Kentucky Hemp Farmers Form Cooperative to Navigate Industry’s Growing Pains

The Farm Bill of 2018 legalized the industrial cultivation of hemp, and it was followed by a rush into the budding industry by players looking to exploit the market. Farmers in the Ohio Valley weren’t left behind, and they finally get to harvest the thousands of acres of hemp crop they planted this year.

Tony Silverman is one such farmer. He runs his farm, Beyond the Bridge LLC, with his business partner Shawn Lucas, a professor at the Kentucky State University. Silverman has been an organic farmer since the 90s, and he says farming hemp was radically different from what he’d been doing. Referring to the relatively new state of the industry, he says it was hard to find anyone with expert advice or experience farming the crop who could show him the ropes.

After agonizing over it for a while, he and Lucas decided to start an organic hemp cooperative for smaller hemp farmers. This allows them to buy hemp seeds and other pertinent supplies in bulk to get discounts and to sell the farmers’ harvest collectively. They can use their strength in numbers to bargain for better prices and to consolidate their knowledge and skills. The association is still small, comprising of 15 farmers in Central Kentucky, with a total of 30 acres of crop.

While cooperatives are relatively new to the hemp industry, you cannot deny their effectiveness. A cooperative allows small farmers to argue for better terms with processors and suppliers and gives them a better chance of succeeding in a highly competitive industry. Once the crop was legalized, there were fears that big corporations would quickly move in and consolidate the market, at the expense of the small farmers.

J. Morgan Leach, a hemp farmer who founded the West Virginia Farmers’ Cooperative, has already fought efforts to aid corporate consolidation of the industry. He says he testified in 2017 against a bill that would prevent the sale of CBD in the state unless the FDA approved it. Coincidentally, that portion of the law was supported by British company GW Pharmaceuticals, the proprietor of Epidiolex. It is the only FDA approved drug that has CBD as the main ingredient.

An agricultural economist at the Murray State University’s Center for Agricultural Hemp agrees on the need for small farmers to join cooperatives. They lack the acreage and volume that big corporations possess, and this puts them at a severe disadvantage.

According to Leach, their biggest worry is that large scale hemp production could push smaller hemp growers out. Banding together allows them to compete with larger scales of production and ultimately gives them a better chance of succeeding.

Industry watchers believe that hemp companies like Geyser Brands Inc. (TSX.V: GYSR) and VPR Brands LP (OTCQB: VPRB) welcome the decision by farmers to form co-ops since this will open opportunities that would have been lost to them as individual farmers.

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