State of the Hemp Industry in 2021
The industrial hemp market made $5.6 billion in 2020 throughout the world and is projected to make $17.4 billion by 2027. Ever since the passing of the 2018 Farm Bill, hemp was let off the leash of being put in the same category as cannabis and its cultivation became more widely accepted and lucrative.
Industrial hemp seed is highly nutritious, containing massive amounts of protein, vitamins, essential fats, and enzymes. Hemp fiber is incredibly durable, yet also soft and comfortable. This makes hemp a dual-function crop, thus its cultivation creates a wide range of products.
Hemp yields foods and beverages, personal care and cosmetic products, nutritional supplements, fabrics and textiles, paper, construction and insulation materials, and many more. This has made hemp a multi-billion dollar crop that has changed the face of global agriculture.
But now that the hype of hemp that came about in the late 2010s has settled into reality, let’s take a closer look at the current state of the hemp industry in 2021 and what we can look forward to in the coming years.
Hemp Supply and Demand in the United States
The 2018 Farm Bill resulted in hemp being categorized under the same regulations covering cannabis from the Marijuana Tax Act of 1937. With its approval, hemp derivative products can now be shifted across state lines for manufacturing and commercial purposes. It lifted the federal restrictions on transportation, sale, and possession of hemp-derived products.
There were thousands of farmers, growers, and small business owners who jumped on the hemp bandwagon to see if they could turn a massive profit with hemp, and many have. But there were also many who suffered crop failure, as well as ending up not turning a profit due to the sudden increase of hemp supply tanking prices.
That has resulted in many farmers across America with hundreds of thousands of hemp stockpiled in their barns, unable to sell them at good enough prices to break even. Obviously, those farmers are likely not planting hemp anytime soon.
Now that the hype train has passed, the industry will rebalance, stabilize, and mature. Hemp is expected to remain a specialty crop, like cherries and tulips, as opposed to competing with major commodities like corn and soybeans. This may not be what a lot of hemp supporters were expecting, but that’s not necessarily a bad thing since it still did become a multi-billion dollar industry nonetheless.
Factors in Hemp Cultivation
As mentioned, hemp is an incredibly versatile crop, with both its plant fibers and its seeds being useful in many different applications. As a dual-function crop, it has the potential to replace or serve as an alternative to many existing commodities out there, such as cotton and corn.
The wonderful properties of hemp seed and hemp seed oil make it great for use in both food and nutritional supplement. As we know, hemp contains cannabidiol (CBD), which is a powerful anti-inflammatory that makes it great for treating a number of ailments. The hemp seed itself is so packed with nutrition that it can be added to food to give it more of a nutritional punch.
It has also started to make waves in the beverage industry. Hemp juice has relaxing properties that help calm whoever drinks it, so it’s now being added to refreshing beverages to promote health and wellness that were first reserved for CBD oil and its derivatives.
Another market being shifted tremendously by hemp is the pet industry. More and more pet owners are now turning to CBD oil and other hemp products for their pet care, and that has yielded a lot of positive attention for hemp as it turns out that pets respond well to hemp products as well. For instance, CBD oil helps with managing neurological conditions, as well as promote appetite and restful sleep in pets.
Challenges Faced by Hemp Industry
Despite all this recent positive attention towards hemp, there are still significant challenges that the hemp industry must face. For instance, the regulatory structure for industrial hemp is still quite complex, so they have to navigate all the state and federal legislations regarding the cultivation, manufacture, and use of industrial hemp.
Also, since it’s still a burgeoning industry, there’s still a deficiency in agricultural and processing facilities that must be filled over the next few years. As farmers and growers learn more about how to efficiently grow and harvest hemp at a grand scale, more technologies and equipment need to be devised in order to better facilitate the cultivation of industrial hemp.
But there’s still optimism in the air for the US hemp industry. Hemp production has seen a resurgence in the past several years and is bound to go only higher as there’s now more demand for hemp-based products than ever. However, they’re still relatively higher-priced since most hemp is being cultivated now for CBD.
Over recent years, most producer interest in hemp production has been driven mainly by the prospect of high returns from the sale of hemp flowers meant for processing CBD oil. As prices start to go down, things will start to even out and growers will find other ways to sell their hemp for other purposes.
Also, since hemp is still a relatively new crop in the US at the moment, growers are facing a host of basic challenges. For instance, there’s the issue of just developing seeds that deliver a consistent crop. The aforementioned crop failures are mostly due to bad seeds, so there’s a need to develop better seeds that will be more consistent.
There’s also the matter of timing and technique. They’re still figuring out better planting calendars and growing techniques that will create greater and more consistent yield of hemp crops that will push the hemp industry forward and make hemp products more viable for businesses.
The Potentially Bright Future of Hemp Fiber
The future's looking good for hemp beyond the wonder of CBD as hemp fiber is now being tapped as the next big commodity on the market. However, as of now, processing facilities for hemp fiber are still scarce, and supply chains within the US have yet to develop. Also, US hemp farmers are competing with growers in Canada and China, so it’s going to be an uphill battle.
Right now, hemp fiber yields in the US are still quite low, so hemp clothes are likely not going to be profitable in the country just yet. However, high-end clothing may be a more viable avenue at the moment as more upscale customers who may be interested in the novelty of hemp should be able to afford paying for hemp clothing. If it does catch on, that can then trickle down and broaden the hemp fashion market.
But for now, farmers and growers have taken a bit of a step back from hemp, with the less experienced ones who dipped their toes into hemp in previous years likely no longer in the mix. As the hemp industry matures and develops, we may see more things coming out of hemp for the American market over the next several years.
In the meantime, there are already outlets that are selling hoodies, pants, shirts, and other comfortable articles of clothing made of hemp fiber. It’s taking a lot of people by surprise as they never imagined hemp to actually be comfortable and fashionable, and that could be what takes hemp to the next level.