isn’t going to be planted either. Instead, the farm is growing hay, which is selling for more than $400 a ton. It will require less water and hopefully will yield multiple harvests, said Matt Cyrus, Central Oregon hemp grower and the Deschutes County Farm Bureau president.

“It’s sad because hemp is an incredible plant,” said Jonathan Tebault, owner of Ekena Farms LLC in Bend. “It just didn’t pencil out. I tried it for two years.”

After the U.S. Congress removed hemp from the U.S. Drug Enforcement Administration’s list of Schedule 1 drugs in 2018, the number of hemp farmers swelled. It was considered the darling of the agricultural industry in Oregon and was projected to become the No. 2 commodity behind cattle and calves. But since descheduling it, regulatory murkiness has clouded its future, forcing farmers to pivot to other crops, said Beau Whitney, Whitney Economics, an Oregon cannabis and hemp economist.

By the first harvest in 2019, there were 219 farming entities in Central Oregon growing hemp. By 2021 the ranks of farmers dedicating their efforts to hemp shrunk to 83, according to Oregon Department of Agriculture data.

Hemp is not only used to produce CBD, an additive that has been found to help with sleep disorders, fibromyalgia pain and anxiety, but can also be in textiles, paper, building materials, food, car parts and for livestock feed.

Banking issues and regulatory rules around CBD have compounded the industry’s attempt to grow. U.S. Department of Agriculture and the Food and Drug Administration have not established that CBD is a food supplement or a food ingredient and not putting its stamp of approval on either classification, Whitney said.

“There’s a fracturing in the industry and hemp is being made the villain,” Whitney said. “Law enforcement and regulators say hemp producers in Oregon are cartels in disguise, water users and criminals.

“The data doesn’t support that narrative.”

There have been instances in southern Oregon last year where inspectors from the Oregon Liquor & Cannabis Commission field inspected hemp farms and discovered the fields were actually THC-rich cannabis hidden among hemp plants.

Hemp, also called industrial hemp, looks just like a cannabis plant. The only difference is cannabis produces a larger amount of THC, tetrahydrocannabinol, the psychoactive aspect of marijuana that makes people feel high. Products containing CBD, which can come from marijuana plants or industrial hemp, contains less than 0.3% THC.

“The future of hemp is not just in CBD,” Whitney said. “The future is in the industrial uses. The industry currently is being suppressed.”

Cyrus said the market hasn’t recovered yet, mostly because farmers produced 25 years worth of hemp in just one year. Across the country more than 500 million acres were planted when only 20,000 acres are needed.

“We over produced,” Cyrus said. “It’s all about supply and demand. We have to make a profit. Eventually the prices will stabilize to a range that covers the cost of production.”

Today, Cyrus has about 100,000 pounds of hemp stored in his barn, waiting to sell the product and prices to recover. In the meantime, his farm is producing hay, as the market is netting high prices for grass hay.

The industry is also facing new regulation. Agriculture officials have not approved hemp applications for this year pending approval for criminal background checks, required by federal and state regulators, as approved by the 2021 Legislature, said Mike Odenthal, Oregon Department of Agriculture hemp program manager.

“There was a green rush to get into the new crop and take the opportunity to make lots of return on the investment because prices were sky high,” Odenthal said. “Like a lot of agricultural commodities, we out produced the market.”

For the 875 growers statewide who submitted a license renewal by Dec. 31, 2021, they can legally continue to operate while the department irons out the background check issues, according to a department statement.

Once markets are established for hemp, Oregon is primed to become a key player in producing hemp, said Jay Noller, an Oregon State University professor and director of the Global Hemp Innovation Center. Outdoor growers in southern Oregon have seen higher yields than other places, Noller said.

In the future, Noller said, hemp could be used to feed livestock, and its fiber used in manufactured products. But the federal government needs to support the industry, Noller said.

“We’ve been trying to interject the science of hemp in the narrative,” Noller said. “My mantra has been science before market. We’re already seeing higher yields on fewer acres using less water and that means the cost of production will go down.”

Investors will come once the regulatory murkiness is cleared up and the industry can sustain itself.

“It’s still a huge global market and still huge in the United States,” Whitney said.

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