There are risks and significant costs in growing hemp, Tyler Mark warned about 50 attendees at the Florida Agricultural Policy Outlook Conference 2020. The event, hosted by the University of Florida Institute of Food and Agricultural Sciences Food and Resource Economics Department, took place Feb. 27 at the Citrus Research and Education Center in Lake Alfred.
Mark, a University of Kentucky associate professor of production economics, says hemp planting costs can be high. Plants can cost from $3 to $6 each, and seed goes for around $1 each, with 1,500 to 3,000-plus plants per acre. “That gets pretty expensive fairly quick,” he says. But, he adds, “over time as we get better genetics (and) this industry matures, those costs are going to come down.”
“You can’t understate the importance of contracts,” Mark says. “You have to have a very good understanding of what the outs are for the (purchasing) company, and what the outs are for the producer.” Producers should also be aware of “who pays, who’s responsible for all the testing that may take place … who’s responsible for all those fees, because those fees can add up fairly quickly … You just really have to understand that contract frontwards and backwards. I suggest getting a lawyer, and also vet the company you’re working with.” One test required for industrial hemp is for the amount of THC, the psychoactive compound in hemp. Hemp that tests higher than 0.3 percent THC is illegal and must be destroyed.
Mark urges potential hemp producers to “understand what your risk tolerance and your risk-bearing ability is.” He tells producers not to spend any more money than they’re willing to lose. “There’s just very few risk management tools that you can utilize.”
“Just be careful going forward and understand where you’re going,” Mark concludes.
Hemp is already being produced in Kentucky and other states, and production rules are currently being finalized in Florida. The Florida Department of Agriculture and Consumer Services expects to begin issuing cultivation permits in time for growers to plant hemp in April or May. Many growers are interested in hemp as an alternative crop to replace Florida citrus groves that have gone out of production in recent years, primarily due to the devastating citrus disease HLB.
Hear more from Mark, including information on hemp drying methods and crop insurance options:
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