Over the past few years, farmers have been excited about the opportunity to grow industrial hemp. But, among the many roadblocks that have prevented the mass adoption of industrial hemp, insurance & lending are at the top of the list.
Traditional crops like corn, wheat, and soy have pre-established marketplaces. An acre of these materials can be easily quantified by historical sales. The value of these traditional crops on a per-acre basis has been recorded over millions of acres and decades of research.
This makes crops like corn, wheat, soy, and other traditional agricultural goods a safe bet for farmers that are looking to ensure the safety of their property and family. For many farmers, there is no point in taking a risk on new crops that have no proven market.
Just like the adoption of anything else on this planet, there are people who are first to the party, and people who lag behind. The product adoption timeline can be easily visualized with a bell curve.
The innovators are the people who want to be on the bleeding edge of the revolution.
There will always be individuals who are willing to step into the unknown. Farmers across America have been very willing to do a test plot of industrial hemp. Typically, these test plots are anywhere from 5 to 50 acres.
In the following years, many of these farmers will expand to hundreds or even thousands of acres. They believe in being leaders in their local farming communities, and they are willing to partner with companies like Heartland that have a strong customer base. Heartland’s customers are looking for hemp-based additives that can add strength to their products while reducing their cost, weight, and carbon footprint.
Fortunately, Heartland has been able to work with farmers across the midwest that are excited about growing a new crop like industrial hemp.
The question now is, how do we get other farmers to adopt industrial hemp into their crop rotation?
The answer is multifaceted. Here are some of the things that will help farmers gain confidence that industrial hemp can become a profitable crop on their farm.
Heartland’s team has developed the client base, standard operating procedures, and data sets necessary to get farmers excited about growing industrial hemp.
The last piece of the pie comes down to creating a network of underwriters at financial institutions that are willing to provide credit and insurance for industrial hemp crops.
When insurance companies are underwriting agricultural goods, there are 2 main things that they look for.
These are the two main points of focus that underwriters at financial institutions care about.
Heartland is actively working with insurance providers to create an industry report that walks through the revenues and expenses of industrial hemp on a per-acre basis.
With this data, agricultural insurance companies will be able to underwrite acreage that farmers commit to industrial hemp. Getting the insurance and lending providers on board with industrial hemp will provide the last piece necessary in order to get to mass adoption.
One of the reasons that insurance has not been created for industrial hemp farming is because there are not pre-established marketplaces.
For traditional crops like corn, wheat, and soy, there are decades worth of data that insurance companies can lean on to accurately predict their risk. For industrial hemp crops in America, insurance companies only have data that was created after the 2018 Farm Bill.
There is some market data that can be used from other sources:
These pieces of fragmented data can start to help insurance companies quantify the value of an acre of hemp.
The piece of data that’s really missing today is the information about the hemp fiber and hemp hurd (which comes from the stalk of the plant).
These materials are grown, cut down, and then bailed up (much like hay). This material is then sent to a processor that prepares the materials for manufacturing. The value of the bales of hemp (as a raw material) is what the insurance companies need to better understand in order to properly insure an acre of industrial hemp.
With this information, underwriters at the insurance companies can start to dial in the cost of insurance on a per-acre basis. Farmers would then end up paying a certain amount of dollars per acre to ensure a minimum revenue per acre.
The agriculture finance and insurance companies have tasked us with collecting certain data from our farmers for this year. This will allow underwriters to better understand the revenues, expenses, and yields of industrial hemp crops on a per-acre basis.
For the best interest of the industrial hemp industry as a whole, Heartland has started collecting farming data from industrial hemp farmers and processors across North America.
Collecting data from all over the continent will give insurance providers and their underwriters a more holistic perspective on industrial hemp farming. This data will help to create risk pools that will make sure that farmers can efficiently protect their industrial hemp crops.
We are fortunate to be sitting on the ground floor of an industry that has a bright future ahead of it. The future of industrial hemp farming is about showing America’s farming community how industrial hemp can be added into the crop rotation. This will help farmers increase revenues, reduce expenses, and remediate their soil.
The benefits of growing industrial hemp have been well recorded over the past 10,000 years. But, this is the first time American farmers have had the ability to grow industrial hemp in over 80 years.
If you have farmed industrial hemp, please connect with us via this form.
This form is helping us collect and analyze data about industrial hemp farming in America. We will be distributing the report in a few months to the leaders who have a vested interest in seeing a successful and reliable American industrial hemp supply chain.
Join us in making a world out of hemp.
— Heartland Team
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