Heartland Industries Cracks the Code to the Industrial Hemp Supply Chain Bottleneck
The 2018 Farm Bill opened the doors for hemp farming across the heartland of America. Since then, the world has seen dozens of different approaches from entrepreneurs who are looking to capitalize on the new legislation.
2018 Farm Bill: The Industrial Hemp Supply Chain
The opportunities created from the 2018 Farm Bill have previously been focused on CBD farming, distribution, extraction, packaging, retail, and ancillary services.
The executives at Heartland understand that most of the hemp market is focused on the plant’s flower (where CBD is found). But, the big opportunity that most in the hemp industry are not paying attention to lives within the material science of the plant stalk.
The stalk of the industrial hemp plant has been known to be used for 50,000+ things. Hemp has proven itself to be the world’s most versatile plant over the past few hundred years.
The rope on the Mayflower was built from hemp fibers. The first American flag was made out of hemp fibers. The strength properties of hemp’s fibers have stood the test of time.
Industrial Hemp is the 21st century Standard Oil
The Heartland team has uncovered the biggest opportunity that has hit the American economy since Standard Oil and US Steel.
The ability to build an industrial hemp supply chain that supports manufacturers is a multi-billion dollar opportunity. The ability to replicate that supply chain dozens of times domestically and internationally is a multi-trillion dollar opportunity.
Of course, replicating industrial hemp supply chains is no small task. Creating product consistency (what we refer to as bio continuity) in any type of agriculture supply chain is one of the more difficult things to accomplish in the world of business.
Of course, the scale of the dollar value of these opportunities is directly tied to the team, mission, vision, and strategy that clearly defines the path forward.
After extensive market research, our executives have settled on an ESG compliant mandate that investors, clients, and employees across America can all align with.
The difference between industrial hemp and CBD
Most “hemp processing facilities” throughout America and the rest of the world focus on CBD extraction instead of industrial hemp. This is not a multi-billion or multi-trillion dollar opportunity. The price volatility in the CBD market has proven to be unreliable for all stakeholders that seek to build a company that creates a long-term impact.
Much like wheat, industrial hemp is grown for its stalk on massive outdoor farms with 300,000-400,000 plants per acre. CBD, on the other hand, is grown for the flower either indoors or outdoors with about 1600 plants per acre. There are many differences between CBD and industrial hemp; this is just one of them.
Part of the reason that the hemp market skewed toward CBD is that the market was quickly established with dozens of players raising multiple large amounts of capital.
CBD companies promised farmers upwards of $50,000+ per acre to farm their crop. There were multiple things that the CBD companies didn’t take into account.
- CBD is a very labor-intensive crop.
- CBD crops can be ruined if a male seed pollinates the other female seeds.
- CBD crops have been destroyed due to mold. This was well recorded in the early days of CBD where the majority of the American supply chain had to be thrown out due because the product was moldy.
- There were no standard operating procedures for farming CBD successfully.
Unfortunately, the poor execution in the CBD industry created fallout in the industrial hemp industry. Our team has spent a lot of time educating the public on the differences between CBD and industrial hemp.
Industrial hemp isn’t as sexy as CBD and the supply chain doesn’t exist. These are just a few of the reasons that a majority of the market has focused on the CBD supply chain instead of the industrial hemp supply chain.
So, you’re probably wondering:
Who will benefit from an industrial hemp supply chain?
Although industrial hemp can be used for 50,000+ things, no smart company (or team) would go to market trying to solve 50,000 problems.
In the early days, Facebook focused on ivy league colleges. Apple focused on serving the education market. The industrial hemp supply chains that will succeed long-term will start by solving a specific problem for a specific customer.
Our team tested out all the markets. Unfortunately, we saw roadblocks in many of the places that other industrial hemp companies are focused on. Animal bedding, building materials, textiles, and bioplastics: are all markets that companies see as viable opportunities. Although some of these sectors have seen success in international markets, there are multiple reasons why these opportunities are not the optimal market penetration strategy.
One of the bottlenecks industrial hemp supply chains will face over the next few years is their focus on the wrong markets. Many players will build supply chains that focus on markets that will struggle over the next few years.
- Textiles – most clothing is manufactured in Europe and Asia.
- Building materials – each city municipality needs to check off on the material, and ASTM standards have not been established yet.
- Animal bedding – this market will compete with wood chips and other waste materials that are sold for pennies per pound.
- Bioplastics – these materials require a large expense to build a chemical conversion plant, and typically come at a 150-200% price premium due to low supply and high costs.
It’s not that these markets can not benefit from hemp, its that these markets have other factors that make alternative materials a better solution today.
After testing all of the viable markets, our team decided to pursue the plastic additives market. Instead of making bioplastic, we decided to focus on aligning with the pre-existing relationships and supply chains in the plastics market by providing a reliable supply chain of bio-based additives. Our hemp-based additives will replace materials like talc, calcium carbonate, fiberglass, and carbon fiber.
Heartlands Approach to the Industrial Hemp Supply Chain
Heartland’ hemp-based materials can make hundreds of different types of manufactured products stronger, lighter, cheaper, and more sustainable.
In fact, our value proposition has been built around hemp materials engineered for polymers (plastics, rubbers, and foams). We have developed a specific input format that allows our hemp materials to be compounded at the highest percentage of plastic possible.
Today, we have plastic compounders that are using our materials at 20%-40% hemp. But, we have compounders who are testing the ability to masterbatch our materials at 80%+.
We decided to solve the problems that the manufacturers and the plastic compounders face.
- There’s no reliable supply chain for bio-based materials. This leaves hemp materials stuck in R&D labs with no path to commercial use cases.
- There is no product consistency in most agriculture supply chains. But, every pound of material needs to have the same specs (size, moisture content, aspect ratio, etc).
- Current materials used in plastics manufacturing are mined and synthetic.
- All of the current materials are toxic and carcinogenic.
- Consumers are demanding more sustainable products, but manufacturers don’t have a way to satisfy those demands (besides recycling programs).
A more focused approach
By focusing on understanding our customers better, we built a reliable industrial hemp supply chain that focuses on solving problems for people who are actively looking for alternatives.
A properly executed industrial hemp processing facility requires Big-Ag infrastructure. This includes:
- Large farming partnerships (10,000+ acres).
- Large processing capacities (1,000,000+ pounds of hemp per day).
- A customer base that has demand for hundreds of millions of pounds.
This is the only way to create a stable supply chain that farmers, investors, and manufacturers can trust. At the end of the day, the only way that hemp is valuable to a manufacturer is if it can be applied in mass manufacturing.
At this current moment, most farmers who have committed to industrial hemp are growing small batches (dozens or hundreds of acres). The lack of supply does not allow companies to use hemp-based materials regularly. This means that hemp materials end up stuck in R&D labs wasting the time, money, and energy of the companies that want to use them.
The American company that can source and processes 1,000,000+ pounds of hemp per day will create a supply chain that American manufacturers can rely upon.
In order to properly scale an industrial hemp processing facility, a few key things must be secured:
- Processing Capacity
- A Pipeline of Customers
If all 5 of these key pieces within a hemp supply chain are not properly secured, an industrial hemp material supplier is setting themselves up for failure.
Most companies are focused on small batch production with the ability to supply R&D materials. Heartland has identified a simple, scalable, and repeatable path to solve these problems within the hemp industry.
The successful execution of our facility in Michigan will make Heartland the first U.S. supplier of hemp-based materials.
Join us as we make a world out of hemp.