I don't need to tell you 2020 was a tough year. I would say it was a paradigm year for the hemp industry.
Hemp was promising as it has been held back for decades, and then 2018 happened.
The 2018 Farm Bill was approved in November 2018. The FDA and USDA were to work to get a framework in place so the industry could begin to take shape. From the date of signing the Farm Bill until November 2019, little was done by the FDA or USDA in relation to the Farm Bill. Many states jockeyed to get their state laws written and adapted as farmers all over the US were rushing to plant hemp as they were promised millions.
The problem, is that at the same exact time, many other farmers did the same. The amount of acres planted increased by ten fold at least, resulting in a bottom out of pricing in the industry crippling some small farms that took the risk.
The difference with farmers is some were spending big money for "proven" genetics while others just took whatever they could get. The monetary investment, time, equipment, and storage put many farmers in a terrible situation. These specific coupled with contract "buyers" who breached their purchase contract did significant damage to many small farms as well as larger operations.
I am aware of a group in Oregon that has successful business growing ornamentals for a large brand store chain. They took their past success and bet on hemp without a game plan. I mention this example as this is the "outlier" that destroys a market when in the development stages. I say this as this company had no understanding of the market but could put their operations power behind a new crop and compete with anyone on commercial farming. The 'not knowing your numbers' is a serious negative on the entire industry because you can crash the market just to sell at a very low price to offset your "known" costs or you can hold your material increasing the amount in market driving down pricing.
And let me tell you, there were several companies like the example above that wrecked the market. The market got to the point to where people were selling hemp based on different metrics than were "accepted" in the market. You take the exact same material and one seller is offering at $5 lb while the other seller is offering at $0.50 lb. That is what we ended up with at the end of 2020.
I truly believe it is a larger move by multinationals to get positioned with super cheap labor in countries that have no environmental or government controls, then produce and sell to the entire world unregulated material that is nothing like what we thought. I have been working with my clients to negate that entirely, so stay tuned to see what worked.
Hemp still has a great future. I hope that it is for all of us and not just the few.
Until next time.