If you want to sell industrial hemp there are two questions that you should ask yourself. Do you want to sell directly to the consumer, or do you want to sell through a broker? Your answers to these questions depend on how much of a profit you’d like to make.
There is nothing wrong with wanting to see a monetary result from your hard labor, but at the same time money could point you in the wrong direction if you’re just looking for the highest bidder. If you plan on being in this business for long, you are better off creating relationships with your buyers that can benefit you in the long run.
The current market for industrial hemp has not been as lucrative as industry experts expected it to be. This could be due to a lack of adequate machinery and infrastructure, which makes it hard to put all hemp to use. Although this is a relatively new industry with huge potential for growth, this is a factor that could prevent it from actualizing its full potential.
Industrial hemp has many uses, including the manufacturing of:
If you are an industrial hemp farmer, you can target any of these end-product manufacturers as your potential buyers.
Selling Industrial Hemp Directly
If you are starting out as a hemp farmer, you will need to create networks of individuals or companies that work with industrial hemp as a raw material. To do this, start attending hemp-related events in your neighborhood where you can meet and connect with like-minded individuals.
Social media channels such as LinkedIn and Instagram also provide wonderful opportunities to network with potential customers. This strategy is monetarily advantageous because it allows you to cut out the broker, leaving you with more of the profits from sales. At the same time, keep in mind that you could lose out on potential opportunities that a skilled broker could bring to the table.
Selling Industrial Hemp through a Broker
If you cannot get direct access to customers, you can work with a hemp broker. There are three different kinds of hemp brokers and they are discussed below:
The Novice Hemp Broker
This is one of the trickiest kinds of brokers that you will encounter. They are new in the field, may be very eager to impress, and are likely to give you the best prices to get your attention. They are also likely to fail to deliver on their promises by either not actualizing their sales, or not following through with the low prices that they gave you previously.
The Experienced Hemp Broker
This broker knows their way around the hemp business and is better positioned to give you a true picture of the market. This is because they have a deep knowledge of the industry and they have established networks of potential buyers. Experienced brokers can be an invaluable asset to your business even though their prices may not be the best. Most hemp farmers deal with experienced hemp brokers before they establish their network of potential buyers.
Unscrupulous Hemp Brokers
Just like any other industry, unscrupulous brokers have begun to flood the industrial hemp market. These brokers are dishonest and will try to swindle the farmer. To avoid getting caught up with such a broker, keep away from deals that are too good to be true. Also, ask for a considerable down payment or guarantee before releasing your hemp, especially when dealing with a new broker.
Hemp Futures Contracts and Profit-Sharing Agreements
These are other ways to sell industrial hemp profitably. Futures contracts allow the farmer to negotiate a favorable price with a third-party before the hemp is ready for harvest. This will protect the farmer from losses associated with price volatility. That being said, note that you stand to lose if the market price exceeds the price that you agreed on in the futures contract.
Profit-sharing agreements come in handy when you are short of the cash needed for cultivation. In this model, the buyer injects some capital into the farming venture. When the harvest is ready, the farmer sells to the buyer at a subsidized rate that is less than the amount that the buyer injected into the venture. For the farmer, this helps lower the start-up cost needed for farming, but the profit margins may be thinner.
Determining Industrial Hemp Price
The price of industrial hemp will vary depending on the quality of the seeds, fiber, and CBD content. If you are selling to a CBD extractor, you will fetch a better price if your industrial hemp is high in cannabinoids. Note that hand-shucked biomass will have more CBD compared to combined biomass. The same goes for other hemp products in that the more the fiber and the healthier the seeds, the higher the value of the product.