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Hemp hits Howard County: Local grower plants area's first crop, but will the commodity live up to the hype?

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RUSSIAVILLE – Hemp has made its way to Howard County.

And if one local grower has his way, the crop that had formerly been illegal to grow for more than 80 years in the U.S. is going to revolutionize the area’s agricultural landscape.

Austin Rhodus, owner and CEO of Kokomo-based DREEM Nutrition, which makes CBD products, is in the middle of transforming a 44,000-square-foot building on the south end of Russiaville into the area’s first and only hemp facility.

Since February, Rhodus and a group of investors have worked feverishly to convert the building at 310 S. Union St. into an all-things-hemp hub designed to help area farmers as they venture into an unknown and risky industry. The facility was formerly owned by Functional Devices, which produces circuit boards.

Now, Rhodus is investing around $500,000 to install an in-house lab to test and create products, and convert a huge warehouse space that could hold and dry more than 2 million pounds of hemp.

The building will also house a nursery to start hemp seedlings, a seed-growing operation and a project to breed seed varieties that grow well in the area’s soil and climate.

Hemp Products

Austin Rhodus and Greg Kruger work in the facility in Russiaville making Hemp products such as CBD oil on June 12, 2019. Rhodus stacks plants that did not make the planting onto racks for disposal in the temporary growing room. Tim Bath | Kokomo Tribune

“The goal with this building is to try to make it one of the largest hemp-as-an-ingredient suppliers in the Midwest,” Rhodus said.

He has also planted 12 acres of hemp near Russiaville to use in his company’s popular CBD oils, and another 32 acres of the plant for grain as a side project.

The 30-year-old Tri-Central High School graduate started Dreem Nutrition in Kokomo over four years ago after living in Hawaii for eight years and serving in the Navy. He currently imports all his hemp from Colorado.

But that’s about to change now that he’s established his own hemp farm that will save the company substantial amounts of money on buying and shipping the plant from out-of-state. After the facility is up and running by the end of the summer, Dreem Nutrition will grow, harvest, create and ship all their products from the facility.

“We’ll be doing everything in-house, here in Russiaville,” he said.

Rhodus said he believes hemp will become a massive boom crop for farmers in Howard County and the surrounding area, and he’s preparing for next year, when the industry will officially open up to anyone interested in growing.

“Hemp is the biggest thing that will happen in agriculture in our lifetime,” he said. “When you see the potential of what hemp can do as a crop, it’s monumental.”

But as hemp makes the shift from banned to legal in Indiana, will the market be there to turn it into Howard County’s next cash crop – and will farmers be willing to take the risk on a plant many of them know nothing about?

LEGAL AT LAST

Since 1937, hemp had been considered a controlled substance under federal law because of its relation to marijuana. But that all changed when Congress passed the 2018 Farm Bill, which reclassified hemp as an agricultural commodity that could be grown and sold.

Hemp plant

Closeup of the green medical cannabis plant. Hemp and marijuana look very similar, but hemp has very low levels of THC, the compound that makes users feel high.

Indiana legislators followed that earlier this year by passing Senate Bill 516, which set up a hemp advisory committee and laid the groundwork for future regulations and licensing for growers and sellers in the state.

But regulatory details are still pending. Specific administrative rules must still be adopted, such as the processes of applying for a license, fees, seed labeling and requirements, and background checks for growers. Until those are adopted, farmers won’t be able to apply for permits to grow hemp.

According to the Office of the Indiana State Chemist, expectations are good that rules will be adopted in time for farmers to plant hemp during next year’s growing season.

Currently, the state is still operating under a portion of federal law that allows hemp to be grown for research purposes, which was approved under the 2014 Farm Bill prior to it becoming a legal crop. Since then, Purdue University has planted 24 acres of hemp for research.

Last year marked the first time the state made 100 permits available to growers and farmers to plant hemp this season for research purposes. The product can also be sold on the market since it is now considered an agricultural commodity.

Rhodus said he was the 11th person in the state to receive a permit to grow hemp this year.

Mark Boyer, a farmer near Converse who grows corn and soybeans, as well as sunflowers and canola for his business Healthy Hoosier Oils, also received a permit to grow hemp. He said he’s planting 50 acres this year to use it in his cooking-oil products.

State Chemist and Seed Commissioner Robert Waltz said around 3,000 acres in total were approved this year for hemp production to test various aspects of planting, growing and harvesting.

He said some research projects include the impact of using farm equipment on hemp, different processing techniques and testing different varieties of seed in different soils.

Hemp seed

A bag of hemp seed. Photo from Purdue Hemp Project.

“There are lots of different research projects because there are lots of questions still to be resolved,” Waltz said.

