Hemp fibre and hemp seed are used by processors to produce hemp products for numerous niche markets. The viability of hemp as an agricultural crop will be determined by the development of these markets, as well as the development of a processing infrastructure to support these markets.
The markets for hemp products are new and developing. The business potential of commercial hemp production remains uncertain while markets for hemp products evolve. Potential growers of industrial hemp in Alberta need to research the markets for hemp products and the markets for raw hemp.
Hemp growers must be prepared to undertake on-going market research in order to:
- identify the markets for hemp products
- assess consumer demand for hemp products
- assess the growth potential for hemp based products
- understand the technical requirements for different hemp products
- forecast the expected size and structure of the markets
- Industrial hemp can provide a high quality fibre and high quality oil for use in a wide range of applications.
Generally, the demand for hemp products is expected to benefit from a growing demand for products that are environmentally and economically sustainable.
The following new and emerging hemp product markets have been identified in a recent marketing study of industrial hemp.
Oil and health food markets Hemp oil provides a balanced source of essential fatty acids. This composition provides benefits and penetrating qualities that are in demand in health food and body-care markets.
Hemp oil products are competitive with other high end products made from natural oils, and may have an advantage in the form of longer shelf life.
North American consumption of hemp oil products such as health foods, shampoos, cosmetics and skin care products is unknown. Increased demand for these products depends on growing consumer desire for new health products, increased environmental awareness and rising disposable income levels.
Hemp oil is also used to produce industrial oils for the production of paints, wood sealants, inks and lubricating oils. Hemp oil improves the ability of paints, sealant and inks to penetrate surfaces. As well, hemp oil contains 20 per cent linolenic acid. This has strong drying properties and contributes to high quality products.
Linseed oil is the main ingredient in industrial oils that require strong drying properties. Hemp oil would have to be price competitive with linseed oil in order to gain market share.
Most hemp oil originates from the United States where it’s pressed from sterilized Asian, Indian or European hemp seed. Canadian crushing and processing plants are being considered and some already exist.
Alberta growers would need to develop business relationships with these processors and provide a reliable supply of high quality hemp seed.
Contracts with a processing plant ensure market access to growers who have proven they can produce a quality product and deliver on time.
Organic hemp seed may give certified growers access to processor markets or consumer markets where there’s a demand for organic products. Organic hemp will have less competition from hemp seed produced in China and India.
Textiles-woven and knitted such as draperies, carpets, apparel, etc. Woven and knitted hemp textiles are used in the production of clothing, canvas, rugs and upholstery. Manufacturers claim hemp fibres are strong and wear better than other natural or synthetic fibres.
The production of hemp into textiles and clothing is limited in North America due to a lack of equipment and processing technology. Currently, most production of hemp textiles takes place in China, Romania, Russia and Ukraine,15 where wages are low.
There are few domestic processors of hemp textiles due to the price competition from imported hemp textiles, synthetic fibres and other natural fibres.
The demand for hemp textiles and clothing is limited by its high price. Currently, the production of hemp apparel in Canada is a cottage scale industry.
Increased consumer demand for hemp textiles and clothing would require a greater number of consumers willing to pay the higher price for hemp apparel. Significantly increased demand for hemp textiles and clothing could provide manufacturers with an incentive to use new, specialized equipment.
Hemp fibre may have greater potential in the production of canvas, rugs and upholstery as the fibre is compatible with the high-speed equipment used in these industries. Growers seeking access to this market need to ensure long fibres by preventing the breaking of stalks and retting off the outside tissue (bark) that binds the fibre portion of the plant and the non-fibre portion.
Textiles-molded or pressed Molded or pressed hemp textiles are used to make a wide range of automotive parts and accessories. This includes headliners, rear window shelving, door panels, trunk liners and air bag parts. These hemp products are lighter, more fire resistant and recyclable.
