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Some Farmers Who Bet On Hemp Early Have Gotten Stung

ARI SHAPIRO, HOST:

With no end in sight to the trade wars, many farmers are struggling to make a living. Some see a potential lifeline in hemp, the non-intoxicating cousin of marijuana. Last year, Congress made it legal to grow hemp. The market for the extract CBD is now booming. But as Montana Public Radio's Kevin Trevellyan reports, some farmers who bet on hemp early have gotten stung.

KEVIN TREVELLYAN, BYLINE: Montana farmer Dean Nelson (ph) has spent most of his career raising grocery store staples like wheat and peas. In the cab of his tractor this fall, Nelson said this year's yields are outstanding, but the trade wars initiated by President Trump have driven down prices for established commodities.

Montana wheat farmers say they've been losing $150 million a year since Trump withdrew from the Trans-Pacific Partnership in 2017. Agriculture exports to China have also plummeted by more than half since Trump began imposing tariffs there in early 2018. And so some of the fourth-generation farmers' grain bins are still full of last year's unsold product, and there's hardly any room for what he's bringing in now.

DEAN NELSON: You know, we sold some at a price that's half of what we should get for it. If you do it on paper, you can't make it. It just - it doesn't work.

TREVELLYAN: But hemp might, says Tyler Mark, an associate agriculture professor at the University of Kentucky.

TYLER MARK: As we've had downward pressure put on prices of our traditional commodities - corn, soybeans, wheat - farmers are looking for alternative crops. And hemp, that gets a lot of farmers excited when they can think about that type of return on a per-acre basis.

TREVELLYAN: Hemp is hot now because everyone from Whoopi Goldberg to Willie Nelson is hawking an extract from the plant called CBD as the new natural cure-all. But there's a catch - because hemp growing was only legalized last year, there are few established processors to sell to. It's not like markets for wheat or barley, with buyers that have been in business for decades. That makes growing hemp a gamble. Mark says some CBD startups may be making farmers promises about payment that they can't keep.

MARK: We're starting to see lawsuits pop up around the country with respect to those types of issues happening. It's kind of like the Wild West in this market. There's still a lot of hurdles to get over as this industry develops.

TREVELLYAN: Montana farmer Dean Nelson is in the middle of one. Last year, he planted more than a square mile of hemp. Farmers here grew more than in any other state. But Nelson and several dozen other farmers signed contracts to sell their harvests to an unproven company called USA Biofuels (ph). And now they say the company didn't pay what they were promised.

So some, like Nelson, are withholding the hemp they grew. He's got about a thousand bales of it sitting on his property. He was expecting to get around $43,000 dollars for it. Lots of farmers are hurting, Nelson says.

NELSON: My nephew, it was everything he had. So he's working in the oil field now. Horrible shame. But us, it's half a million dollars out there that, yeah, I'd kind of like to have that.

TREVELLYAN: Lawyers representing USA Biofuels didn't return requests for comment on the lawsuit. Nelson and other farmers in Montana and North Dakota who are suing the company want punitive damages and the roughly $7 million they were initially guaranteed. They're growing nearly 12,000 acres of hemp, more than half of Montana's entire yield last year.

The state agriculture department has also gotten involved with the dispute, only the second time it's taken such action in a decade. Meanwhile, Nelson can't remember feeling so blindsided by a farm deal, except when a friend of a friend sold him a used combine harvester that never arrived.

NELSON: We've never had a situation like this. It's just - it's tough.

TREVELLYAN: Yet Nelson risked growing hemp again this year, given the markets for established commodities. Unlike with those traditional crops, he does get cold calls asking if he knows anyone with some hemp to sell. But Nelson isn't sure whether the folks on the line are reputable.

For NPR News, I'm Kevin Trevellyan in Missoula. Transcript provided by NPR, Copyright NPR.