Ask Our Experts: Pakistan Adopts Hemp, CBD Production
Q: This month, Pakistan became the first Islamic country to issue a license to produce industrial and medical-use hemp. What does that landmark decision mean for the international hemp market?
By Trevor Yahn-Grode, Data Analyst, New Frontier Data
A: Pakistan is the world’s fifth-most populous country, and fourth-largest cotton producer after India, China, and the United States, respectively. The crop accounts for 8% of the country’s GDP and constitutes 64% of Pakistan’s exports. Despite its prominence, cotton production declined 20% in 2019, in large part due to low profitability for the 1.5 million small farmers who supply the bulk of the crop.
In a similar vein to what has been seen in the U.S., the cultivation of hemp for industrial and medical applications is being touted by government officials as a new cash crop capable of revitalizing rural economies and replacing declining demand for traditional agricultural products.
Supporting that narrative, Minister for Science and Technology Fawad Chaudhry explained that the hemp market “could provide Pakistan with some $1 billion in the next three years, and we are in a process of making a full-fledged plan for this purpose.”
What it could mean to the emerging market for hemp textiles Is that though there is significant fiber-processing infrastructure in the country, the retooling costs of retrofitting the supply chain to handle hemp (a much tougher fiber) would require immense amounts of capital, and the lack of experience with it as a crop would require significant amounts of trial-and-error.
Still, the existing network of textile manufacturers and purchasers in Pakistan — combined with a comparative advantage in labor costs — makes the country well-positioned to emerge as a leader in hemp textile production, with proper government support.
From the perspective of CBD production, Pakistan’s potential is much less clear. Though medical cannabis use is commonplace and tolerated by Pakistan’s government, it remains illegal throughout the rest of the region. It is possible that Pakistan can create a large and thriving domestic market for CBD products, but its prospects for legal exports are slim, given both the country’s distance from established CBD markets in Europe and the U.S.), and its neighbors’ prohibition of the plant.
Even so, the establishment of a large market of CBD consumers in Asia would be a seismic event for the global hemp industry. Medical cannabis has a long cultural history in Pakistan, and the capital city of Karachi consistently ranks as the world’s second-highest cannabis-consuming city, at an estimated 92,000 pounds annually. Considering the cultural acceptance of medical cannabis among Pakistan’s 212 million citizens, hemp-derived CBD could become a significant source of economic activity and tax revenue.
Despite its challenges, Pakistan’s embrace of hemp’s economic potential is a positive sign for the industry. As the first country in the region to invest in hemp cultivation, Pakistan has the potential to become a global leader in the emerging industry.