Eager farmers have been jumping on the hemp bandwagon. Seeing green, they raced to grow as much of the crop as they could. Now, with the harvest done, they are finding that prices have been cut in half if they can find anybody to buy their crop at all.
From 2018 to 2019 Vote Hemp reported a 445% increase in the number of acres licensed to grow hemp, jumping from 112,000 acres to 510,000 acres. Of that, the estimate is that 250,000 acres were planted this year. With 90% of growers looking to cash in on the CBD craze, that constitutes a large increase in the market.
The increase is so great that processors are unable to stay ahead of demand. Processing plants are pumping through product, extracting as much CBD as they can, but they can’t keep up. This has left the market to be more competitive than people first thought. Hemp Benchmarks, an industry publication, reports that the average price of CBD flowers dropped by 53% since April of this year.
Farmers are generally paid for each percentage point of CBD in their final product. The more the CBD, the more the hemp is worth. The price per point now ranges from $2.32 to $1.61, depending on the size of the order.
Many farmers who jumped into the market this year hoping to strike green gold are now stuck with a product that is worth half of what it was, with many unable to sell their crops at all. As the market develops, the processing capacity will catch up with the size of crops.
A large percentage of these new farmers lacked a business plan or fallback in case this happened. They put everything they had into the plants with the promise that they would strike it big at the end of the harvest. Now, that inexperience has come back to bite them, hard.