Hemp, aka industrial hemp, has been at the center of market analysis especially since 2018. There’s good reason for that, of course. An array of factors have contributed to this focus on hemp, with 2018 being a catalyst year particularly because of the US Farm Bill 2018.
Growing concerns about environmental degradation has given rise to a consumer body increasingly more conscious about what they buy. People are searching for products with reduced carbon footprints. There is heightened consumer criticality about industries and businesses that show no ecological commitment.
The world of big corporations have felt the pressure to respond to this changed consumption pattern. There’s been a steady growth in the consumer body displaying a definite trend to move towards small, niche companies that showcase their commitment to environmental sustainability.
There has been a scramble in the world of big business in recent times, therefore, to reinvent themselves as environment-friendly, among other things. Hemp has emerged as a clear winner in that scramble.
One of the earliest plants to be cultivated and used by humans, hemp is amazingly multifaceted. It seems to be Mother Nature’s solution to the sustainability problem. With the characteristic arrogance of an industrialized and technology-driven way of life, we humans chose to look away from this miracle plant.
Going a step further, we even banned hemp cultivation and the use of its products in a number of countries across the globe. During the 1930s, the crucial difference between the non-psychoactive hemp and its psychotropic cousin marijuana got obliterated to label hemp as contraband.
With the turn of the millennium, rapid environmental degradation has forced us to emerge from the cocoon of techno-industrial smugness and revisit ancient wisdom to learn from it. Hemp has made a comeback in that process.
That is not surprising at all, as the sustainability value of hemp is almost incalculable. Hemp has health benefits that can replace medicines derived from synthetic chemicals. It grows fast and in ample quantities needing neither pesticides nor herbicides.
Except in conditions of desert aridity or drought, hemp hardly needs extra irrigation. It is a super crop for soil preservation as it rejuvenates the soil. Hemp needs about half the quantity of water that cotton does. The yield is 200-250% more per hectare.
Hemp fibers can be used to produce a wide range of eco-friendly items. From linen-like textile that is more beneficial than cotton for the environment and the human skin, the bast fibers of this plant can replace synthetic clothing altogether.
Hemp is a potential source of biodegradable plastic, and of biofuels that can replace fast depleting fossil fuels. Its fibers make excellent insulation material that can reduce our dependence on electricity-based heating and cooling. Hempcrete is a building material with the potential to revolutionize the construction industry.
The global market has finally caught up with this nature’s wonder.
Reputed market research organizations differ in their predictions about how the hemp market will grow. However, they all agree that it will be a growing market. The projected compound annual growth rate (CAGR) ranges from as low as 5.6% during 2019-2025 to as high as 34% during the same period.
Most market research reports, however, predict a CAGR between 13.7% and 16.7% during 2019-2025. The estimated value of the hemp market in 2019 was US$4.6 billion. The projected market value by 2026 ranges from US$13.03 billion to US$14.67 billion.
Factors Driving the Growth
Lead research agencies agree that the growth of the hemp market is majorly consumer-driven. Vendors are building new production capacities and extending the existing ones to respond to the growing demand from end-users.
A political climate of decriminalizing hemp cultivation and legalizing the production and use of items derived from the plant is also a driving factor behind the projected market growth.
The Asia-Pacific region (APAC) led by China dominated the global supply of hemp in 2018. Most leading market research agencies forecast that this lead will continue during 2019-2025. North America dominated by Canada was the second-largest supplier of hemp and hemp-based products in 2018, followed by Europe.
South America was in fourth place with the Middle East and Africa (MEA) coming last.
All the reports agree that hemp seeds and food items using hemp seeds or hemp seed derivatives dominated the market in 2018-2019. The seed market had a 50.9% share of the total hemp market in 2018. The fiber market came second with about 40% market share.
The highest demand for hemp fibers is from the textile industry, The estimated market value of the hemp textile industry was US$1.03 billion in 2018. However, the demand for hemp hurds, the woody inner core of hemp stalks, is projected to grow in the coming years.
Demand for lightweight automotive parts and energy-efficient insulation options will drive the growth of the hemp hurds market during the projected period. Big car companies like Audi, BMW, Daimler/Chrysler, and Volkswagen are already using hemp bioplastic in their cars.
Personal care items using hemp seed oil and/or CBD oil constitute the third-largest segment of the hemp market and is likely to remain there.
USA imported hemp seeds and fibers worth US$67.3 million in 2017. Canada was the largest supplier to the US, providing about 90% of the hemp imports. China supplied about 3-5% and Romania about 2-4%. Other European countries, the Dominican Republic, and India supplied the rest.
With the Farm Bill 2018 making hemp cultivation legal in the country, hemp farming increased four times in 2019. Farmers in the US got licenses to grow hemp in 511,442 acres, which was a 455% increase from 2018.
USA is already the third-largest producer of hemp in the world as a result of this boost. China is the leading grower of hemp with Canada in second place.
The US hemp production is likely to feed the domestic demand for seeds and fibers in the country. That will be a major export slash for Canadian hemp farmers. China and other countries that have been exporting hemp items to the US will also feel the brunt.
It remains to be seen how that affects the pricing of hemp items in the global market.