A global agricultural research firm called hemp farming a risky business based on inconsistent pricing and production data and an unstable market.
RaboResearch Food & Agribusiness said that while the U.S. hemp industry is poised for growth, there are serious financial, regulatory and agronomic risks that farmers and investors must understand.
“The road ahead is rocky, risky and untraveled,” Bourcard Nesin, an analyst with RaboResearch, said in a statement.
“If hemp really is a good long-term opportunity, there’s no harm in being methodical.”
RaboResearch Food & Agribusiness is the research and analysis division of Rabobank, a Dutch bank that serves the food, agribusiness and beverage industries.
The hemp report warns U.S. farmers that:
- Hemp farming requires more paperwork, and regulatory infractions could result in crop seizure and destruction.
- States can still ban hemp production.
- CBD, the most lucrative sector of the hemp industry, is still off-limits under U.S. rules for food and dietary supplements.
- The U.S. Food and Drug Administration will take several years to develop rules, if the agency allows CBD to enter the food supply.
- The United States may face an oversupply of hemp grown for CBD extraction, causing losses for farmers once prices adjust.
- The international hemp grain and fiber market is already in equilibrium and growers will have to compete on price to make a profit.
“It’s no surprise that confusion reigns,” Nesin said.
“Headlines have a lot of people excited in the hemp world, but farmers, investors and even regulators are unsure about what to do.”