New Markets and Applications Trying Hemp Fiber for Size

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

This year, and for the first time since its federal prohibition in 1937, a significant amount of hemp fiber will be grown in the U.S. However, even as its supply is ramping up, producers are still struggling to find its foothold in the market. Which end-use hemp products will find their niche?

One metric to watch is price parity – those areas where hemp fiber is most price competitive with the materials it would replace. That too can be difficult to track, however, as the price and quality of the existing supply of hemp fiber in North America can be quite volatile.

There are three immediate areas where hemp is approaching price-parity with competitors:

Wood Alternatives

Processed hemp fiber and hurd can serve as an alternative to wood in several product categories, such as building materials – e.g., particleboard, cellulose insulation, and flooring – as well as in paper, pulp, and bioplastics. For now, almost all of those hemp product applications trade at a premium, but future prospects are more promising as the price of lumber continues to rise. In response to an especially damaging wildfire season, lumber prices rose 188% year-over-year from March 2020 to last month. As climate change intensifies, wildfires of the magnitude seen in 2020 are expected to become increasingly common. That risk – combined with proposed environmental measures to cordon off large areas of forested land to logging – indicates that spikes in lumber prices are not temporary, and that wood alternatives including hemp will continue to approach price parity.

Plastics

Chemical plant shutdowns in Texas caused by a severe cold spell in February have created large shortages in plastic and petrochemical products. Prices for polypropylene as much as tripled between January-March 2020, and according to the Wall Street Journal, “[prices] likely won’t ease until closer to the end of the year, which in turn means higher spending costs for consumers”.

Though the shortage is likely to subside over the long term, what is not likely to lessen is support for legislative measures to increase the costs of carbon emissions for companies. Regardless of whether such support ultimately takes the form of carbon taxes, subsidies for net-zero alternatives, or both, carbon-neutral inputs like hemp fiber are becoming ever more attractive for use in industrial products.

Textiles

Depending on plant genetics, an acre of hemp can yield up to 38% more fiber than an acre of cotton while using less than half of the amount of water. Why, then, would hemp textiles consistently trade at a premium compared to cotton textiles? Part of the answer is the relatively small scale of hemp fiber cultivation worldwide, as scarcity fetches higher prices in the marketplace.

A harder problem to overcome is infrastructure: Because of its strength and lignin content, hemp fiber cannot be spun on the same machinery as cotton without first undergoing a cottonization process. Depending on the process used to achieve cottonization, hemp fiber actually can end up being less environmentally friendly than cotton, undermining one of the key factors differentiating hemp fiber products in the marketplace. Furthermore, in regions (e.g., China and Eastern Europe) where most hemp fiber is now being processed for textile use, hemp cultivation remains quite labor-intensive, leading to high costs and relatively low throughputs.

Despite the current challenges, record-low cotton prices have attracted the curiosity of many cotton farmers – particularly in West Texas, where hemp’s relatively low water requirements are becoming increasingly relevant. While true price parity with cotton likely remains a long way off, the market for hemp textiles is nevertheless growing as hemp carves out a premium niche as an environmentally friendly alternative to cotton and synthetic clothing.