Hemp farmers face $7.5b in losses

Banks struggle to come to terms with fast-growing CBD market.

 

Feedstuffs

Sep 13, 2019

 

A dramatic rise in the acreage of hemp planted this year has been seen around the world, and particularly in the U.S., with 46 states having licensed farms since the farm bill was passed in December 2018. The potential for the U.S. market alone is astronomical, at $8.5 billion, but there isn't enough processing equipment installed to handle 90% of this year's harvest. The fear is that $7.5 billion of hemp will be left to rot in farm fields this fall, according to Delta Separations.

 

Cannabidiol (CBD) is one of the fastest-growing consumer product segments, and this is evident with the 128,000 acres of hemp (equivalent to 100,000 football fields) planted in 2019. That's a 300% increase from the previous year, and each acre of hemp can produce 165 lb. of CBD oil at a market value of roughly $66,000. That same acre of hemp used for fiber products garners only $850 -- a staggering value difference, Delta Separations noted.

 

Unfortunately, less than 10% of the equipment installed in the U.S. meets requirements to process hemp into CBD oil before it spoils. This is a major pinch point for hemp farmers to turn their crop into cash.

 

Banks are worried that the Federal Deposit Insurance Corp. will penalize them for supporting any clients with the word "cannabis" in their supply chain, and since hemp is a form of cannabis, banks won't make loans for processing equipment, the company said.

 

Roger Cockroft, chief executive officer of Delta Separations, said...

 

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