2020 hemp outlook questionable
Penn State Extension
For those who participated in Pennsylvania’s first year of commercial hemp production, 2019 was a year of highs and lows.
Unfortunately, we started the year on a high and ended on a low.
For those unfamiliar with hemp, the crop has multiple uses: oil is pressed from seed similar to canola, fiber from the plant is used as an industrial feedstock and cannabidiol (CBD oil) can be extracted from hair-like structures on the plant called trichomes.
While genetically similar to marijuana, industrial hemp does not produce the psychoactive compound THC in any significant amount.
For farmers to grow hemp, a permit must be obtained from the Pennsylvania Department of Agriculture. In 2019, approximately 320 people grew hemp on 8,000 acres across the state.
Likely the biggest story of 2019 was the sharp decline in CBD prices.
The year started with prices of over $4 per percent CBD per pound of biomass and by November those prices fell well below $2.
In late November, at one of first public auctions of the crop, farmers hoping for a competitive market found few buyers and prices below 50 cents. Many went home with their crop unsold.
While we advised that growers have their crop contracted with a buyer prior to growing, approximately 75% of the CBD-hemp growers in Pennsylvania did not have one, with many still having unsold product.
For many of those with contracts, payments were tied to market prices, and for some, buyers completely backed out of contracts.
Growers focusing on fiber faced similar pains last year.
Groff North America, the largest contractor of hemp in Pennsylvania, hoped to have a processing system in place in 2019. However, the start of that operation looks to be delayed until sometime this year. They have no plans to contract fiber hemp in 2020.
We also witnessed many agronomic challenges in 2019.
Growers battled weeds, as there were yet to be any herbicides legally registered for use in hemp.
Many CBD growers utilized plasticulture systems, although they’re likely not feasible for fiber or seed production systems.
As acreage increased, so did the occurrence of diseases such as white mold and leaf spots, as well as insect damage. This was somewhat expected, as with the introduction of a new host crop comes the disease and insects that associate with it. The use of varieties developed in western portion of the country that are not well adapted to humid regions likely worsened the situation.
Although there were many predictions of a market bust in 2019, few, if anyone predicted that things would turn as sharply as they did.
However, there may be potential in this market.
For those who are considering growing hemp in 2020, I advise they start with a plan based on realistic assumptions of the crop and see if it makes sense on their farm.
We’ll look at what to expect for 2020 next month.
Zach Larson is an agronomy educator for Penn State Extension. He can be reached at 414-0582.