What to do with last year’s hemp inventory is the ‘billion-dollar question’ for growers, processors

If you’re a hemp farmer who is sitting on flower and biomass produced in 2019, you aren’t alone, says Casey Flippo, CEO of Little Rock, Arkansas-based hemp extraction firm Natvana LLC.

Because the hemp market, which already had been seeing a shortage of processors and extraction facilities, is seeing more of these firms going offline because of cash-flow issues, there are still many farmers who still have  surplus of product on their hands going into the 2020 planting season.

What to do about it is “the billion-dollar question,” Flippo told Hemp Industry Daily.

The options are limited because the demand for flower and biomass is still low, there is still an oversupply of hemp on the market and the bottleneck at the processor level exists, Flippo said.

However, a few things farmers should consider when deciding what to do with their current inventory include:

  • Contract tolling – an option for farmers who don’t have the minimum potency level that processors are looking for due to crop degradation.
  • Processing product to a preserved point.
  • THC-free processing to add value.

There’s a wide range of pricing currently for hemp crops held over from 2019. Biomass prices are as far down as $4 to $5 per pound, and it’s not likely prices from the 2014-2018 seasons are likely to come back, Flippo said.

However, it’s hard for anyone to predict what prices will look like down the road, so for hemp farmers going into the 2020 planting season looking to make a deal with processors before they put crops in the ground, it may not be reasonable to expect a hard-line purchase agreement including prices because some processors just can’t facilitate those contracts.

Hemp Industry Daily sat down virtually this week with Flippo, who provides insights on how farmers can approach working with processors and extractors before the 2020 season goes into full swing.

Laura Drotleff can be reached at [email protected]

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