As the gold rush in the CBD sector appears headed for a bitter end, it has left U.S. Hemp a mere shadow of its former self, with reports showing the industry has shrunk roughly 80% from its 2019 peak.
According to Stamford, Connecticut-based researcher Hemp Benchmarks, a total of 107,702 outdoor acres have been licensed so far this year, down from 511,442 three years ago.
The more critical measure, however, is actual acres harvested, which have run an average of 22 percent vs. licensed acres over the past three years. By that measure, 2022 is on track to bring in roughly 25,000-30,000 acres this autumn, down from 120,000, or approximately 20-25% of the total harvest in 2019.
Further reflecting the downturn:
- Hemp licenses in 21 key hemp states fell 35%, down to 5,381 in 2022 vs. 8,298 in 2021, researcher New Frontier Data noted in a recent mid-year review.
- Colorado, historically the biggest hemp-growing state, suffered a 75% drop in planted acres, falling from 18,715 acres in 2021 to 4,727 in 2022; and Minnesota, the third biggest grower by harvest last year, saw a dropoff of roughly 60%, from 6,191 acres in 2021 to 2,005 this year, according to New Frontier.
- Anecdotally, consultant PanXchange has noted that leading CBD-maker Charlotte’s Web, which grew 862 acres in 2019; but the company’s revenue of $95 million was achieved from the biomass of just 57 acres – 6% of fields planted.
‘Out of balance’
Grossly understating the crash in CBD as “a period of correction,” but justifiably attributing the market wipeout to the ill-fate of the CBD sector, the New Frontier review noted that the “moon shot in (hemp) acreage was driven by the CBD boom, and proved to be massively out of balance with the cannabinoid’s true market size.
“When tens of thousands of farmers jumped into hemp production in 2019, they produced a glut of biomass that was tenuously compliant with federal THC standards and often failed to meet the specifications of CBD product manufacturers,” according to the New Frontier review, written by Eric Singular, a director at the data provider who is also Director of Communications at cultivation seed broker International Hemp.
“We can say with confidence that a balance has finally been struck between supply and demand for hemp-derived cannabinoids,” Singular wanly concluded.
In addition to the glut that brought CBD down to earth, the hemp agriculture sector is currently under pressure due to rising prices for traditional crops such as corn, soybeans and wheat, all of which have nearly doubled in price in recent months due to a number of factors, attracting immediate attention of farmers.
Export restrictions on Ukrainian wheat as a result of the Russian invasion, drought in the western U.S., supply chain disruptions and high fuel and transportation costs are all contributing to price rises for most staple crops – crops that farmers know well, and can expect to cash in on over the next two years or more.
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