Geoffrey Taylor, MA
Like most American companies, the economic setbacks posed by the COVID-19 pandemic are devastating and may take years to recover from. With mass unemployment, uncertainty on Wall Street and Main Street, and decreased investment all around, 2020 is proving to be a difficult year from virtually every American industry. Farming is no different, and frankly, hemp farming is especially prone to fluctuations in the marketplace as it is so new to the American agricultural landscape.
As if the hemp marketplace wasn’t already such a new and exciting segment for farmers to explore, a combination of local regulations, the economic slowdown and a decrease in B2C and B2B spending on hemp biomass and hemp-derived products may directly impact the way farmers navigate their hemp crops in 2020.
While many may still choose to plant their crops and hope for a turnaround in economic activity by the time their harvests come, others may simply forego hemp for another year. Unfortunately, due to local regulations, many farmers may not be able to plant until it’s too late.
“Right now, local hemp farmers have big concerns with the ability to get fingerprinted to even comply with the new ordinance and begin planting,” said Rene Garcia of 4G Farming in Arvin, Calif., “I think the bigger issue is that the county is being reactive, and instead of trying to come back and fix the ordinance, its making every previous registered grower non-compliant because we can’t get fingerprinted.”
With a deadline for compliance of April 30, 2020, the issue many local growers are facing in this context are that many local government agencies who perform LiveScan fingerprinting, part of the new compliance standards for the Kern County hemp ordinance, are closed to the public or are not currently performing LiveScan services due to COVID-19. These scans can take up to four weeks to come back from the FBI.
“The Kern County Department of Agriculture is aware and understanding of the challenges facing the agricultural industry in light of the COVID-19 crisis“ said Cerise Montanio, Deputy Director of Consumer and Agricultural Protection Division at the Kern County Department of Agriculture & Measurement Standards, “Since fingerprinting is not available in much of Kern County at this current moment, we will work with you to keep your industrial hemp registration active.”
While many crops may find themselves in demand over the coming year, the hemp market is facing very uncertain times in 2020. To compound the non-compliance issue Kern hemp growers are facing, the issue of investment and funding for farms is directly impacted by the economic downturn and a looming recession.
Yahoo! Finance writer David Becker writes that overall, the hemp market is currently taking a hit in the current economic climate caused by COVID-19 and may persist into Q3.
To compound this issue, many hemp businesses who process, sell or market CBD, or cannabidiol products, are ineligible for small business funding through the CARES, or Coronavirus Preparedness and Response Supplemental Appropriations Act, from the Small Business Administration intended to help employers offset payroll and other business expenses, as they must comply with all federal laws and regulations.
Because CBD is regulated by the Food and Drug Administration, or FDA, many CBD businesses are ineligible for the funds because the sale of CBD for food, beverage or many other retail products is deemed illegal, further complicating the precarious situation many hemp growers, processors and product sellers are facing.
Many brick-and-mortar retailers of B2C CBD and hemp-derived products are also closed as non-essential businesses, thereby placing their orders on hold until the retail climate begins seeing foot traffic again.
Adding yet another layer of uncertainty to the hemp grower’s equation, Becker continues by specifically noting that “hemp prices after coronavirus will see the same forces at play throughout the economy, with demand down as a result of many aspects of commerce coming to a screeching halt.”
“As a first time hemp grower, this continued uncertainty will definitely have an impact on our projected plans for this year” said Emmanuel Rangel of Three Mountain Farms, a hemp farming company with over 200 acres near Arvin, Calif. “The health emergency is forcing us to be more cautious with our investments, but the main question is how and to what extent the worldwide economic shock will impact the industry.“
As hemp farming only recently made its way back into American agriculture, it’s difficult to predict exactly how an economic slowdown coupled with a decrease in consumer and industrial demand through summer might impact a rapidly expanding marketplace of growers from coast to coast. However, it can be assumed that with unemployment looming at 13 percent as of April 9, that American consumers and American businesses are poised to shift into survival mode rather than spend valuable funds on hemp-derived products.
According to a February 2020 report from the United States Department of Agriculture, or USDA, “the next few years should see a resolution of the legal and regulatory issues constraining hemp production in the United States, leaving domestic production, imports, consumer demand, and exports to dictate growth and long-term market size.” The report, titled Economic Viability of Industrial Hemp in the United States, does present some good news in noting: “Hemp production may expand even more rapidly in 2020 as the regulatory environment becomes more stable and if farmers face depressed market outlook for other commodities.”