The market for molded or pressed hemp automotive products may present a significant opportunity to the industrial hemp industry. The processing technology is available, but needs to be located close to automobile plants. This location factor will limit Alberta growers from taking advantage of this opportunity.
Pulp and paper A wide range of paper products can be made from industrial hemp. Hemp fibres have superior strength and length to wood fibres, but higher processing costs for hemp result in hemp pulp that is considerably higher priced than wood pulp. This cost differential, together with technical obstacles, limits the use of industrial hemp in Canadian pulp and paper mills.
The fibre characteristics of hemp are suited for use in specialty papers such as food wrapping, cigarette papers, tea bags, coffee filters and currencies. These fibre characteristics are similar to flax straw, which has the largest share of the specialty paper market. In order to gain a greater share of this market, industrial hemp has to compete with flax straw and jute.
Industrial hemp is also used in the production of specialty paper sold in high value niche markets. This specialty paper may benefit from consumer demand for “tree-free” paper and new technology in pulp making.
Building materials Industrial hemp can be used in the production of a number of composite building materials. This market is at the developmental stage, but Alberta is well positioned as it has invested in research to study the manufacturing and use of panel boards made from industrial hemp.
A number of fiberboard plants have recently been established in Alberta and other parts of Western Canada. If price allows, these plants may consider using hemp stalk as an ingredient in their production.
Alcoholic beverages Hemp seed has been used in the production of beer by small specialty breweries. The market for hemp beer is expected to remain a small specialty market, with limited growth potential.
Livestock feed Hemp seed can be processed as a livestock feed, but before a feed market can develop extensive research and feeding trials are required. Hemp seed would also have to be price competitive with other livestock feed.
Livestock bedding Hemp hurds can be processed into livestock bedding that’s both absorbent and biodegradable. It’s also reported to be price competitive with other bedding materials such as wood chips and wheat straw. The hurds can be produced as a by-product of other higher value products. This can contribute to the economic viability of growing the crop.
In addition to the cattle industry, Alberta’s large horse population may offer some market potential for hemp livestock bedding. However, in order for livestock producers to consider and use hemp bedding, it must be readily available at a price competitive with sawdust and straw.
Marketing factors The existing markets for hemp product tend to be small scale (niche markets), offering limited amounts of high valued goods. Marketing is a continuous activity and growers need to make their own assessment of whether these markets will remain the same or grow over time. Key factors to monitor are:
- changes in the level of consumer demand for the hemp product
- the profitability and scale of processing required to serve these markets
- the potential for growth through an increase in the number of domestic processors.
- competition from alternative crops, imported hemp fibre and hemp seed
Price information for hemp isn’t readily available and may be difficult to collect. Growers need to qualify all price information as either prices for actual transactions, asking prices or bid prices. Actual transaction prices are the most meaningful information, but also be the most difficult to come by.
The price a grower receives for his/her crop in a particular year is influenced by the following factors:
- changes in consumer demand for hemp products
- the supply and demand of raw hemp to processors as hemp markets tend to be limited in size and new production could increase supply to the point where it exceeds demand, resulting in drastic price declines
- the level of imports and exports of hemp products or partially processed hemp products
- the quality of the hemp product as buyers have specific requirements and price is the most effective tool for expressing those requirements
There is no existing market infrastructure for hemp and growers need to develop their own marketing channels to gain access to markets. Generally, providing a reliable supply of high quality hemp is the best way to gain access to a market. Hence the reason this All-things-Hemp marketing agency came to life, as we strongly felt a need to support our Canadian Farmers. As the North American markets develop, producers have to be competitive in the world market in terms of price and product quality. New hemp growers must avoid focusing on production and ignoring the marketing side of the business. Individuals considering investing in hemp production need to ask themselves whether they are prepared to do all the tasks necessary to market their product. The critical marketing activities for the manager of a hemp enterprise are to monitor the development of markets for hemp products and determine how they impact on the market for raw hemp.
Source: Agdex 153/830-1. Revised June 2000.