Farming, Fiber, Interview, News, North America, Processing, Research, USA

‘Now is the time to get facts ahead of the market excitement’

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INTERVIEW: Jeffrey Steiner is associate director of the Global Hemp Innovation Center at Oregon State University. Formerly division director for plant production at the U.S. Department of Agriculture’s (USDA) National Institute of Food and Agriculture (NIFA), Steiner has led interdisciplinary research teams with the USDA Agricultural Research Service (ARS) and at universities studying food and agriculture, natural resources, bioenergy systems, and hemp. He has served as an adviser to political appointees and government officials, as well as to commodity, conservation, and economic development organizations.

HT: What can you say about the development of hemp as a commodity in the USA. What’s required to establish such markets, and how fast can that happen?

Jeffrey Steiner: Enthusiasm only goes so far. We are at a point when decisions need to be made based on science and financial soundness. With the great investments that have already been made and lost in hemp, now is the time to get facts ahead of the market excitement.

Many priorities need to be addressed to help establish hemp as a 21st Century industry. There is a general lack of knowledge about where different hemp grain, fiber, and essential oil market classes should be optimally grown and what are the best genetics to use. Particularly with fiber, production must be close to handling and processing facilities to reduce transportation costs. Also, there need to be outlets for by-products from processing to return as much value as possible within the system.

Hemp will not be a monocrop spanning entire regions. Diversification of production risks is an established principle in agriculture and as hemp acreage expands, insect pest and disease problems will follow. Also, we need to know how to incorporate hemp into existing production systems in ways that complement rather than disrupt current markets. Hemp is a new kid on the block and it would be best to find out which crops preceding hemp in a rotation benefit hemp and which crops benefit the most from following hemp. Farmers and processors need to be linked so farmers can be assured there is a market for the materials they grow and at a known price.

At the same time, processors need to be assured a dependable and likely year-round supply of materials they can turn into value-added products. Finally, standards need to be developed to evaluate products as they flow through markets to assure the quality and integrity of hemp-based products.

To accomplish these points, there needs to be a dependable flow of information that can help support industry expansion and identify likely growth markets. These are places where industry, researchers, and government need to closely work together. The sooner these are accomplished the sooner hemp will be established in the market, with advantages like any other commodity.

HT: How do you see the balance of outputs shaping up for hemp in the USA?

JS: That is probably the greatest challenge we face as a country. In Oregon, as well as across much of the rest of the U.S., there was a rapid expansion of hemp production, particularly for cannabinoids such as CBD. Registered U.S. production went from 0 acres in 2013 to 525,000 in 2019 which far exceeded the largest historic hemp acreage in 1943 when 146,200 acres were grown.

However, following this initial enthusiastic expansion, the number of acres produced particularly for cannabinoids crashed in 2020 and again in 2021 because there is inadequate infrastructure to support harvest, handling, and processing, and the market outlets are not there to absorb that level of production. There are still carry-over inventories of materials cross supply chains being processed in 2021. Also, the regulatory environment and its uncertainty greatly restrict CBD and other cannabinoids production and the marketing of products made from them.

For the grain and fiber market classes, it is a different story. U.S. hemp grain production is becoming established in the North Central states, particularly Montana and North Dakota. These states are across the border from Canadian production in Alberta, Saskatchewan, and Manitoba where North American production was first re-established. Hemp grain production is relatively similar to the production of other grains and so doesn’t require the establishment of an entirely new, costly infrastructure. The establishment of new and expanded market outlets and increasing consumer awareness and demand are needed to support increased production, but from what I understand, this is well underway.

As for domestic fiber production, there is great interest across the U.S. I did a casual web search and found mention of 15 states planning to establish hemp processing facilities to separate fiber bast and hurd from stalks. At present, hemp fiber would mostly be produced as “bi-crop,” with fiber production concurrent with grain production. Either way, if the fiber is produced as a dedicated crop as in China or as a bi-crop as in Europe, a great investment in infrastructure is required and this poses the classic “chicken-or-the-egg” problem: how does the acreage of production get established to assure the supply of commodity to support a processing facility that needs to draw investment to be built? And what farmers are going to produce the commodity at the scale needed year after year without a processing facility to assure the purchase of their fiber crop.

This is not a new problem. We can look back at examples from just 15 years ago when the cellulosic ethanol industry was trying to come up to scale using dedicated biomass energy crops. My guess is there could be significant shifts in what hemp market classes are grown and where they are grown depending on how hemp production and product development evolve in the U.S. and overseas.

