- The fast-growing hemp market is driving intense competition, with innovative cultivation practices serving as a major factor of differentiation
- Hemptown’s cultivation methodology, paired with a genetic modification advantage, is expected to lead to increased yields and lower costs
- The company is scaling up operations to meet rising demand; it anticipates up to $200 million in revenue by 2020
Legislative changes in the U.S. and other parts of the world, as well as changing consumer attitudes, are contributing to the rapid expansion of the hemp products market. The industrial hemp market is anticipated to grow at a CAGR of 18.3 percent through 2027 (http://ibn.fm/Hstkn). Market research indicates that the CBD segment is the one that will grow the most, with some forecasts suggesting that that the CBD product market could reach $20 billion by 2024 (http://ibn.fm/4xDh6). Combined with THC products, this market is on course to reach more than $45 billion by 2024.
Such lucrative forecasts are contributing to the establishment of numerous producers and CBD companies. To be successful, however, these enterprises need some competitive advantage.
One of the biggest strengths in the future will come from an ability to maximize hemp yields and bring down production costs. Companies like Hemptown USA are changing hemp cultivation through technology to keep production costs low and optimize yields.
Hemp Production Cost: A Numbers Game
Yields from hemp are highly variable and dependent on numerous factors. Soil type, irrigation effectiveness, control of pests and seed genetics all play a role in determining the effectiveness of agricultural processes.
Since many companies currently compete to establish leading positions within the lucrative market, maintaining optimal prices is one of the key essentials. The goal cannot be accomplished whenever yields are insufficient or the agricultural process is too expensive. Apart from cultivation and agricultural factors, economic principles also have to be taken into account for the determination of hemp price trends in the future.
Reports suggest that the price of hemp went up after the passing of the federal Farm Bill (http://ibn.fm/CG8NG). Some forecasters suggest that it will remain elevated due to the high demand and growers’ current inability to meet it.
Main Factors Impacting Hemp Production Prices
Hemp doesn’t grow well on wet soils or in those featuring a heavy clay content. Right from the start, the number of plots available for effective cultivation is limited.
Additionally, hemp is a short-day plant. It starts to mature only when the day length falls under 12 hours of sunlight. This means that growers have a limited amount of time to produce the crop, if they plan to do outdoor cultivation.
Currently, there are no herbicides in the U.S. labeled for use on hemp (http://ibn.fm/K0EHN). This means that weed control has to happen mechanically – the old-fashioned way, by hand. Furthermore, hemp can be affected by diseases, pests and insects. All of these factors need to be controlled for the yield to be optimal and the cost of production to remain reasonable.
Growers also need to focus on characteristics of the hemp seed, one of the most important parts of the plant (http://ibn.fm/fNqf2). They have to work on increasing the size, the CBD content and improving the seed’s shattering resistance. Such goals can be accomplished through technology and genetic modifications.
Modern Technology to the Rescue
Innovative hemp cultivation practices allow for the optimization of plant yield and the reduction of costs. Companies like Hemptown have established themselves as low cost producers, because they control all of the variables that may reduce effectiveness.
One of the easiest ways to increase yields and eliminate waste involves controlling environmental factors (http://ibn.fm/Eetxk). State-of-the-art hemp facilities can accomplish the goal in several distinctive ways.
Hemptown employs a “soil to oil” methodology that involves experienced professionals working in a few selected agricultural microclimates across Oregon’s Emerald Triangle, Kentucky and Colorado. In 2018, Hemptown harvested 110,000 pounds of full-spectrum biomass with CBD content of approximately 17 percent from the Oregon hemp farm.
In 2019, the company is scaling up operations to meet the growing market demand for affordable hemp and CBD oil. As per initial estimates, it will cultivate over one million pounds of hemp. By 2020, the company’s projected revenue will reach $100 million to $200 million as the additional farming operations reach full capacity.
Genetic modifications and control over the seeds provide additional opportunities for reducing the cost of hemp production. In addition, such innovative practices allow for the cultivation of hemp plants that have highly desirable characteristics.
Hemptown has the rights to one million rare cannabigerol (CBG) seeds that are genetically modified to yield anywhere between 15 and 20 percent full-spectrum cannabinoids. This fact positions Hemptown as one of the future leaders in the CBG oil production market, a fast-growing segment of the cannabinoid market due to the multiple uses and benefits associated with CBG.
For more information, visit the company’s website at www.HemptownUSA.com
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