It’s 2020 and farms across the US are growing industrial hemp. The infrastructure needed to compete with other nations creates an opportunity for businesses and farmers to receive funding in this new and emerging industry.
After the farm bill in 2018 legalized hemp production, farmers across the US grew hemp for its medicinal benefits and had many extraction labs to choose from; while farmers who grew industrial hemp realized the infrastructure and machinery needed to process their crop hasn't been around since WW2.
During this time period growing and processing hemp was a huge undertaking. It involved many steps, and today many of the same processes from this old industry are beginning to emerge again; with new technologies and products.
Having worked in the Hemp industry for the last two years, we’ve seen a lot of the hardships our farmers and manufactures have had to face from bad seeds to mold and a flooded market with too much supply and competition.
When the farm bill allowed the production of Hemp, I was the first to assume like many others; hemp would be grown for its use in the textile, construction and food industry.
Two years later, we can see many farmers who were banking on the CBD boom have had to sadly leave much of their crops to rot in the field or in a warehouse with the current market price for biomass below or close to production costs.
Farmers who grew industrial hemp are facing other challenges as the US lacks the infrastructure needed to process their crops and compete with other countries such as China who are responsible for 70% of the worlds hemp supply. This not only includes growing but, the ability to process hemp into usable products such as twine, fabric and other textiles..
There are currently very few hemp producers in North America, while even Canada is using China to process their hemp for twine and other uses. This creates challenges for both farmers and US companies looking to buy and sell American made Hemp as the equipment needed to compete hasn't been fully developed on the scale needed. We spoke with one of the leading machinery manufacturers in the US and they’ve stated the industry is so new, many companies have yet to come forward requesting them to design or build the machinery.
This machinery would produce materials similar to cotton and rope used in products like pet bedding and carpet backing.The cost benefit and logistics of sourcing American made hemp will be an easy choice for US based businesses. In fact, US manufacturers in 2019 imported $66.6 Million worth of hemp from countries like China, Romania and Canada.
This provides a great opportunity for businesses and farmers to secure the funding necessary to build the infrastructure during its infancy. For example, companies seeking financing to expand their existing farm to build a processing facility have a better opportunity to qualify for funding than those without a farm. Existing businesses can receive funding to purchase equipment, purchase property or for working capital with a collateral based loan. Even new companies can receive funding depending on their prior business history.
These are some of the scenarios we’ve seen in the industry and the loans we work on which have provided the most success. The opportunity is here as current processors are close to reaching capacity and other companies are still in the market testing stages. We are looking forward to seeing how this industry will emerge over the next few years while providing farmers and business owners access to a wide variety of lenders.
If you would like to know more about how you may qualify for financing or have any other questions or comments please feel free to contact us at [email protected]