Although the hemp/CBD sector has been subject to intense demand from a population looking for natural, healthier alternatives, it hasn’t been easy for sellers to operate. After decades of prohibition, industrial hemp was legalized by the 2018 Farm Bill, finally giving farmers the leeway to farm the crop through state and tribal programs. And while this was a step in the right direction, it was barely enough to get the industry going.
As 2019 began, a few states here and there started their own hemp pilot programs, and with that, hemp was grown on American farms again. However, hemp is a very high-risk crop. For starters, banks avoided working with hemp farmers and CBD sellers, as there wasn’t a standard procedure for doing business with them. But perhaps the biggest challenge farmers had to deal with was lack of crop insurance.
Farmers in Wisconsin will be glad to know that this may soon be a problem of the past. The state is among a group of 21 states where hemp farmers will be eligible for a new pilot program for their crops starting this year. Under the program, farmers will have access to Actual Production History (APH) coverage under Multi-Peril Crop Insurance.
The pilot program will be available to farmers who grow hemp for cannabidiol (CBD), fiber or grain in the 2020 crop year.
“APH policies insure producers against yield losses due to natural causes such as drought, excessive moisture, hail, wind, frost, insects, and disease,” says the U.S. Department of Agriculture (USDA). Thanks to the insurance program, farmers can now insure up to 85% of their average yield, as well as a percentage of the crops’ value between 55% and 100%
The program will also be available to Alabama, California, Colorado, Illinois, Indiana, Kansas, Kentucky, Maine, Michigan, Minnesota, Montana, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Tennessee and Virginia.
This is obviously a step in the right direction, especially in an industry as nascent as hemp. Although lucrative, there’s quite a ton of risk involved, especially in Wisconsin. The state’s cold and wet climate is unsuitable for cultivating hemp, and a single accident could leave small farmers dealing with bankruptcy.
Brian Parr, agronomist for Minnesota-based company Legacy Hemp, explains that hemp doesn’t thrive in cold climates, whether it’s grown for CBD fiber or grain. “That’s unfortunate because for the two years we’ve been able to grow this crop in Wisconsin, that’s the type of weather we’ve had to deal with. It’s difficult for farmers because they can’t get their work done on time, and it creates additional challenges such as weeds and diseases,” he says.
Hopefully, the new crop insurance program will mitigate some of the risks and make it a little easier for farmers to comfortably shoulder the remaining risk.
Experts say hemp companies like No Borders Inc. (OTC: NBDR) will heave a sigh of relief once the crop insurance is offered to farmers since this will allow them to enjoy the same benefits that farmers of other crops enjoy.
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