‘Highway to Hemp’: Waves of Fiber and Grain Life on The Cutting Edge of the Emerging Industrial Hemp Economy

About 30 days before Melissa Nelson-Baldwin was set to harvest her first 80 acres of industrial hemp, her buyer was no longer interested.

The buyer had lost funding to process the hemp and decided to back out of the deal altogether.

“People wanted to grow, but they were like, ‘We don’t know where to take it,’ ” Nelson-Baldwin recalled. “And then we had manufacturers saying, ‘Man, we would love to convert to hemp and do (the) sustainability approach … But we need local, consistent supply.’ So we were like, ‘Why not us?’ ”

Rather than be defeated by the missing link in the hemp supply chain, South Bend Industrial Hemp started doing its own processing.

Today, the company is the only hemp fiber processor of its kind in the Midwest.

The small machine shed on the outskirts of Great Bend, Kansas, receives hemp bales from as far as Texas and South Dakota as more and more farmers begin to harvest the “crop of the future,” but lack a place to take it.

Since that first year of growing hemp in 2019, South Bend Industrial Hemp has more than doubled, harvesting 160 acres of hemp for fiber and contracted to receive 1,600 acres of hemp from across the Midwest just this year.

Nelson-Baldwin has positioned the company to take off, bringing other hemp growers with her, as manufacturers find more uses for the crop in everything from cars to buildings and T-shirts.

In 2018, Nelson-Baldwin’s husband and brother-in-law, who co-own the company with her, brought up the idea of diversifying their corn and soybean farm with the addition of hemp.

Her response at the time was typical of most people new to the industry. 

“Nope, I don’t do pot, this isn’t my thing,” she remembered saying. “They were way more educated about it than I was, and they said just read about it. So I just started reading about it … and that’s what really got me going.”

By the time Kansas first introduced it’s research-based industrial hemp program in 2019, Nelson-Baldwin was fully on board and ready to add the crop to the family farm’s repertoire.

“We were looking for a way to diversify our farm and we saw the potential of fiber and grain, which is why we explored that avenue,” Nelson-Baldwin said.

At that time, the money was in the CBD market, so they also grew hemp for CBD extraction.

“We understood that as farmers, you know, the value of hemp and what it brought, (fiber and grain) was the avenue that we really wanted to heavily pursue,” Nelson-Baldwin said.

They planted 80 acres of hemp for fiber and about 1,500 plants for CBD on a small plot in the first year.

“The thing about hemp is it’s been in prohibition for so long, there’s really no relevant data out there,” Nelson-Baldwin said. “And there’s really no resources because the United States, as a whole, was really in the same boat.”

That didn’t intimidate Nelson-Baldwin, who also owns an agriculture research company and saw the new venture as an exciting, and needed, area of research.

From the get-go, Nelson-Baldwin wanted to include other farmers in the process, so that when the demand exceeded their farm’s capacity, she would have farmers lined up, ready to send bales of hemp to her processing facility.

“Our goal in this industry is to help bring farmers up with us,” Nelson-Baldwin said. “We understand that this industry is going to explode much bigger than what our farm can handle.”

Already, she’s sourcing more hemp from other farmers across the Midwest, who can’t find a processor, than she is from her own fields.

South Bend Industrial Hemp now runs six days a week for 16-18 hours a day.

That’s what happens when no one else in the vicinity possesses the same equipment.

Nelson-Baldwin faced the same problems that Rural Route Hemp in Drexel, Missouri, found when it came to starting a business in hemp.

She couldn’t get loans, had to jump through extra hoops to open an account with the bank, and didn’t get farmers’ insurance until this year.

Thankfully, the family run farm had enough capital to gamble on a business in hemp.

Nelson-Baldwin was smart in 2019 to plant hemp for both fiber and CBD. Now that the CBD market is saturated, South Bend Industrial Hemp finds itself at the forefront of the soon-to-skyrocket fiber and grain side of the industry.

What is Hemp Fiber and Grain?

Before hemp was famous for its cannabinoids (CBD, THC) it was a staple of both the grain and the fiber industry.

Like corn, soybeans and wheat, it was one of the major crops in the United States.

Grain from hemp is the harvested seed. Commonly known as hemp hearts or hemp nuts, it’s high in protein and can be used like any other grain, or provide a nutrient-rich oil when extracted.

The woody stems of these plants, which grow between 10 and 12 feet tall, break apart into three, usable products: the fiber, the hurd and the dust.

