Michael Klumpp did not know what to expect when he ventured into the world of industrial hemp, but the farmer soon realized growing a viable crop was only half the battle.
Klumpp’s Mak Enterprises LLC farming operation in Shepherd, Mich., near Mt. Pleasant, includes about 3,000 acres of corn, beans and wheat, most of it certified organic, and 20 acres of industrial hemp. He decided to dive into hemp as a way to generate new revenue for the farm.
He also formed Ag Marvels LLC to handle the processing and marketing side of the business.
As a vertically integrated grower, processor and marketer of industrial hemp, Ag Marvels helps other growers and converts Klumpp’s own hemp crop into consumer products.
“On the farming aspect, we’re putting the seed in the ground and taking this product all the way through to product development,” he said. “We’re a seed-to-shelf business all the way through.”
During the first harvest this fall, Klumpp has remained busy fielding calls from farmers who need help harvesting, drying or processing hemp. In some cases, he is sending out tractor-trailers to pick up the crop, or outright buying it from other growers.
“We are kind of that resource for these farmers who didn’t really have a great game plan going into fall,” he said.
Michigan’s first legal industrial hemp growing season and harvest has been one big experiment, according to growers who took on the challenge, and now they are left to figure out what to do with the harvested plants.
“It’s been a huge learning curve,” Klumpp said. “I spent a couple of months flying all over the country just visiting with everyone in the industry learning about hemp and how to grow it.”
Farmers want to harvest, process and sell their industrial hemp for grain, fiber or cannabidiol (CBD), but the infrastructure to process the plants into those products is lacking across the state.
For its part, Ag Marvels includes barns to hang-dry hemp for whole flower processing and features biomass drying and milling capabilities. The company sells hemp seeds and supplies, offers agronomy and consulting services, and provides hemp sales and brokering.
Klumpp also is building a facility to extract CBD oil, and is working with companies who want to develop their own products and brands. Ag Marvels’ own CBD brands include Heirloom Grove, offering high-end products for women, and a men’s line under the label Funny Farm Hemp Company.
“For the most part, I think most farmers are going to be successful this year,” Klumpp said. “There is good money in growing hemp; even if they bump their head a little, they are going to come out OK financially.”
Piloting an industry
Considering hemp was outlawed at the federal level for nearly 50 years, and is often confused with marijuana, farmers have been learning as they grow the crop while advocates educate the public and lawmakers on the valuable uses of industrial hemp.
The 2018 Farm Bill legalized hemp production, and Michigan joined other states in launching an ag pilot program last spring through the Michigan Department of Agriculture and Rural Development (MDARD).
Michigan registered 580 growers, who planted more than 15,000 acres of hemp. MDARD has been waiting on the USDA to finalize federal rules for industrial hemp before developing a state-specific industrial hemp program. Under the pilot, farmers are conducting research on behalf of MDARD.
Hemp and marijuana are both cannabis plants and look similar, but hemp has much lower concentrations of delta-9 tetrahydrocannabinol, or THC, the psychoactive ingredient in marijuana. As well, the plant has a myriad of industrial and practical uses. However, in 1970, the federal government categorized all cannabis as a controlled substance and made it illegal for farmers to grow industrial hemp.
In the first season, growers scrambled to get the crop in the ground and harvested, as well as struggled to work within the confines of the ag pilot program, according to Dave Crabill, vice president of Ferrysburg-based iHemp Michigan LLC, a member organization that formed to educate, inform and promote the industry.
“One of the big challenges this year is we have some junk genetics,” said Crabill, who grew an acre of industrial hemp with a partner near Swartz Creek. “We’re trying to get everybody connected up so they can have a good plant variety to start with.”
The hemp flower contains CBD, which is extracted for use in oils and body care products. The CBD market has exploded in recent years, and many farmers are experimenting with strains that can be used for the products.
The market is potentially very lucrative for farmers, with prices for hemp flower reaching as high as $45,000 to $60,000 per acre, according to a report this year in the Chicago Tribune. Other reports cited farmers who received more than $110,000 per acre for last year’s harvest.
In most cases, “farmers just want to grow the crop and sell it,” Crabill said, noting that it takes a different skill set to extract the oil and turn it into a balm, tincture or another kind of retail product.
Another tool for farmers
Although CBD oil has garnered the most attention, growing hemp for grain and fiber holds real promise for farmers in Michigan, Crabill said, noting farmers who want to grow both can harvest the fiber crop early before it pollinates their CBD plants.
“The future for hemp in Michigan is very bright,” added Blain Becktold, government and business liaison for iHemp Michigan. “The products that we are going to be able to develop and use this plant for are going to be tremendous.”
Becktold, who lives in Grand Haven, also runs a consulting business for farmers and grew 70 acres of hemp for CBD and grain in the Keeler area, east of Benton Harbor. He said growers need to consider the entire process from seeds to planting to harvest.
“This was a research year for everybody because this crop hasn’t been grown before,” he said. “We learned how to plant it, how to harvest it, how to store it; that was our goal.”
Growers faced various challenges, including planting late, preventing cross pollination, controlling weeds, managing through unpredictable rainfall, and learning methods to hang and dry the harvested crop.
The grain can be sold for livestock feed and other food products such as hemp seeds. Hemp hearts, seeds, protein, and hempseed oil also have nutritional value and are available in grocery stores. The fibers and stalks can be used for rope, clothing, construction materials, paper, bioplastics, insulation, biofuel and more.
“It will take a couple of years, but it is coming, and the infrastructure will get there,” Becktold said. “The renewability of this is just amazing. This isn’t the silver bullet for the farmer to save them, but it is another tool in the toolbox a farmer can use.”
iHemp Michigan already has organized several conferences and continues to meet with MDARD and legislative leaders. The organization will host the Midwest iHemp Expo on Jan. 10-11 at the Lansing Center. Becktold said it is likely growers will continue under the ag pilot program in 2020 while MDARD finalizes a formal hemp plan and submits it to the USDA for approval.
As the industry advances, iHemp Michigan plans to advocate on behalf of growers and processors and address issues with the law. For instance, a grower’s license costs $100, but to transport or sell hemp requires a processor-handler license that costs $1,350.
“There are some things in the laws that we are going to try to get tweaked and that’s one,” Becktold said. “A corn or soybean farmer doesn’t have to have a different license to take their crop down to the elevator and sell it.”
To help growers get prepared for the next season, Ag Marvels is hosting an educational seminar on Dec. 4 at Soaring Eagle Casino in Mt. Pleasant. There will be commodity experts, industry leaders and vendors there to discuss growing practices, licensing, processing and more.
Despite the unknowns of this first year, growers are confident in industrial hemp’s future market potential as an agricultural commodity for retail CBD products and industrial uses.
“We’ve placed a pretty large wager saying that it is,” Klumpp said. “People are calling us every day asking how they can get involved. I think there is going to be twice as much hemp grown next year in Michigan.”
MiBiz food and agriculture news coverage is supported by Dan Vos Construction. For more information, visit danvosconstruction.com. This sponsorship is advertising. It has no effect on editorial consideration in MiBiz.