A global agricultural research firm called hemp farming a risky business based on inconsistent pricing and production data and an unstable market.
RaboResearch Food & Agribusiness said that while the U.S. hemp industry is poised for growth, there are serious financial, regulatory and agronomic risks that farmers and investors must understand.
“If hemp really is a good long-term opportunity, there’s no harm in being methodical.”
RaboResearch Food & Agribusiness is the research and analysis division of Rabobank, a Dutch bank that serves the food, agribusiness and beverage industries.
The hemp report warns U.S. farmers that:
- Hemp farming requires more paperwork, and regulatory infractions could result in crop seizure and destruction.
- States can still ban hemp production.
- CBD, the most lucrative sector of the hemp industry, is still off-limits under U.S. rules for food and dietary supplements.
- The U.S. Food and Drug Administration will take several years to develop rules, if the agency allows CBD to enter the food supply.
- The United States may face an oversupply of hemp grown for CBD extraction, causing losses for farmers once prices adjust.
- The international hemp grain and fiber market is already in equilibrium and growers will have to compete on price to make a profit.
“It’s no surprise that confusion reigns,” Nesin said.
“Headlines have a lot of people excited in the hemp world, but farmers, investors and even regulators are unsure about what to do.”