LANCASTER — The Antelope Valley’s nascent industrial hemp industry is on hold.
“The research has shown us that there is not quite the savings on water that we had fully anticipated,” said Brandon Calandri of SoCal Farms.
Industrial hemp is used in thousands of different products.
SoCal Farms collaborated with Antelope Valley College last year to conduct a research project on industrial hemp.
The company’s ultimate goal is to be the West Coast’s largest provider of full-spectrum hemp oil. They produced two crops of industrial hemp last year.
Part of the goal was to see how much water industrial hemp saved compared to alfalfa, the Valley’s No. 1 crop. Alfalfa requires about seven-acre feet of water per year to grow. Company officials estimated industrial hemp would take about one-third of that.
Calandri said the results show industrial hemp saves about 50% on water compared to alfalfa. The crop also saves an estimated 20% to 30% on water compared to vegetable crops.
“So there is a reduction, but it’s not as substantial as everybody had anticipated,” Calandri said.
Company officials also wanted to see where the industrial hemp market could take them. Right now, there is an oversaturation of industrial hemp.
“The use hasn’t caught up with the supply yet,” Calandri said.
Calandri anticipates that will change. He cited the almond market as an example.
“Even though the supply has continued to grow the market has continued to catch up with the supply and keep it a profitable industry to be in for the last 20 years,” Calandri said. “You’re going to see the same thing happen within the hemp industry.”
The profitability for industrial hemp is limited to a few groups of people who have existing offtake agreements. Calandri said more markets have to emerge and develop for it to be a viable market in the future, which Calandri expects will happen.
“The quality of the hemp that was growing here in the Antelope Valley was absolutely superb quality,” Calandri said. “We definitely did discover this was for sure a viable place for hemp production. Now we just have to see how long it’s going to take for the market to catch up with it.”
Calandri added they would not plant any more industrial hemp until they can see some markets emerge and offtake agreements become available.
“It was a giant research project to see how it worked,” Calandri said. “At the end of the day, we were not able to make a profit with it because we did not have the offtake agreements for it. Within the wholesale market we actually saw a loss to the project we did.”
Calandri said the research project proved that Antelope Valley is a good place for hemp production.
Calandri, a third-generation onion farmer, said they recently laid off more than 100 employees.
“It was devastating,” Calandri said.
Calandri blamed the most recent increase in the state’s minimum wage and changes in California’s overtime law as it relates to the agricultural industry.
“It has become more and more evident that this is an unsustainable business model,” Calandri said.
Normal overtime laws say a worker is eligible for overtime after working more than eight hours in one day, or 40 hours in one week. The agricultural industry previously had a 10-hour day or 60 hours a week exemption. Minimum wage increased to $13 an hour this year. The overtime laws for agriculture workers dropped to nine hours per day or 50 hours per week before a worker is eligible for overtime. It will drop to the state standard of eight hours per day, or 40 hours per week starting next year.
“You basically just saw a 25% increase in your overall labor costs because of the decrease in overtime hours and the increase in minimum wage, which resulted in ultimately 100 jobs being terminated,” Calandri said.