Competition Rising Over Shelf Space for Hemp Foods
By Eric Singular, Director, Hemp Business Journal, New Frontier Data
Canada has long fed the world’s demand for hemp foods. Since 1998, the now Tilray-owned Manitoba Harvest has built a global supply chain for hemp grain produced by the country’s farmers. Over the past three years, Health Canada has reported an average of 75,133 acres of industrial hemp production, with 48,045 (nearly 64%) of those dedicated to grain production.
In 2020, Manitoba Harvest controlled 58% of the market for hemp grain products sold in the United States. The president of the Canadian Hemp Trade Association, Ted Haney, is confident of seeing a 15%-20% increase in Canadian hemp by the end of this year, a development made more notable given a 37,540-acre decrease in Canadian cultivation from 2019 to 2020. Nevertheless, Haney’s confidence stems from rising prices for both conventional and organic hemp grain.
Manitoba Harvest’s marquee product has been its shelled hemp hearts. For years, the small amount of shelf space at major grocers (e.g., Kroger or Whole Foods Market) has been just enough to fit the one product. For two decades, that microcosm effectively represented the hemp foods market.
While hemp hearts represent the hemp foods market’s past, the sector has been thrust toward a fast-approaching future where food manufacturers are experimenting with hemp grain and its byproducts as ingredients for plant-based foods. Be it burgers, tortilla chips, hot dogs, or breakfast sausages, the surface has barely been scratched for all the plant-based products which may be supplemented by hemp protein.
As consumers increasingly notice hemp-based foods appearing on store shelves, competition for the dollars of hemp hearts consumers has been spurred. Over the past 12 months, each Costco and Whole Foods (the latter now owned by Amazon) has launched a hemp hearts product under its in-house brand (i.e., Kirkland Signature and 365, respectively). A review of the fine print reveals that each is currently a “Product of Canada.”
Interest on the part of a Costco or Whole Foods in launching an in-house hemp food product is likely bolstered by projections of retail sales for hemp food products to grow at a 16.5% CAGR, with annual sales reaching $144.1 million by 2025. Presently, seed-based products, including hemp hearts, account for 83% of total hemp food sales.
If the Canadian Hemp Trade Association is hopeful that hemp acreage increased this season, it is correlated with confidence and contracts on the part of Manitoba Harvest. The X factor is the United States: With regional processors like Montana-based IND Hemp establishing a supply chain for domestic production, how long will Costco, Whole Foods, and other food manufactures need to rely on Canada’s hemp grain supply?
Conversely, U.S. grain farmers are seeing the highest corn and soybeans prices since 2012. Why would farmers take on the headaches for hemp production in a year when USDA estimates the average farm price for the 2021 corn crop at $5.70 per bushel, and $13.85 per bushel for soybeans?
Nevertheless, as the U.S. hemp grain market matures, price will be the deciding factor, though consumer preferences for products with a smaller carbon footprint or produced domestically — “Product of USA” — may also play a role.
How fast the global hemp foods market grows will ultimately drive year-over-year fluctuation in North American hemp grain acreage. While hemp grain’s potential for the U.S. animal feed market — a sector growing at a 2.40% CAGR that is expected to reach nearly $83.7 billion by 2024 — is keeping hopes high, red tape remains.
In the short term, according to Hemp Benchmarks, the hemp foods for human consumption market can fetch U.S. farmers anywhere from $0.40–$0.55 per pound (conventional) or $0.95–$1.15 per pound (organic) for the hemp grain they produce.