Uses for these three elements are constantly being developed, and that’s where a lot of excitement in industrial hemp stems from. Paper, insulation, building materials, ground cover, textiles, and a biodegradable alternative to plastics are all on the long list of possibilities.

Hemp for CBD, marijuana and hemp for fiber are all variations of the same plant: cannabis. Misunderstanding around the plant species is what led to the ban on hemp, in an attempt to curtail marijuana use, in the 1970s.

Nelson-Baldwin explained the difference with a comparison to other agricultural products. Take peppers as an example. Some peppers are spicy, but there are also bell peppers which don’t pack a punch at all. Both are peppers, they’re just different varieties.

“Bell peppers are more of your hemp plants, spicy jalapenos are more of your marijuana plants,” Nelson-Baldwin explained.

Now labeled as industrial hemp by the 2018 Farm Bill, cannabis grown with less than 0.3% concentration of THC is once again a commercial crop.

According to Erica Stark, executive director of the National Hemp Association, if properly backed, hemp grown for fiber and grain has the potential to be a $32 billion industry.

These are the numbers predicted if just 5% of the current row-crop acreage, now dedicated to soybeans and corn, added hemp into the rotation.

Farming Hemp

Regardless of if someone is growing for CBD extraction or for fiber, the enrollment process to grow industrial hemp (for now at least) is the same. So are the regulations.

That means testing before harvest to ensure a less than 0.3% THC concentration, enrollment fees, background checks, and in Kansas, a deadline to enroll each year.

“With fiber and grain there’s essentially no THC or CBD in these plants,” Nelson-Baldwin said. “We’re basically glorified hay growers.”

It’s Nelson-Baldwin’s biggest complaint about the current regulations.

“They need to divide CBD and fiber and grain,” Nelson-Baldwin said. “It is hay. There (are) no cannabinoid properties in these bales, nothing.”

And fiber and grain producers don’t want their plants to have cannabinoid properties. As Nelson-Baldwin explained, if the plant is diverting energy to produce cannabinoids, it’s not directing as much energy into the parts of the plant she’s concerned with: the stalk and seeds.

“We want (the hemp plants) to focus all their energy that they’re getting from the sun and the nutrients we give them to grow because we need tonnage,” Nelson-Baldwin said. “We don’t want the plant to waste any of its energy producing cannabinoids.”

In the field, hemp grown for fiber and grain is dense, tall and bushy. It’s very different from marijuana or even CBD crops, which are grown in spaced apart rows with a “Christmas tree-like” appearance.

When grown for CBD, hemp is treated like a specialty crop on small acreage with daily attention to the development. A grower might have 5,000 plants or so per acre.

Hemp grown for fiber and grain is treated like mainstream rotational crops and is grown on big acreage with close to a million plants per acre. Agricultural Marketing Resource Center estimates the average yield is between two and three tons per acre of hemp.

The acres of hemp on Nelson-Baldwin’s farm receive little to no tillage, pesticides when needed and ground irrigation. South Bend seeds and harvests with the same equipment it uses for its traditional crops.

Once mowed down and baled the hemp looks identical to a bale of hay.

Processing: The Missing Link

So why aren’t more farmers growing this type of hemp?

Growers couldn’t find processors to take their hemp, so the middle person between the farm and the manufacturer wasn’t there to support the industry, according to Stark.

“That intermediary piece of the supply chain, which is the decortication facilities, are not developed on a commercial scale in order to create a complete supply chain,” Stark said.

Justin Swanson, president of Midwest Hemp Council, said his home state of Indiana hopes to have a fiber processor soon.

One processor for an entire state is the goal right now, that’s how few processors are currently operational.

“We as an association really think the long term sustainable model for farmers is on that grain and fiber side,” Swanson said. “But those markets and that supply chain takes much longer to build.”

South Bend had to become an integrated operation to succeed in the hemp industry.

They could grow all the hemp they wanted, but if no one could break the hemp apart into its usable elements (a process known as decortication) they’d never make anything.

So the family plunged into hemp processing. With their own funds and some venture capital (the bank would not consider giving them a loan) a state-of-the art decortication machine was purchased.

“The bank will give you a, ‘no,’ because no manufacturers will contract with you,” Nelson-Baldwin said. “So that’s why we had to take such a leap of faith.”

While they wouldn’t sign a letter of intent, Nelson-Baldwin said manufacturers promised they’d place orders as soon as she switched on a decorticator.

