- Rohan Hiatt
Industrial Hemp Fiber Market Research - Current and Future Prospects
Considering the latent $32 billion potential for the combined domestic industrial hemp fiber and grain sectors, it is surprising that the most prominent discussions surrounding industrial hemp focus on its possible intoxicating qualities. According to market research, a robust market for industrial hemp fiber exists around the globe and is slowly burgeoning in the United States in an effort to realize this potential.
Industrial hemp fiber is versatile. Not only does it appeal to the sustainability goals among consumers, but it also satisfies a trending desire for more durable and long-lasting materials–particularly in light of the intensifying impacts of climate change. Historically, industrial hemp fiber was most commonly associated with textiles, paper, and pulp. However, industrial hemp fiber is also suitable for construction materials like hempcrete, rebar alternative, animal bedding, furniture, automobile interiors, and in biofuels and bioplastics. Compared to the market leader in natural fibers–cotton–industrial hemp fiber is longer and stronger.
In terms of the industrial hemp fiber products currently on the market, the most common are simpler hurd-based industrial hemp fiber products that require less rigorous processing. As the market grows, consumers will begin to see more complex bast-based industrial hemp fiber products that require manufacturers to acquire specialized machinery and overcome other market entry barriers.
Among the three hemp product sources–fiber, grain, and cannabinoid-rich hemp–market research shows that industrial hemp fiber achieves the lowest profit margin, resulting in a lack of price parity between industrial hemp fiber products and their associated alternatives. Despite lackluster pricing due to the emergent nature of this market, the United States Department of Agriculture’s (USDA) own market research calculated the value of industrial hemp produced for fiber domestically in 2021 at $41.445 million. The USDA market research also found that out of 33.249 million pounds of industrial hemp fiber produced, 27.61 million pounds actually sold on the market–an ~83% utilization rate. Finally, the USDA researched the value of retted industrial hemp fiber produced domestically and valued that market at $14.029 million in 2021.
In general, the economic prospects for industrial hemp fiber appear bright. The pricing issue will tend to resolve itself as the industrial hemp market supply chain matures. Additionally, peer-reviewed market research from the Rensselaer Polytechnic Institute strongly suggests that industrial hemp fiber is economically viable and has the potential to be a more environmentally friendly alternative material to traditional natural fibers like cotton. By conducting a study through the lenses of sustainable development and systems engineering, the researchers found that industrial hemp is a high-yield crop with on average three times more metric tons of fiber produced per hectare cultivated than cotton. As a result, industrial hemp fiber reduces the overall cost-burden of agricultural activities by 77.63% when compared to cotton, assuming average total agricultural activity costs and average yield estimates. Because of the economic growth the industrial hemp market is currently experiencing, these benefits will inevitably come to fruition.
Primarily due to the increasing desire for industrial hemp fiber in various end-product industries, the industrial hemp fiber market is experiencing a period of rapid growth. While end-product manufacturers increase their utilization of industrial hemp fiber, regional processing infrastructure is also under development in many states and investment capital is beginning to flow into the industry at a higher rate. New Frontier Data, a business intelligence and cannabis data firm, pins the expected compound annual growth rate for the domestic industrial hemp fiber market at 10.5% for the period between 2021 and 2025.
Regional processing infrastructure growth is slower because, unlike with industrial hemp grain, industrial hemp fiber processors do not yet have a robust supply chain of processing equipment to handle the unique properties of hemp fiber. After the passage of the 2018 Farm Bill, the initial lack of specialized equipment to deal with high-tensile hemp stalks resulted in some early harvesters experiencing equipment failures. Other early harvesters and processors found themselves unable to surpass this entry barrier to the industrial hemp fiber market and went bankrupt as a result. The past two years have seen higher rates of success among fiber manufacturers as the market adapts to these barriers.
