Contraction in U.S. fields won’t necessarily mean higher prices

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Hemp growing in the USA dropped off by more than 30% compared to 2019, to roughly 200,000 acres (81,000 ha) planted, but that doesn’t necessarily mean hemp commodity prices will rise, according to recent commentary by sector analyst Hemp Benchmarks,

“Whether a contraction in supply will result in more favorable commodity prices for farmers remains to be seen,” Hemp Benchmarks said in the analysis, blaming “tough market conditions” and difficulties related to the COVID-19 pandemic as factors in the sector’s shrinkage.

Only half planted

While Hemp Benchmarks documented 400,000 acres (162,000 ha) licensed for hemp in the U.S. as of late July, it estimated that half were never planted, similar to 2019. Licensing of outdoor fields was down from 580,000 acres (235,000 ha) last year, while indoor growing space was down roughly 64% from about 2,300 acres (930 ha) in 2019 to 1,450 acres (587 ha) this year, based on figures Hemp Benchmark collected “from nearly every state with a functional hemp program.”

“We have noted previously that we estimate that at least half of the acreage registered for hemp production in 2019 was not planted, a trend that appears as if it will continue this year,” the analyst said.

Hemp Benchmarks reported earlier this year that many farmers are taking a more conservative approach to hemp growing, with some having left the business entirely while others are scaling back. “Many of those who farmed hemp in 2019 are not doing so in 2020, but most of those who exited appear to have been replaced by first-time growers,” according to research the analyst carried out among state agriculture departments. 

Licenses decline 8%

Cultivation licenses recorded this year in the USA number 18,000, Hemp Benchmarks said, an 8% decline from 19,500 recorded in 2019. “This indicates that most growers registered smaller outdoor plots or indoor and greenhouse sites,” the analyst noted.

Most hemp production this year will be for CBD, with CBG expected to lead in the production of other minor cannabinoids. “However, we estimate that the proportion of total U.S. production capacity devoted to CBD or other cannabinoid-rich hemp varieties will decline to roughly 75% this year, from around 90% in 2019,” Hemp Benchmarks said.

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