Since the beginning of June 2021, when the machine got up and running, it has processed over 250,000 pounds of hemp. Nelson-Baldwin expects to see even greater numbers in the future as those first couple of months were spent figuring out how to work the machine and account for differences in hemp bales.

South Bend’s 12-roller decorticator is special in that it keeps the stalks whole while separating hurd from fiber.

“So think about ropes or things like hemp strength, all of that stays at a high level because (the rollers) are not smashing it,” Nelson-Baldwin explained.

It also allows the hemp to meet the millimeter-precise specifications set by the manufacturers she supplies.

“What’s even crazier is there’s zero waste,” Nelson-Baldwin said. “We sell everything that goes through that machine.”

The fiber will be used for textiles like cardboard, bioplastics or paper. Hurd gets used like wood chips’ more attractive sister in everything from animal bedding to particle board filling and the emerging, green building material: hempcrete.

Even the dust created during the processing is sent to plastic manufacturers. According to Nelson-Baldwin, the addition of the hemp dust to a plastic water bottle helps it to biodegrade in about 80 days.

“So the big thing now, though, is making it cost effective,” Nelson-Baldwin said. “We’re not there yet, just in terms of scale, but it’s quickly coming down the pipeline.”

This is why she works with farmers across the country to help them grow and process hemp.

South Bend also hosts educational events, inviting the community, state representatives, manufacturers and anyone who’s interested to tour the farm and learn more about the crop’s potential and current challenges.

“Every day is a growing and learning day, and we just pass that information along to our farmers,” Nelson-Baldwin said.

Filling the Gaps

The potential for hemp lies in its versatility, quick growth cycle and how few resources it needs to grow. Hemp also does well in dry, sandy soils, making it an attractive crop to regions like western Kansas and Texas where wells are drying up.

Timber takes years to grow, while hemp is harvested in a single season. If hemp replaces the fiber in paper or the filling in particle boards, that means fewer trees have to be cut down and milled.

The high price for lumber recently has helped to drive manufacturers to look at alternative materials. Nelson-Baldwin can attest to this from her experience.

“We’ve got some people that are like, hemp will change the world, hemp will replace every industry,” she said. But “we don’t want hemp to replace every industry.”

Soybeans, corn and other crops are important to the economy and sustainability, she said. While hemp has a place in these industries, she doesn’t want it to be a replacement.

“Which, I think, is where we differ a lot with some of the big hemp companies, because we see this as a tool, not as your whole tool kit.”

Right now, Nelson-Baldwin’s biggest problem with her business is that she simply can’t meet demand. She fields calls from Wrangler, Levis and Lego, all wanting to manufacture with hemp.

The paper company she supplies wants 100,000 pounds a month for their production.

“I can’t supply that at our facility,” Nelson-Baldwin said. “We’re looking to add on another decorticator by the first quarter of 2022. We would like a second facility by the end of next year, because we can’t even keep up.”

Her goal for next year is to have 4,000 acres of hemp contracted to her company throughout the Midwest so she can supply even more manufacturers with the product.

The long-term goal is a nation dotted with processing facilities, like hers, so hemp growers can process locally rather than shipping bales all the way from Texas and South Dakota to the middle of Kansas.

For that to happen, government entities and big corporations need to get on board. Not everyone can self fund a processing facility.

The National Hemp Association is working to make state funding a reality.

“We were trying to get some language put into the forthcoming reconciliation (of the 2018 Farm Bill) for specific infrastructure funding for the hemp industry, knowing that creating those processing facilities for fiber is what this industry really needs to get the fiber and grain portion of the industry off the ground,” Stark said.

Missouri already began offering a hemp processing grant earlier this year.

Christi Miller, communications director for the Missouri Department of Agriculture, said eight Missourians applied for the grant and the winner will be announced later this year.

“The whole premise of that grant is to build infrastructure, build capacity (and) equipment that can give our growers a place to go with their products,” Miller said.

Miller said other states have their eyes on Missouri as it makes waves supporting industrial hemp.

If the past two years have been any indicator, the next couple of years will be an exciting time for industrial hemp.

“It’s gonna take time,” Nelson-Baldwin said. “We’re gonna work as fast as we can, and as hard as we can, but it’s gonna take time.”

Next: “Highway to Hemp” returns next month diving back into the world of CBD to look at the varying methods of extraction and distribution.

Correction: An earlier version of this story mislabeled Midwest Hemp Council.

Cami Koons covers rural affairs for Kansas City PBS in cooperation with Report for America. The work of our Report for America corps members is made possible, in part, through the generous support of the Ewing Marion Kauffman Foundation.

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