Fortunately, increasing interest in industrial hemp fiber for more than just its materials properties has contributed to advancements in agronomic research and development to improve and expand industrial hemp fiber’s capabilities, as well as advancements in specialized processing and harvesting equipment. Further growth is expected from an influx of consumers abandoning the lumber industry for its rising lumber prices. By increasing the frequency and degree of forest fires, climate change is spurring a market movement towards durable and fire-resistant industrial hemp fiber-based materials.
Certain barriers to market growth nonetheless exist. Regulatory compliance continues to present an outsized burden on the industrial hemp fiber industry. Because the types of end-products derived from industrial hemp fiber contain predictable levels of cannabinoids in forms incapable of intoxicating humans, regulatory testing requirements append an additional market entry barrier. Industry insiders also continue to indicate that significant market entry risk exists due to uncertainty about terminal markets and a lack of price certainty, both likely due to anxiety about the nebulous regulatory landscape for industrial hemp fiber moving forward.
A robust industrial hemp market with an efficient supply chain will provide an economically viable and sustainable alternative to many end-products that consumers are increasingly looking to pivot away from. The majority of the barriers to industrial hemp fiber market growth will resolve themselves through natural market behavior, bolstered by concerted industry advocacy for more attuned regulations.
A case study from the cement industry illustrates this shift. Two materials industry groups, the American Concrete Institute and the American Composites Manufacturers Association, have catalyzed talks surrounding certification standards for hemp fiber reinforced polymer as a sustainable concrete rebar alternative. These industry groups garnered interest in the industrial hemp fiber rebar after it matched glass fiber pound for pound under stress and exhibited a longer service life compared to steel rebar. As this example conveys, many industries are naturally moving toward industrial hemp fiber materials due to their inherent benefits, adapting the regulatory landscape as they go.
Look out for companies like South Bend Industrial Hemp in Kansas, IND Hemp in Montana, BioPhil Natural Fibers in Pennsylvania, Formation Ag in Colorado, and others as market leaders in the near future.
Sources - Anchored in Text Above
Elie Awwad, et al., Studies on Fiber-reinforced Concrete Using Industrial Hemp Fibers, 35 Construction & Building Materials 710 (2012)
Findings from Rensslaer Polytechnic Institute in the Area of Sustainability Research Described (Industrial Hemp Fiber: a Sustainable and Economical Alternative to Cotton)., Ecology, Environment & Conservation (Sept. 25, 2020), link.gale.com/apps/doc/A635999313/AONE?u=lacc_legal&sid=bookmark-AONE&xid=87770f60
Hemp Fiber and Grain to generate $32B impact by 2030, Nat’l Hemp Assoc. (Sept. 15, 2021), https://nationalhempassociation.org/hemp-fiber-and-grain-to-generate-32b-impact-by-2030/
Jim Kaufmann, Hemp: A Reintroduction To One of the Original Textile Inputs, TextileWorld.com 18 (Nov./Dec. 2020), https://www.textileworld.com/textile-world/features/2020/12/hemp-a-reintroduction-to-one-of-the-original-textile-inputs/
Don Marsh, Hemp fiber adds to FRP buzz, 75 Concrete Products 4 (Feb. 2022), https://concreteproducts.com/index.php/2022/02/08/hemp-fiber-adds-to-frp-buzz/
Eric Singular, The Outlook for Hemp Fiber in the U.S., Cannabis Business Times (Nov. 9, 2021), https://www.cannabisbusinesstimes.com/article/outlook-for-hemp-fiber-in-united-states-new-frontier-data/
Ron Smith, Hemp future is positive, challenges remain short-term., Western Farm Press (Oct. 28, 2020), link.gale.com/apps/doc/A639709011/ITOF?u=lacc_legal&sid=bookmark-ITOF&xid=e75cbe4b
United States Dep’t of Agric., National Hemp Report (Feb. 17, 2022), https://www.nass.usda.gov/Publications/Todays_Reports/reports/hempan22.pdf