Hemp in Latin America: Milestones Among Growing Pains
By Esteban Rossi I., Special Contributor to New Frontier Data
Hemp cultivation offers promising opportunities for firms interested in producing flower, seed, and fiber. In 2020, Colombia and Uruguay began building the foundations of the hemp value chain while neighbors paid close attention. Though agronomical difficulties coupled with regulatory hurdles caused growing pains, the hemp industry is beginning to take off.
Latin America is well positioned to grow industrial hemp. The region offers extensive tropical lands at affordable prices, and leverages substantive agricultural experience producing crops and commodities for global markets. Notable examples include sugar, soybeans, palm oil, and beef. Still, a combination of circumstances delayed the growth of the industry.
Figure 1. Uses and applications of hemp if various industries.
The primary growing pains were caused by the incremental evolution of the market’s regulatory framework. While investors’ attention focused on cannabis, and governments struggled to regulate cultivation and extraction, development of hemp production was being overlooked, most notably in Uruguay (i.e., Law 19.72) and Colombia (i.e., Decree 613), respectively.
Subsequently, the availability of hemp cultivars adapted to the tropics created a supply bottleneck. Since most industrial hemp cultivars were developed in temperate countries, it was necessary to develop new cultivars better suited to the climate, light, and soils throughout the region. Consequently, numerous firms remain focused on strain selection and seed production. After those production challenges are solved, hemp cultivation will expand rapidly.
In August, the Colombian Agriculture Institute (ICA) authorized the firm Cañamo Industrial de Colombia the importation of roughly 20 kilograms (kg) of hemp seeds from Eastern Europe for testing purposes, and updated the methodology for agronomic trials with hemp cultivars. The leadership from Dr. Luis Alberto Rosero from ICA was crucial to complete the milestone. Thanks to those advances, numerous firms are poised to complete trials and register their cultivars before the end of the year. Consequently, commercial seeds will reach the domestic market by 2021.
Uruguayan firms also reached important milestones. First, the government updated and eased the requirements for the export of CBD flower (i.e., less than 1% THC), allowing producers to sell crops harvested in 2018, 2019, and 2020 (e.g., Decree 305, August 2020). Moreover, the executive branch as well as the Ministry of Livestock, Agriculture, and Fisheries are actively promoting the industry overseas to position the country as a leading exporter both of hemp flower and CBD extracts.
Similarly, Paraguay is taking pains to prosper in the hemp industry. The government declared hemp as a strategic priority, thereby facilitating seed importation for testing purposes, and is currently developing production guidelines (e.g., Decree 2527-2019). Moreover, the executive branch is encouraging farmers to grow hemp in small plots of up to 2 hectares (ha) for seed, grain, and fiber. Government estimates indicate that up to 25,000 families could benefit from hemp cultivation. Those advances resonated with public opinion, with hopes that hemp can offer a much-needed economic boost.
In sum, recent legislative advances in the region illustrate the growing public interest in industrial hemp. Ecuador recently approved and published guidelines for hemp production, and Mexico and Brazil could follow in 2021. Mexico allows hemp imports but remains focused on adult-use regulation. Meantime, in Brazil the assembly just began discussing a hemp bill. It is too early to anticipate how the two markets will develop.
In 2021, hemp firms and investors should prepare to accelerate their operations to try and recover the time lost in 2020. Nevertheless, those delays will prove valuable in serving to update business projections, strengthen agronomic processes, and expand commercial networks.