Can Grain & Fiber Acreage Eclipse CBDs’ This Year?

By Trevor Yahn-Grode, Data Analyst, New Frontier Data

The magnitude of oversupply in the CBD market this year could reduce the amount of hemp acreage dedicated to cannabinoid production by more than 70% from 2020. Though total U.S. licensed hemp acreage in 2020 declined by 30% from its peak in 2019, it still produced more material than the industry could process and sell: Much more.

Such is the extent of the glut of biomass in the market that many extractors are still using material from 2019 crops to make their products. Consumer demand for CBD products is still growing, and quickly, but the requisite amount of acreage necessary to feed that demand is drastically smaller than what was grown in 2020.

After CBD production, hemp grain is the most common use for hemp in the U.S., accounting for approximately 10% of total U.S. acreage in 2020 (about 14,000 acres), according to data provided by Hemp Benchmarks. In terms of new acreage planted, grain is the fastest-growing segment of the hemp industry, and it is possible that grain acreage could surpass CBD acreage this year.

The growth in acreage for hemp grain is being fueled primarily by growth in global demand for plant-based proteins. According to SPINS data, plant-based food retail sales topped $7 billion in 2020, growing 27% over the previous year as products such as the Impossible Burger rapidly gained a foothold in the market.

That growth is being driven by several macrotrends. First and foremost are concerns over the environmental and ethical costs of industrial meat production, which annually accounts for 3.1 gigatons of CO2e emissions. Nearly 4 in 5 (77%) of Americans say that sustainability factors into their food purchasing decisions. According to Global Market Insights, the plant-based meat industry is projected to grow to $4.15 billion by 2026 through a 25% compound annual growth rate (CAGR).

Within the growing market for plant-based proteins, hemp is one of the fastest growing segments. Though the plant-based protein market has historically been dominated by pea and soy protein (which together make up more than 90% of the market), hemp protein’s amino acid and mineral profiles have been popular with customers.

What would really move the needle in the hemp grain market, however, is entrance into animal feed. Allowing hemp into animal feed would significantly reduce risks to farmers and open an entirely new product category of hemp-fed products in one stroke. Although federal regulations currently bar hemp animal feed from being used for animals destined for human consumption, headway is being made in that area.

In February, the Hemp Feed Coalition submitted its first application for hemp to be used in chicken feed. In April, Montana became the first state to officially allow hemp in animal feed for pets and horses. From the perspective of hemp farmers, those represent progress. Still, until the FDA approves hemp feed products for use on animals destined for human consumption, growth in grain acreage will come exclusively from growth in demand for retail hemp seed products.