Hemp farmers hope bankers will realize value of crop, while bankers say they have concerns
MADISON, Wis. — Mark Hubbard is using money out of his own pocket to fund his large-scale hemp operation in Monroe. He has spent many months having conversations with bankers, financial organizations and other stakeholders.
“I hope that banks will realize the value of this crop, make it available for others to start farming it, and give farmers the opportunity to increase their income for their families and save their farms in some instances,” Hubbard said.
Hubbard, of GroHub Farm, planted 35 acres of the crop this year, taking advantage of Wisconsin’s first hemp harvest since the 1950s. He said he spent more than $300,000 this year on his business.
Bankers hesitant about hemp
A large majority of Wisconsin bankers have concerns about industrial hemp, according to a recent survey from the Wisconsin Bankers Association.
“We want to make sure that we understand the market, we understand what the farmer’s expectations are and things like revenue expectation, collateral, what other types of revenue streams those farmers might have at those points. Those are all factors that might come into play,” said Mike Semmann, executive vice president and chief operations officer for the Wisconsin Bankers Association.
The survey, created before the federal farm was signed into law legalizing hemp in all 50 states, asked bankers two questions about hemp:
1. If the 2018 Farm Bill changes the federal view of hemp, will your bank actively seek to provide loans to industrial hemp farmers and/or processors in Wisconsin?
2. Do you think industrial hemp will provide enough revenue to stabilize revenue streams for Wisconsin farmers?
The survey showed 83 percent responded “no” and 17 percent responded “yes” to both questions.
Tips for farmers looking for loans
Semmann said the results caught his attention and is encouraging farmers to do their homework if they do decide to apply for loans.
He said bankers will likely ask many questions, such as, “What type of revenue do you think we can project? How much acreage is going to be there? How long does it take to process?”
Bankers are willing to give some financial help for tangible assets but not for the crop itself, he explained.
“We are getting some loans for buildings, structures, tractors, things like that that bankers can quantify and understand that they can reclaim, but it was still based on our existing credit or collateral that we can put up to secure the loan,” Hubbard said.
Hemp farmers optimistic
Kattia Jimenez and her husband, John Eichorst, planted a half acre of hemp at their farm in Mount Horeb using their own savings to fund their new business.
“This (industry) is something that’s supposed to help farmers,” she said, adding that much of it is at a standstill if farmers can’t get loans.
Still, Jimenez called her first year growing hemp a “success” and said she plants to plant two to four acres next year.
“If there was a bank that could give us a loan, or if the FSA would, we would plant more,” Jimenez said.
But, as she put it, she’s an optimist.
“I think eventually it’ll all work out,” Jimenez said.
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