Hemp farmers brace for Wild West growth

Legalization in the U.S. could increase acres there, which would be good for Canadian seed firms and bad for farmers

Canada’s hemp industry may soon enter a period of extreme growth.

Or a period of extreme chaos.

Or both.

The United States is on the verge of legalizing hemp production, which could prompt a demand boom for hemp foods and related products there. On top of that, the global market for hemp plant extracts, like cannabidiol (CBD), is exploding and could be worth billions in a few years.

On the downside, the regulations around CBD and other cannabinoids, made from the flowers and plant tissue of hemp plants, are difficult if not impossible for many to understand. Plus, American farmers may soon plant hundreds of thousands of acres of hemp, flooding the market with an oversupply of hemp grain.

In early November, U.S. Senate majority leader Mitch McConnell said the new U.S. farm bill would include a provision to legalize hemp.

“If there’s a farm bill, it will be in there, I guarantee you that. We’re trying right now to make sure there’s a farm bill and before the end of the year,” McConnell said, as reported by The Hill, a news service dedicated to covering political news from the U.S. capital.

U.S. farmers in a number of states have been growing hemp since 2014 but only under state research programs.

Under proposed regulations in the new farm bill, hemp would be removed from the list of controlled substances, would be eligible for crop insurance and could be sold as an agricultural commodity, says Hemp Inc., a U.S. firm.

In 2017, under pilot project programs, American farmers grew about 35,000 acres of hemp. Canadian growers, in 2018, registered about 56,000 acres of industrial hemp, based on Health Canada data.

Should the farm bill succeed and McConnell gets his way, hemp acres could mushroom in states like Montana.

“We planted about 22,000 acres this year (2018),” said Ian Foley, the hemp program co-ordinator with the Montana Department of Agriculture.

Most of the hemp was sold to a biomass company in Montana, which is processing hemp for the nutraceutical market, Foley added.

It’s uncertain what will happen next year, but an increase in hemp acres is a safe bet.

“I think it depends on what the buyer market looks like,” Foley said. “Whether the big Canadian processors come down and offer contracts or whether we have local processors show up and offer contracts.”

Foley has told farmers that they shouldn’t grow hemp without a production contract. However, many producers may not listen to that message because Montana farmers are desperate for an alternative to wheat.

“They are interested in something they can make money in,” Foley said.

“Other commodity prices are so low that they’re looking for anything.”

A boom in U.S. acres in northern plains states like Montana and North Dakota is good news for Canadian hemp companies that sell seed and plant genetics. Foley estimated the Canadian firms supplied 95 percent of the hemp seed planted in Montana.

A big jump in U.S. hemp acres is negative news for Canadian hemp growers, who are already faced with an overproduction of hempseed in 2017. Canada increased production that year to satisfy demand for hemp grain and hemp foods in South Korea. That market disappeared when China began selling hemp grain into Korea.

“Korea was a one-year phenomenon,” said Russ Crawford, Canadian Hemp Trade Alliance president, while speaking to reporters at the CHTA conference, held in Winnipeg Nov. 20-21.

Demand for hemp grain, hemp protein and oil in North America remains strong, but most of the excitement in Canada’s hemp industry is around CBD.

Until this year, Canadian farmers were not permitted to harvest the flowers, buds and leaves of industrial hemp plants to extract cannabinoids, a term for the dozens of naturally occurring compounds in hemp, including CBD.

About the author

Comments

  • Commercial contracts and processing systems will be mission critical. Moving hemp seed into the plastics markets, for example, would consume vast quantities of grain. Building materials are another growth sector for industrial hemp. Turning the stalk into composite materials and “hempcrete” will fuel the industry for the next decade.

Markets at a glance

Copyright © 2018. All market data is provided by Barchart Market Data Solutions. Information is provided 'as is' and solely for informational purposes, not for trading purposes or advice. To see all exchange delays and terms of use, please see disclaimer.

explore

Stories from our other publications