One of the most common questions that hemp farmers ask is how to establish a fair market price for hemp. With the inherent nature of the cannabis industry, the unfamiliarity with the hemp market prices is justifiable. The industry lacks important baseline data such as total sales of CBD products and total biomass produced every year.
To determine the current industrial hemp prices, we need to understand the relationship between the demand and supply of hemp. Here’s everything you need to know.
What are the Current Industrial Hemp Prices?
Across the country, farmers are increasingly venturing into the hemp growing business, given the recent mainstream consumer interest in the health benefits of one of its compounds – CBD (Cannabidiol). The commercial viability of the industry looks almost certain with hemp being used to make thousands of products in different industries.
However, before you make a huge investment and start growing industrial hemp, keep in mind that different parts of the hemp plant attract various market prices. For instance, hemp buds used for CBD production fetch higher prices compared to a similar amount of hemp stalk. Therefore, if you’re looking to make a killing from hemp stalk sales, you’ll need to grow your plants closer together so that they grow longer for more stalk mass.
That said, here’s a look at the average wholesale market prices for various hemp products:
- Hemp biomass: $3.00 per CBD% per pound
- Dried hemp flower (bulk): $364 per pound
- Industrial hemp seeds: $10.85 per pound
- Crude hemp oil: $1,737 per kg
- Refined hemp oil: $4,973 per kg
The price of the CBD-rich industrial hemp flower (bulk) is usually based on dollars per point per pound, with the term “point” referring to the CBD oil percentage.
What are the Market Trends Affecting Hemp Prices?
Even after the 2018 Farm Bill, industrial hemp prices have continued to plummet. Industry researchers predict that prices may continue to fall further if nothing is done about it, which is unwelcome news for industrial hemp farmers as well as those in the related CBD and hemp fiber products sector. As per recent data, spot hemp biomass prices have even hit an all-time low of $0.62 in certain cities.
What could be affecting this downward trend?
Here are some of the factors that may be contributing to the plummeting hemp prices:
Oversupply of Hemp
With the legalization of hemp cultivation, many farmers believed that they’ll make a big raking from hemp production. As a result, 285,000 acres of land was dedicated to hemp growing in 2019. However, after harvesting, a lot of farmers still struggle to find a market for their produce.
Currently, a significant portion of the hemp market is overseas where industrial hemp production and use have been legal for years. Now, many new farmers have to find ways to compete in already established hemp markets.
To make matters worse, many farmers don’t have the proper storage facilities for their huge hemp harvest, meaning that their produce could go to waste if they can’t find a market in the next few months.
With the oversupply, it’s pretty clear that the crop currently doesn’t hold much value, leading to plummeting hemp prices.
Hemp Cultivation is Labor Intensive
Hemp production will eventually bring more money to the agricultural sector, however, farmers have to work hard for it. Currently, hemp cultivation is a laborious affair to the average farmer who can’t afford high-end farming equipment.
Additionally, certain types of hemp seedlings must be put physically into the ground, which makes cultivation quite tiresome and expensive. Even worse, many hemp farmers are experiencing issues with crop insurance, banking, and lack of access to appropriate pesticides and herbicides.
As a result of poor farming practices, most of the hemp produced is of a low quality which brings the hemp market prices down.
Unclear Federal Regulations on Hemp
Some of the major federal hemp regulatory agencies such as the Food and Drug Administration (FDA) and Environmental Protection Agency (EPA) haven’t issued official regulations to the hemp industry.
The FDA simply released a statement after the passing of the 2018 Farm Bill stating that it’s responsible for the regulation of CBD and that CBD isn’t allowed in food. EPA, on the other hand, hasn’t released any rules to regulate the use of herbicides and pesticides for hemp cultivation nor has it approved any products.
As a result of all this, the industry’s growth remains limited, and this hurts the hemp market prices.
Shortage of CBD-Rich Hemp Seeds
Many new farmers are focused on capitalizing on the CBD craze that has taken the world by storm. It’s estimated that the industrial hemp CBD market could be worth $20 billion by 2024.
However, not all hemp plants produce quality seeds for CBD extraction. If you’re cultivating hemp for CBD, you require female hemp plants only. Unfortunately, according to recent reports, many farmers have been duped into buying male hemp seeds for the CBD market. In such cases, the hemp produce will certainly be sold at a throw-away price, resulting in huge losses to the farmer.
What the Current Industrial Hemp Prices Mean for Industry Players
If you’re a farmer who’s just starting in the hemp business, it may be wise to tread lightly in light of the recent drop in hemp prices. For instance, growing about on a single-acre land would be a safe option as you continue to monitor market price trends.
Despite current market saturation and resultant low prices being predicted to last for the next months, it’s still too early to give up on the crop. There’s plenty of hope for the financial viability of industrial hemp, especially with the ongoing research into its use as an animal feed.
With the federal approval of hemp as a legitimate animal feed raw product, the industrial hemp prices will increase once again due to increased demand. Hemp regulatory bodies are also expected to come up with draft hemp regulations in the coming months and help streamline the growth of the industry.
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