A US-based industrial hemp trial farm owned by CropLogic (ASX: CLI) has been increased in size by 350 acres in order to vertically integrate the agronomy service provider’s expertise and provide support to the nation’s growing hemp market.
Previously located over a modest 150 acres of agricultural land in Oregon’s Deschutes County, the new 500 acre farm is being grown under lease through a registered industrial hemp growers licence issued by the state’s Department of Agriculture.
The licence was issued in March and allows New Zealand-based CropLogic to legally participate in Oregon’s 2019 industrial hemp growing season, with a view to first harvest in September and sales to follow.
The boost in size will afford CropLogic the space required to demonstrate how it can vertically integrate its agronomy expertise, digital ag-tech, extensive knowledge of local growing conditions and tangible foothold in the Pacific North West states (encompassing Washington State, Idaho and Oregon).
It will also allow the company to better evaluate and produce reference data for different growing conditions such as soil types, land contours and elevation in order to optimise crop yields.
The parameters were determined following discussions with local hemp growers who confirmed the need for representative data across the various conditions.
The company expects production rates of between 800,000 and 1.1 million pounds of industrial hemp biomass for the total 500 acres at an indicative production cost of up to US$7 per pound.
Based on the current selling price of up to A$65 per pound, this could generate sales revenues of up to A$70 million and eclipse CropLogic’s targeted profit of between A$31 million and A$58 million. The company currently has a market capitalisation under A$12 million.
Key crop metrics
During the trial, CropLogic aims to facilitate the hemp production process through the use of its proprietary CropLogic realTime technology solution, which monitors and tracks key crop metrics such as soil moisture and irrigation, and converts observations into real-time data.
The information is collated in a concise format within the company’s user-friendly CropLogic GrowerView application for android and Apple devices.
Knowledge gained from the trial farming exercise will be applied to CropLogic’s customers in the US and Australia, as well as other global emerging industrial hemp markets.
Hemp is a term given to cannabis containing less than 0.3% tetrahydrocannabinol (THC), closely related to marijuana but with no psychoactive effect.
Oregon has been a long-time supporter of industrial hemp and is one of only a few states to have legalised its production prior to the passing of the 2018 Farm Bill, which confirmed the nationwide legalisation of hemp and made provisions for its cultivation, transport and sale.
Oregon currently hosts over 550 licenced growers – an increase of over 4,000% since licencing began in 2015 – sharing over 11,000 acres of land under hemp cultivation (an increase of 960%).
The state is part of the much larger US national hemp market which is projected to triple to $22 million by 2022, driven by the relative low cost of engagement, comparatively lower owner and investor risk regarding hemp production, continued research and confirmed benefits of cannabidiol (CBD) products, which can be manufactured using industrial hemp.
CropLogic’s trial hemp farm has been established to validate the company’s ability to service this projected growth.