The U.S. Department of Agriculture (USDA) caused a stir in the hemp industry when it announced a coronavirus relief program in late May that hemp producers were not automatically eligible for. The department instead established a comment docket for producers of ineligible commodities to argue their case for eligibility.
So far, more than 350 comments have been submitted to the USDA about ineligible commodities, including a 23-page document from the U.S. Hemp Roundtable that argues hemp products experienced a significant value decline since the beginning of 2020.
The Coronavirus Food Assistance Program was created to provide up to $16 billion in direct payments to farmers and ranchers impacted by the coronavirus. To be considered for the program, hemp producers must prove in their comments to the agency that “they’ve suffered a 5% or greater price decline between January and April 2020 and ... face additional marketing costs due to COVID-19,” according to the USDA’s website.
“That’s a tall order for a new industry,” U.S. Hemp Roundtable says on its website. “Hemp does not have widely published price data, such as those commodities whose prices are collected by USDA and commodities traded on the futures markets.”
The advocacy organization says it teamed up with Hemp Benchmarks and PanXchange, a price reporting agency and trading platform, respectively, to assess COVID-19’s impact on hemp pricing.
Together, they found prices declined anywhere from 19% to 46% from January to April, depending on the product.
According to the U.S. Hemp Roundtable’s comments, from January to April 2020, Hemp Benchmarks found:
CBD biomass declined by 19%, from $1/percent CBD/pound to $0.81/percent CBD/pound.
CBD flower declined by 36%, from $225 per pound to $145 per pound.
Crude oil extracted from hemp flower declined by 46% from $668 per kilogram to $376 per kilogram.
Refined hemp oil extracted from flower declined by 31%, from $2,528 per kilogram to $1,744 per kilogram.
Cannabidiol (CBD) isolate declined by 37% from $1,624 per kilogram to $1,018 per kilogram.
Meanwhile, PanXchange shows prices for processed hemp flower fell between 21% and 32% in that same time period.
“Both firms have also identified deeply concerning trends in their data,” U.S. Hemp Roundtable says in its letter. “The Hemp Benchmarks data reveals that the ranges between low and high prices have shrunk, and with little fluctuation in prices, farmers are likely to earn something closer to the significantly lower assessed values for their hemp. PanXchange notes that many farmers were unable to sell biomass at harvest time last year, so they entered into tolling agreements to process their biomass.
“With the industry-standard contract structure requiring farmers to pay a processing fee that would be returned once the processors sold the refined product, many farmers are still awaiting payments for their 2019 crops.”
In addition to an intro letter, U.S. Hemp Roundtable’s comments consist of graphs and charts detailing hemp’s price decline.
The USDA is accepting comments on the rule until June 21.