By Robert Ziner, CIHC, Canada
Over the long run hemp fiber will become the most relevant part of the hemp plant, and the most valuable of its outputs.
Just as iron ore is a primary product, and steel is a secondary product, seed and CBD outputs are strictly primary – while in hemp only the fiber is secondary.
As primary commodities, hemp seed and CBD outputs react swiftly to the reality of the world’s quick changing market dynamics, driven by inevitable and often unpredictable pricing fluctuations.
Gap in supply/demand
However fiber will respond to changing market needs as a secondary “feedstock” product for many years because of the huge gap between the existing supply and demand in the marketplace.
As the supply of quality-controlled, large volumes of hemp fiber increases, more commercial end-users will learn of hemp’s benefits and choose to pursue hemp for their needs. These large potential users will learn that the potential benefits of choosing hemp fibers will include:
- Greater profitability across the value chain.
- Sustainability; environmental friendliness.
- Lower overall cost of finished products compared to other natural fibers.
- Lighter weight and greater strength.
- Increased durability.
Quality and cost
It’s clear that the greater the supply of quality-controlled fiber for the marketplace, the more demand will increase, and in turn, cause supply to increase.
This is because current large-scale users do not specify hemp because the volumes needed for training, marketing and large-scale logistics required for a new product can’t be cost justified today
Using hemp fiber in many existing product applications can eventually mean considerable cost savings.
Once commercial end-users understand that there is an increasing supply, they will be encouraged to pursue the possibility of lower costs and better products — which can be based on hemp. One need only look to the $21 trillion construction industry globally to see the potential in fiber for hempcrete. And that’s just one example.
Growing demand will cause growing supply – not lower prices.
Of course, this does not mean that fiber prices will never go down. It is just that a supply/demand equilibrium won’t happen for at least the next 20 years.
The fiber market will grow substantially over that time – bringing scale opportunities and financial success to the innovators. Whether from the perspective of a farmer, a large-scale decorticator, or a major end user of fiber, the hemp plant’s fiber will end up being the long-term, dependable and most profitable output of the hemp industry.
When the price of seed or CBD retreats, the fiber will always be there to stabilize the opportunity for the farmer. Even before the price of CBD falls in the future, farmers should look into the the unique opportunity of growing hemp for fiber.
[Get the full analysis: Why Fiber is the Critical Link in the Hemp Family]
Robert Ziner is Founder & CEO at Canadian Industrial Hemp Corp., Toronto, Canada