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Hemp industry outlook has been a point of speculation for a long time. After decades of efforts, legal industrial hemp is here. To be clear, hemp is cannabis with not more than 0.3 percent THC concentration in dry weight. Hemp has many uses in diverse industries such as food and beverage, textile, pharmaceutical, personal care, and construction.
Hemp Industry Outlook
Experts project that the industrial market will grow to a CAGR of 34 percent from USD 4.6 billion in 2019 to USD 26.6 billion by 2025. The increased consumption of hemp products due to their various health benefits and increased incidences of diseases is responsible for the hemp market growth. The legal complexities in other countries can, however, hinder the market growth of industrial hemp. The United States is heavily investing in developing hemp varieties with 0.3 percent THC after the 2018 Farm Bill’s passing, which legalized its production. The largest exporter of raw and processed hemp products in the US is China. The US’s market growth largely thanks to the rise of small-scale niche markets of hemp products.
Asian countries like China dominate the global hemp market because of their significant hemp production and exports. China is the largest producer of hemp products and has never banned the production of hemp. Europe’s hemp industry outlook shows a growing demand for hemp products due to its use in automotive parts, construction, and textiles. Hemp accounted for a revenue share of 22.2% in 2019. Experts project that the market will grow over the forecast period due to the growing demand for hemp products in personal care, food supplements, and cosmetics markets.
The price volatility for CBD extracts and biomass has made hemp producers increasingly interested in expanding the current primary market into other more historical end markets such as fiber and grains. The most recent hemp innovation and investment largely focus on CBD extraction, but there are encouraging signs that the market for other hemp products is increasing, as well.
In 2018, hemp fiber dominated the hemp market. Besides being a renewable source material, hemp fiber can help build textile and pulp and paper because of its long and strong fibers, unlike cotton. Manufacturers also use hemp in the construction, agriculture, and automobile industries.
In the hemp industry outlook, CBD hemp oil is, by far, the fastest-growing sector. This growth is largely due to its proposed health benefits, including minimizing conditions such as stress, general discomfort, sadness, and acne. The application of CBD hemp oil in personal care products, food and beverages, and health supplements is driving the market. Experts predict that the food section will lead the market during the proposed period.
The strict rules concerning the production and selling of hemp across different states can also be tedious for manufacturers and stakeholders in the hemp industry to comply with and restrain the market growth.
Is the Hemp Industry Oversaturated?
Industrial hemp production is still an emerging industry. It is just beginning, and the sales will continue to flourish. With the increasing legalization of hemp, manufacturers and research institutions are developing new products from hemp. Biofuel extracted from hemp seems to have a significant growth potential in the coming years. The rise of diesel and petrol prices with global warming concerns has increased the popularity of biofuels.
Environmental pollution has led to an increased demand for green buildings. As such, the demand for hemp-based construction materials over the forecasted period has grown significantly. European countries such as U.K, France, and Ireland use hempcrete, which is concrete made from hemp and lime to build a private house. This trend has led to an increase in demand for hemp shives in the construction industry.
The health and wellness market is slightly saturated, which is good news for consumers. Hemp production exceeds the demand for CBD infused products in the country, which has forced a drop in pricing. CBD companies must find new uses and ways to move CBD products. The market for hemp fiber and seeds is, however, still undersaturated.
Final Thoughts on Hemp Industry Outlook
Enforcement of rules such as the 2018 Farm Bill has fueled the industrial hemp market growth. Profitable farmers must increase their focus on growing hemp varieties with low THC levels.