As with many perceived “gold rushes,” too many people were lured into the business. With promises of $30,000 an acre and the rebirth of the small-time farm.Limited amount of acres were grown in 2018 and lead to the $30K an acre price.Many farmers and policymakers failed to comprehend what adding lots of additional acres of the crop would do to the value of hemp. As with all lucrative things, when the word gets out, it gets oversaturated.
What lead up to the rising price of hemp
Before the 2018 Farm Bill was signed, hemp was in a weird gray area, and there were only a limited amount of states that allowed cultivation. The risk and reward were high for growing the crop, and the acres and grow season severely limited. The market for hemp biomass continued to grow for further extraction, and the hemp crop was a bit behind and drove the price of the yield up to very high levels.
Farm Bill 2018 and the bottom drops out.
What many failed to realize with the excitement of the 2018 farm bill is only took a relatively small number of acres to satisfy the demand of the CBD market. After the passing of the farm bill in 12/18, many states made it a priority to pass legislation to open up their land for the farmer to cash in on the hemp opportunity. With a vast amount of acreage opening up, the supply quickly surpassed demand in the 2019 harvest season and created ugly situations for both the farmer and purchasers who made agreements to purchase the season’s crop on inflated prices. Once the supply overwhelmed the market, it became a race to the bottom. The farmers who had not secured pre-sales for their yield dropped their prices so that they can recoup some of their initial investment. Unfortunately, there were more farmers in this situation; then there were with purchase agreements. This lead to severe price advantage for companies that were not tied down with contracts. For those that did have deals, it leads to an impossible situation. Many notable names in the industry walked away from their agreements in an attempt to stay competitive and left the farmer high and dry or were forced to sell way below the agreed-upon price.
What this means for the consumer
While many companies and farmers are recovering from the disaster that was the 2019 harvest season, the real winner is the consumer. CBD prices are at record lows, and any lean operating CBD company with a robust supply chain can offer their products at a much lower cost than what they were a year ago. CBD LION is one of those companies, and we take pride in being able to offer the highest quality product at affordable prices. Beware of any company that hasn’t lowered their prices as they are either letting the price drop pad their pockets or have high overhead, which means you are paying for their mistakes! We are proud to say you are not paying for any lousy business decisions here at CBD LION!