What outputs best suit growing conditions in Oregon?

JS: Essential oil hemp and marijuana varieties are exclusively grown here. Potential pollen intrusion from dioecious hemp plants as with fiber and grain types is an inconvenience to usable flower markets and can interfere with the extraction and processing of cannabinoids from biomass. For grain and fiber crops to be grown at scale in Oregon, procedures will need to be worked out for where the different market classes are grown, as in the state of Washington where efforts among growers are being made to coordinate their production.

HT: Tell us about the international partnerships under the 45th Parallel Strategy? How do those partnerships work?

JS: Before passage of the 2018 Farm Bill, Oregon State University faculty could not do hemp research on university facilities. With the emerging opportunities that hemp presented for Oregon farmers and the industry more widely following hemp’s decriminalization by the 2014 Farm Bill, Dr. Jay Noller looked for opportunities to begin working with hemp while waiting for approval to do research at OSU.

Jay was able to establish partnerships with research institutions in Eastern Europe and China where hemp was legal to grow. These regions are similarly located as is Oregon along the 45th Parallel where hemp production has historically flourished. Jay began conducting research with these partners and so was able to begin understanding how hemp would perform in Oregon.

Once OSU could do research starting in 2019, we were able to translate that background information and expertise to our faculty and begin our own research program. With these partnerships, we also were able to begin scientific exchanges, including placing graduate students, doing reciprocal faculty visits, and hosting formal technical trainings. However, with the Covid-19 pandemic, our direct interactions came to a standstill in 2020. We are just now beginning to restart those efforts but we gained a lot in that short time.

HT: And what kind of discoveries are they yielding?

JS: Jay was traveling extensively beginning in 2015 to Serbia and 2018 in China conducting research and expanding our partnerships overseas. We were able to first-hand learn about the status of the hemp industry and the challenges and opportunities we could face in Oregon and the U.S. We have been able to assess the status of the production practices and systems used for commercial production there, and especially learn about the performance of the genetics that are being utilized. We looked particularly at hemp fiber production systems in China and Europe; high-density stands are needed to produce high-quality fibers. These will require planting seed amounts in pounds per acre rather than pricing each seed as here in the U.S. for CBD production.

Our research has found that the kinds and qualities of cannabinoids produced can be greatly affected by production practices, and there is not a concern with pollen affecting flowers as there is here in the U.S. In fact, there can be unique chemical compounds produced by plants that are allowed to pollinate.

Finally, there is a general need for establishing standards for the marketing – importing and exporting – of hemp products to assure the quality of those products is maintained between sellers and buyers. Developing standard testing procedures was a part of the technical exchanges we put in place with our science partners overseas before the pandemic.

HT: How would you describe the development of the hemp industry in China vis a vis the USA?

JS: Particularly in the area of fiber production, China is at least five years ahead of the U.S. There is dedicated high-quality fiber production with the supporting infrastructure needed for processing into textiles. Over half of world hemp production is in China of which most is for fiber, but very little of it is exported. The Chinese are utilizing hemp fiber domestically in the manufacture of garments with antimicrobial properties and for use in advanced technology manufacturing.

China is well-positioned for advancing carbon-based and other high-tech manufacturing, especially when you consider its hemp production and that more than 60% of graphite and nearly 60% of rare earth metals production is there. Likewise in Europe, there is high-quality fiber production, but particularly in Eastern Europe, the fiber processing technology infrastructure needs to be re-established. As for essential oil hemp production including cannabinoids such as CBD, the U.S., and in particular Oregon, lead the world in production capabilities. Our genetics for this market class are superior to those presently being utilized in China and Europe.

HT: What interesting things are coming out of the Oregon state research stations?

JS: Starting in 2019, ten of the OSU research and extension centers began for the first time to get familiar with growing hemp. Since then, faculty from campuses across six colleges and the research centers have begun to plan and participate in different projects. The centers, along with our partners around the country are using the slump in production acreage to get the science ahead of the initial boom market

There are strategic research questions that we are working to answer: Where the different market classes can be optimally grown; What are the best agronomic practices to use (particularly for water management in the irrigated western states); how does hemp fit into crop rotations with established commodities to complement the overall production system and not disrupt markets; what are the actual costs of production; and how can hemp genetics be improved to optimize production, reduce risks from pests, diseases, and other stresses, produce the highest quality end-user product.

