When something is in its infancy and develops by leaps and bounds, it’s hard to make predictions even about its seemingly foreseeable future. This is particularly true about the hemp industry, which comes with the added variable of its unpredictable regulations, one change in which has the potential to trigger chain reactions that can alter the entire landscape of the market.
Even so, a good amount of data has been accumulated since the 2014 and especially 2018 Farm Bill, the latter of which made hemp federally legal. And some takeaways do surface in this data.
For one, farmers in the U.S. are currently planting less hemp than they did last year, even though the number of farmers has actually grown by 27% in that same time period, up to 21,496, according to Vote Hemp. This increase can still be viewed as the nearing of a plateau in the “grand” scheme of things, as between 2018 and 2019, growers became 476% more.
The licensed hemp acreage for this year is 465, 787 acres, marking a 9% decrease from the 511, 442 that were licensed last year, according to Hemp Industry Daily. This decrease stands out even more in the context of new hemp states entering the market.
This overall slowdown could possibly be attributed to an increased caution and curbed enthusiasm among novel hemp farmers, whose overeagerness caused the market to saturate and respectively cost them money last year. In other words, this could, and the key word here is could, be a good thing, a sign of maturity.
The slowdown is evident in the licensed acreages of the 10 leading hemp states. Only New York, North Carolina, and Tennessee have experienced growth in licensed growers and acres – the other 7: Colorado, Kentucky, Montana, Nevada, North Dakota, Oregon, and Wisconsin, have lower numbers on both parameters.
The states that are just entering the hemp scene are California, Arizona, Illinois, Michigan, Florida, and Kansas.
One very important metric to consider is planned acreage as opposed to simply licensed acreage, but unfortunately, it can actually be impossible to consider, since many states simply don’t account for it. And that metric is a game-changer – for reference, Missouri licensed 21,000 acres, their growers plan to produce only 3,892 of it. This huge difference is attributed to “a variety of factors, including access to seed and clones, a lack of financing as well as inexperience,” according to Vote Hemp president Eric Steenstra.
One recent change that can improve foresight is USDA’s interim rule, which has growers report acreage to USDA’s Farm Service Agency (FSA), as well as intended use, such as fiber, seed, grain, and cannabinoid production.
And besides the distinction between licensed and planned acreage, there’s another sift to be made – the acreages that go unharvested, which according to vote Hemp were around 40%-50% last year, for reasons like crop failure and non-compliant crops, among others.
Not surprisingly, cannabinoid production dominates hemp farmers’ goals by roughly 79.4%, with CBG accounting for 14.5% from the whole.
Besides the slowdown, which is nothing that crazy after an explosive start and could even be beneficial, another takeaway that sticks out in experts’ mind is the importance of planning.
“The total crop valuation only works if the whole infrastructure is in place. … Start with your market and then work backward to the crop, but please do not plant any seeds without any planning because you will lose money,” says Mark Reinders, CEO of HempFlax and president of the European Industrial Hemp Association.
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