Europe’s Smaller Hemp Farms Face a ‘Grim Outlook’ For 2022, Finds Survey

HIGHER energy costs, staff shortages and Covid-induced supply chain issues have left Europe’s hemp farmers feeling the pinch, finds a new market report.

The CanXChange Q4 Benchmark Report finds many of the continent’s small farms are facing a ‘grim outlook’ for 2022, due to high stock levels and ‘fairly low confidence in sales prospects’. 

However, the report also highlights how Europe’s larger producers remain bullish with the positive sentiment up 20% on Q3.

Discussing the vagaries between larger and smaller players the report authors speculate ‘while we we anticipate a global demand increase for cannabis based products…the whole market spectrum may not develop at the same pace or benefit from the same growth opportunities. 

Spot Market Blues

‘Unfortunately, we tend to think that this sentiment difference between smaller and bigger production units will remain (exceptions obviously exist)’.

They go on to highlight three key differences between larger and smaller players which include; a lower exposure to the spot market, greater product diversification which in turn delivers on the potential to tap an into an increased number of market segments.

 CanXChange is a physical commodity exchange and wholesale data provider for industrial hemp and its many derivatives including; shives, fibres, CBD and seeds.

This quarter’s benchmark report takes a detailed look at various cannabinoid market segments including CBD, CBG and CBN.

It finds that after several months of stable prices increased competition in the the CBD isolate market is seeing prices fall from €400-€500 per kg down to the to the mid €300’s per kg on orders above 25kg. 

It says: “It seems that the oversupply is still abundant and the downward price pressure has not given way just yet. We do expect this trend to continue into the year end and it could exert some more pressure pushing prices to the low 300’s on larger orders.”

However, the authors believe this will flush out some smaller players with prices set to rise to over €500 in due course.

In assembling its quarterly reports CanXChange’s research team have spent weeks surveying over 100 hemp farms and cooperatives across Europe. 

Five Key Metrics

And it has developed five key metrics to better understand the outlook for cultivation activity. These include:

-Surfaces planted compared to the previous season 

-Increase/decrease of production investments 

-Stock levels

-Sales confidence

-Cultivation yields 

After then overlaying this with farm size it produces separate charts demonstrating confidence levels for facilities of less than 500 hectares, those between 500 and 1,000ha and those over 1,000ha.

The report finds that those farming less than 500ha are less confident than in the previous quarter and those above 500ha more confident.

It adds: “Overall we can see that the farms surveyed are fairly optimistic… but the sentiment is shifting down compared to the July ‘21 Index. This slight shift of sentiment towards the south is explained by global degraded conditions (energy, logistics and labour costs and/or shortage)…with small production units (less than 500 ha) suffering the most from this situation.”

The exchange has hundreds of fully-vetted customers with clients in over 25 countries and over €50m of trade-able inventory from Europe, the US and South America.

To view the report click here

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