This is being accomplished through initial state-wide and nationwide variety trials that are being conducted in cooperation with hemp seed companies and with a dozen other land grant universities across the country.

We are also leading a six-location project in Oregon, California, and Colorado that is determining the actual water use requirements of essential oil hemp crops; and we have formed a three-state partnership with the University of California Davis and Washington State University, and the USDA Agricultural Research Service’s National Plant Germplasm System to expand the genetic base of hemp for use in developing improved varieties of the three market classes. This work is not only important for the 45th parallel production areas, but also to extend the range of hemp production to more southern U.S. locations. Our research partnerships in California and Hawaii will help us accomplish this.

HT: Talk about hemp’s potential in bioenergy applications?

JS: Hemp has many potential high-value uses in the manufacture of biobased high-performance textiles, advanced manufactured and construction materials that can be made from the stalks or seeds, and health and wellness products – the list goes on and on. These have potentially great value as substitutes for petroleum-based materials with potentially superior end-product and environmental performance advantages. Frankly, I do not see a future for hemp as a dedicated crop in the bioenergy space, other than its possible use as a by-product fraction that remains after all other higher value constituents have been utilized

HT: Managing broad interdisciplinary teams to address hemp’s potential would seem like a daunting task in light of the plant’s many possibilities. What are the keys to successfully managing such a sprawling initiative?

JS: Thanks for recognizing the significant challenge OSU faces in establishing an all-encompassing effort such as this for hemp. First, the GHIC is fortunate to have strong support from our home the College of Agricultural Sciences and our dean Alan Sams. This support allows Jay, Kristin Rifai our center administrator, and me to work full-time on establishing the center, its operations and policies, and especially expanding our partnership across campus, the state-wide branch stations, and with partners at other universities and industry.

Second, along with the international partnerships mentioned above, Jay initially put into motion a working framework for OSU and the University of Kentucky to assist USDA researchers to become quickly established in addressing hemp research needs for the national good of the industry. These efforts, supported by research grants, appropriations, and gifts, have helped us form a shared vision for what is needed to address the many challenges that must be overcome to accelerate progress and bring hemp up to the same status in a world economy as any other established commodity.

Because an entirely new industry with complete supply chains needs to be established and matured as fast as possible, there are innovative contributions that must be made by disciplines not only in agricultural production, but also genetics/genomics, food science, engineering, logistics, business and finance, and pharmacy. The key to making this happen is not so much what Jay, Kristin, and I do, but what we can help facilitate through working with like-minded faculty leaders across the entire campus who can contribute their expertise and experiences. What we are doing resonates with industry, which helps us all focus on their needs to establish a competitive hemp sector.

HT: As a veteran of the USDA, how would you rate the agency’s performance in establishing and nurturing the industrial hemp sector so far?

JS: There has been good progress towards advancing hemp through research on many fronts, and in a relatively short amount of time. I was at NIFA (National Institute of Food and Agriculture) in 2018 when we worked with the USDA general counsel’s office to establish the policies that allowed financial support of hemp research, education, and extension activities. Hemp is now considered like any other commodity when it comes to grant applications and the use of base capacity funds by the land grant universities to work with hemp. This has had an impact on OSU through success by our teams to secure research grants.

We also recently hired a state-wide hemp extension specialist and we have received a higher education challenge grant to create hemp specialization certificates for graduate students. These new classes supported by NIFA will build on a general hemp course that has been offered for several years in the College of Forestry.

Also, the College of Engineering is sponsoring senior capstone design classes. The GHIC has also been able to establish new research partnerships with (USDA) ARS in cannabinoid chemical analyses and methods development at Peoria, Illinois; hemp fiber processing and quality assessments at New Orleans, Louisiana; and as mentioned earlier, work with the curator of the new hemp germplasm collection that will be housed at the USDA repository in Geneva, New York.

We have also worked with the National Agricultural Statistics Service, where they are developing the production survey tools that will bring hemp into the Agricultural Census surveys (just like other commodities) as well as giving input to the Risk Management Agency that is setting up crop insurance tools for hemp producers.

At the state level, legislation is being put into place to bring Oregon under the USDA hemp rules that are administered under the Agricultural Marketing Service. There are always rough places on the road, but when you consider that Oregon State University and USDA could not touch hemp until a few years ago, we have made good forward progress partnering at many levels.

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