Bluegrass BioExtracts opened in early May, making it Owensboro’s first hemp processing facility since the Farm Bill passed in 2018, legalizing the agricultural production of hemp for industrial processing and sales in the state of Kentucky. The decision to bring Bluegrass BioExtracts to Owensboro was a strategic one made by three Owensboro natives who saw great potential in Owensboro’s infrastructure.
The co-owners of Bluegrass BioExtracts — Dr. Gerald Edds and Bruce Peters — are both from Owensboro. The decision to build their hemp processing facility in Owensboro was more strategic than advantageous, Edds said.
“We have the infrastructure locally to build out our facility and have the ability to hire really good people,” Edds said. “While there are quite a few processors approved in Kentucky, the number of facilities able to process large volumes of industrial hemp is far more limited.”
Staying local also gives Edds and Peters the opportunity to work with a number of hemp farmers who surround the Owensboro area, including growers from central and western Kentucky, as well as 20 growers from Tennessee and five from Alabama.
In fact, Bluegrass BioExtracts is already doing so well in Owensboro, Edds said his company is having to turn growers away for the 2019 year.
“We have reached our maximum volume of hemp for 2019 and are turning growers away for this year. We will double our output for the 2020 crop and expect to have many more growers for that year,” he said. “Our growers vary in size, from a single acre to over 500 acres to be grown this year.”
Edds said many of the well-known processors across Kentucky haven’t earned good reputations, with some of them not paying their growers on time, or even at all. Despite the negative outlook some growers have of the processing facilities they send their product to, Edds said Bluegrass BioExtracts has worked to erase those concerns.
“We are very pleased that many growers have switched to us for processing,” Edds said. “Our location seems to have had no bearing on our amazing first year of growth.”
Crop insurance only covers input costs, which Edds says are quite high for growing hemp. A lack of crop insurance hasn’t been an issue with the number of growers who have signed with Bluegrass BioExtracts, but Edds believes some growers have chosen not to grow until the issue has been resolved — hopefully by 2020, he said.
“Most growers will pay $10,000 to $12,000 per acre to raise hemp. Planting material makes up a large percentage of that input cost, with clones (plant clippings) costing anywhere between $2.50 to $4.50 each. The average number per acre is about 1,800 clones,” Edds said. “We are interested in helping the small farmers who are transitioning or adding to their tobacco crops, so we hope the issue with crop insurance, banking and credit card use for this industry is remedied soon.”
Another issue facing growers and potential growers of hemp is that crop insurance for hemp hasn’t covered the basics, such as crop and income protection. However, seasoned hemp grower Charles Mann of Charlie’s Compost said major aspects of the crop insurance debacle are about to change for the 2019 year.
“I just got information from an agent who said insurance will be available for normal protection like it was for tobacco crops, but they haven’t come up with insurance for income,” Mann said. “The income insurance guarantees you will make a certain amount for that crop. This is the first year that crop protection is covered.”
Crop protection insurance provides a safety net for growers whose crops could be damaged by wind and hail, but the lack of income insurance could still turn some growers away from hemp, Mann said.
“Farming’s a risky business to start with, and any business person is interested in minimizing that risk,” Mann said. “This industry is new — there’s some growing pains along the way, but we’ll get there.”
Mann says Kentucky has been ahead of the game in the hemp industry as farmers have been able to grow hemp for five years now. At the federal level, however, the kinks are still being worked out–one of those kinks being crop insurance.
“It’s a new crop, and it’s the first year it’s been legal in the U.S., so the national level is catching up, if you will,” Mann said. “Crop insurance is a national program so it’s behind also.”
As for the new facility, located at 931 Wing Ave. in the former Hon Co. furniture factory, Edds said his team is working to complete construction on major portions of the building and the equipment needed to process hemp.
“We expect to be extracting hemp within the next two weeks,” Edds said. “Our goal has always been to be completed and prepared for a huge volume of material coming in starting in late September, and we will be processing material from the 2018 crop until then. We will continue adding equipment needed to at least double production for the 2020 crop.”
Mann believes the hemp industry will be a success as hemp can be used for a variety of things, including CBD oil and clothing material. In fact, Mann believes the fiber processed from hemp will soon compete with cotton as a leading source of clothing material.
“Hemp is drawing new members into the ag community,” Mann said. “A generation has started something, and it’s going to be great to see it develop.”