The Wall Street Journal reports that American farm bankruptcies are soaring in 2017 and 2018. Prices for the two biggest cash crops, corn and soybeans, have fallen due to the trade war with China. Other trade policies from the Trump Administration are upsetting markets as buyers look elsewhere than the United States for farm products. That’s the bad news.
The good news is that the Hemp Farm Act of 2018 and Agriculture Improvement Act of 2018, legalized the growing of hemp, a cannabis plant, in all 50 states. Hemp has all kinds of industrial uses, but the current demand is for its CBD oils and other CBD derivatives. Let’s compare farm prices for corn, soybeans and hemp.
In July 2012, corn sold for $7.40 per bushel, but in December, 2018 prices had fallen to $3.57 per bushel, a 48% drop. At 200 bushels per acre, an acre of corn in December 2018 yielded $750.
Soybeans reached their high in September, 2012 at $16.22 per bushel, falling to $8.95 per bushel in December 2018. At 50 bushels per acre, and acre of soybeans yielded $460 in December 2018.
Now let’s look at prices for hemp.
Depending on how its grown, 1000 – 4000 hemp plants can grow on an acre of land. For simplicity let’s work with 1000 plants per acre and you can do the math if you want to determine prices at higher crop production levels.
Each plant can produce about one pound of CBD rich biomass. Now we need to think about the amount of CBD in that plant, let’s say 15% CBD. One pound of 15% CBD is likely to sell between $40 and $60 per pound. Since each plant produces a pound of CBD, an acre of hemp conceivably can yield $40,000 – $60,000 per acre! Compare that to $750 and 460 for corn and soybeans and guess what, farmers want to grow hemp.
So why haven’t they been doing this, growing hemp, all along? Well, because until December 2018, it was illegal to grow hemp as it was included in the prohibitions against all forms of cannabis under the Controlled Substances Act. That changed under the Hemp Farm Act.
Now, subject to state rules and licensing requirements which are still being worked out, farmers are likely to take advantage of this new crop and grow hemp wherever they can.