Canada’s 2019 industrial hemp crop could reach record output as an increasing number of farmers try their hand at the multi-use plant that can be sold into the booming CBD market, though the lack of a benchmark contract means producers must resort to age-old bartering when they secure prices.
“It looks like it’s at least double the seeded acres last year,” said Ted Haney, executive director of the Canadian Hemp Trade Alliance (CHTA).
The CHTA forecasts that Canadian farmers planted 125,000 to 175,000 acres with hemp this spring, up from an estimated 50,000 acres in 2018. This could place Canada’s planted area on track to reach a record 400,000 acres by 2023, as the crop is expected to become increasingly attractive to farmers who can sell different parts of the plant for seed, fibre, and the increasingly popular cannabinoid known commonly as CBD, a new revenue stream since the Cannabis Act came into effect in 2018.
Farmers in Canada have been harvesting industrial hemp seed for food since 1998, but it is expected that the Canadian Food Inspection Agency will approve the sale of hemp seed for animal feed in 2020, which would help alleviate the bottleneck that is expected from the large harvest.
“It looks like it’s at least double the seeded acres last year,” Mr. Haney said, noting that around 50,000 acres were planted in 2018 though 78,000 acres were licensed.
“Anecdotally, we believe that a lot of the new licensees are planting small acres, just to give it a try. Getting that experience under their belt is important for them to see if they want hemp to become a part of their [crop] rotation.”
Health Canada data show that as of June 24, the government had issued 614 industrial hemp licences. Data from 2018 show licences and registries for cultivation were higher at 711, which accounted for 78,000 registered acres. Mr. Haney estimated that just 65 per cent of this was actually planted with hemp last year.
“It is that inclusion of hemp in regular crop rotations that will see our intermediate goal of 400,000 acres in 2023, and will allow us to move toward a full expression of the crop of a million acres. Not just experimentation, but the inclusion of hemp in regular crop rotations,” Mr. Haney said.
But there is no price transparency for hemp products in Canada as it is not yet acting like a typical commodity.
“You have to have your sales agreements in place before you seed,” Mr. Haney said.
“Today it’s all private barter.”
In the United States, an over-the-counter physical commodities exchange is aiming to establish index prices for hemp biomass in Kentucky, Colorado and Oregon, as well as Colorado CBD isolate, with plans to add distillate. In January, Colorado-based PanXchange launched what it calls the first-ever U.S. hemp index with plans to open a full hemp trading platform later this year.
In its most recent report in May, PanXchange recorded the spot hemp biomass market at a range of US$3.45 to US$4.50 per percentage point of CBD content. This was down slightly from a range of US$3.60 to US$4.50 in April.
“We are quietly onboarding top tier clients. The reason why we’re getting traction so quickly in this market is the need for accurate prices and the confidence that we can provide it,” said Julie Lerner, a former trader at Cargill who is now CEO of PanXchange in Denver.
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