He said the research and lessons farmers learn this year will go a long way in helping get hemp off the ground and into the marketplace next year, when any farmer can apply for a growing permit.

And the state is expecting a huge rush of applications for the 2020 season.

“It could easily be 1,000 or more farmers,” Waltz said. “We’re trying to monitor that number by the level of interest we’ve had this season and from what we’ve seen in other states.”

The interest may be big next year, but a huge question mark still looms: What kind of hemp crop will farmers put out next year, and will it make any money?

HURDLES AND OBSTACLES

Waltz said the biggest uncertainty facing farmers is the lack of any large, well-established marketplaces around the U.S. that could support hemp as a major row crop.

“The reason for that is it has been illegal for so many years,” he said. “Those businesses that would have provided extraction and processing and all that have never had a chance to develop.”

Converse farmer Boyer agreed. But with so many uses for hemp – as a grain, fiber, fabric, oil and animal feed – he's hopeful stable markets would develop for at least some aspects of the plant that would encourage farmers to add hemp into the rotation of corn and soybeans.

“It’s said there are 24,000 uses of hemp,” Boyer said. “How many of those are economically viable, we don’t know. But that’s why it’s important that we’re doing this research this year. We need to establish an economic market for some of those uses.”

Another problem is that no processing plants currently exist in the state to which farmers could sell their hemp harvest or turn it into a marketable product. Boyer said there have been discussions that indicate both startups and established processing companies are considering bringing plants to Indiana.

Rhodus said he was also exploring the possibility of installing industrial processing equipment at his facility that could handle large volumes of hemp.

The other major hurdle is the hemp plant itself. Rhodus said right now, there aren’t many seed varieties that work well for Indiana.

And with current hemp genetics, there’s still a chance the levels of tetrahydrocannabinol (THC), the substance in marijuana that makes a consumer feel high, could spike. Hemp contains very low levels of the compound. If THC levels get higher than 0.3% in the plant, the state deems it to be marijuana and will confiscate and destroy the crop.

Losing an entire harvest could be devastating for a farming operation, Rhodus said. That’s why part of his hemp facility in Russiaville is working to develop seeds and genetics that take away that risk.

“Compliance is key,” he said. “ … We want to make sure there are safe options for people to grow without running that risk of your field going hot and forcing farmers to destroy their crop.”

Hemp Products

Austin Rhodus and Greg Kruger work in the facility in Russiaville making Hemp products such as CBD oil on June 12, 2019. Kruger works in the lab mixing their first in house CBD oil. Tim Bath | Kokomo Tribune

Hemp is also a notoriously difficult to plant to grow. Boyer said he has experience growing other oil crops like sunflowers and canola, but hemp has been the hardest crop with which he’s ever dealt.

“It’s dramatically more challenging to manage than traditional commodity crops,” he said. “ … But we did prove last year that it can be planted and harvested mechanically using traditional equipment that’s in every farmer’s tool shed throughout the state.”

Hemp gets even more labor intensive and difficult when it’s being grown and harvested as a CBD commodity. Rhodus said they plan to harvest all their plants this year by physically cutting down each plant by hand, loading it into a trailer and hauling to their facility.

“Farmers aren’t scared of hard work,” he said. “But they do like to understand and follow a template, and there aren’t a lot of templates with hemp. That’s what discourages a lot of farmers.”

But even with so many obstacles, the prospect of new markets in the midst of slumping corn and soybeans prices is sure to lure farmers in Howard County and the surrounding area to hemp next year, Seed Commissioner Waltz said.

Boyer said most farmers are excited by the prospect of planting hemp to diversify their crop portfolio and adding another option into their farming operations. He said he’s cautiously optimistic hemp will be financially viable, but he thinks the hype that’s surrounded hemp’s impact on local agriculture will be tough to live up to.

Hemp field

A hemp field grown at Purdue University. Photo from Purdue Hemp Project.

“This crop does have potential, but it’s not going to be a replacement for our traditional commodities like corn and soybeans,” he said. “It’s another tool in our tool box, and hopefully it will be a very good tool in that box, but that remains to be seen.”

But Rhodus is banking on a hemp explosion in Indiana that will change the area’s agriculture for decades to come.

“For us, in Indiana, where we have such a large agricultural base, I think we have the potential to be one of the largest suppliers of hemp in the nation,” he said. “Right now, we just have to really support farmers with good genetics and good practices and shared knowledge.”

Carson Gerber can be reached at 765-854-6739, carson.gerber@kokomotribune.com or on Twitter @carsongerber1.

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Carson Gerber is a reporter for the Kokomo Tribune and can be reached at 765-854-6739, carson.gerber@kokomotribune.com or on Twitter @carsongerber1.