Canadian hemp markets could be side-swiped by U.S.

Overly enthusiastic U.S. producers could potentially swamp 
the market if the crop is fully legalized

Canadian hemp markets could be side-swiped by U.S.

Future hemp markets are uncertain as Canadian buyers wait to see if hemp production is legalized in the United States, according to one industry professional.

“There still is a lot of excitement (in the U.S.) about hemp as being something new… that grassroots excitement is one that we’re watching closely to make sure it doesn’t cause overproduction,” said Clarence Shwaluk, director of farm operations for Fresh Hemp Foods.

In the U.S., hemp production is currently in its infancy stages. It is limited to pilot projects, with producers having to grow hemp in partnership with universities or state extension groups. As well, individual states need legislation to approve production, however, that could change.

Bill HR-3530, the Industrial Hemp Farming Act 2017, was introduced in the United States House of Representatives on July 28. The aim of the bill is to amend the Controlled Substances Act to remove industrial hemp from the definition of marijuana, which would then allow for commercial hemp production.

Currently most hemp used in the U.S. food sector is bought from Canada, if the law changes it could lead to an oversupply in the market.

According to Shwaluk, the number of consumers who include hemp regularly as part of their diet is very small. There is room in the market for growth he said, but it has to be done responsibly.

In the U.S., there is excitement over potential of the crop, with the U.S. saying it would like to double production by next year. In 2016, 9,649 acres of hemp were planted in the U.S.

“If that grassroots excitement overwhelms the ability to process what they’re producing, then you will see a glut of product on the market,” Shwaluk said.

In Western Canada this year the Canadian Hemp Trade Alliance has said there was about 100,000 acres of hemp seeded.

The hemp harvest in Western Canada is weeks ahead of schedule this year due to the hot, dry weather. Approximately 75 to 80 per cent is combined already.

Fresh Hemp Foods already has its contracts with farmers locked in for this year’s crop. According to Shwaluk, Fresh Hemp Foods bought conventional hemp at a base price of 70 cents per pound. Organic hemp is more in demand and contracts for it started at $1.80 per pound.

“Prices are a little bit lower than where they were in previous years and that’s a bit of reflection on the supply and demand. As an industry, we’ve been long on conventional grain and that price has softened somewhat,” Shwaluk said.

Fresh Hemp Foods usually contracts hemp a year in advance but currently, Shwaluk said, the company isn’t sure about future pricing as they are waiting to see what happens in the U.S. as well as around the rest of the world.

If the bill passes and hemp becomes a commercial crop, Shwaluk said the U.S. will still have to play catch-up to Canadian production, where it has been legal since 1998.

“I don’t think there’s an immediate need for worry. But it won’t take long for the United States producers to learn and understand the agronomy and get a better feel for crop production,” he said.

About the author


Ashley Robinson - MarketsFarm

Ashley Robinson writes for MarketsFarm specializing in grain and commodity market reporting.



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