When determining whether or not to get involved in the hemp industry, it’s essential to understand your potential hemp farming profit per acre. Like any crop, your profit per acre will boil down to a simple calculation of yield per acre times market price minus the cost of production.
However, what segment of the industrial hemp market you grow your crops for will have a serious impact on your hemp farming profit per acre, as well as the equipment you need and how you plant your crops.
Types of Hemp Crops
There are three primary industrial hemp crops: oil, seed, and fiber.
In the United States, most farmers banking in on the legal changes brought about via the 2018 Farm Bill are focusing on the production of cannabidiol (CBD) oil.
However, out of the three crops, it is the most labor intensive and difficult to farm, as it is essential to understand the effects of stress and growing variables to produce the highest ratio of CBD to THC. The primary issue is that any hemp crop that is determined to contain a THC level at or below .3 percent is considered an illegal crop in the US, which is not a situation you want to be in as a CBD farmer.
Fiber and grain production crops, on the other hand, are much more similar to traditional grain crops, such as corn and wheat. The fiber plants tend to grow to 6-12 feet tall without branching, while grain plants tap out at about 9 feet tall and do branch. The shorter plants are actually preferred for harvesting reasons and don’t — thankfully — produce less grain than taller crops.
Knowing which type of crop you’ll cultivate is essential in determining your profit margins, as each has a different market value per acre and cost of production.
Price Point for Grain
With Chinese tariffs targeting American farmers, especially soybean farmers, those with the land and equipment to focus on grain producing crops are looking for more profitable options, which leads them to hemp.
The going price for hemp grain ranges from $0.60 to $0.65 per pound, which might not sound like a lot. However, the average yield from an acre of well planted and maintained hemp is about 1,000 pounds.
With costs of production ranging from $300 to $350, it’s possible for you to make somewhere between $250 and $300 per acre. This is significantly better than what a lot of soybean farmers in Kentucky are currently trying to scrape by with, as they’re looking to nearly break even with profit margins closer to $30 an acre.
Price Point for Fiber
Fiber is the other primary hemp crop that is particularly easy to work into your crop cycles and take full advantage of with the industrial farming equipment you already have.
The going market for hemp fiber is about $260 per ton, with the average yield being between 2.5 and 3 tons of hemp fiber per acre. Given that the cost of production is comparable to the hemp grain market — $300 to $350 — you’re looking at making up to about $480 per acre in profit.
The Downside of the Grain and Fiber Market
Unfortunately, tapping into the fiber and grain market isn’t necessarily as easy as growing the crops and taking your profits to the bank.
A significant amount of both the fiber and grain market depends on industrial processing capacity. Basically, as a fiber and grain producer, you’d want a production mill within about 30 miles of where your crops are grown, which is just not going to happen in the United States right now.
Additionally, the Chinese dominate the hemp fiber market, making it very difficult to break in. Similarly, China and other Asian countries have a near monopoly on hemp grain production.
Given these factors, those wanting to get into the fiber or grain market will either need to find some level of government backing that doesn’t exist yet, but perhaps could be put in place as the trade war with China continues, or be willing to slug it out with China and try to take back a piece of the US domestic hemp market.
Because of all of this, many American farmers turning to the third — and most lucrative — hemp crop: CBD oil.
Price Point for CBD Oil
The range of hemp farming profit per acre is drastic when it comes to CBD oil because there are so many factors that impact your CBD yield. One of the primary factors is the cultivation method.
The two hemp cultivation methods for CBD are agronomic and horticultural. The agronomic method is best suited for industrial hemp farming, as it allows for the use of the methods and tools you are probably already familiar with if you are currently a commodity crop farmer. Because of this, the agronomic method is cheaper and carries less risk than the horticultural method. However, unfortunately, it also has lower yields of CBD per acre than the horticultural method.
In the horticultural method, you’re basically cultivating hemp in a similar way to cannabis. Though this method leads to significantly higher yields of CBD, it is more expensive and not yet scalable in most situations.
Depending on a number of factors, your CBD crop could be generating anywhere between $2,500 and $75,000 per acre. This huge range comes down to a number of variables, but the most important is going to be the CBD to THC ratio.
One way to break down the numbers would be to realize that if you’re doing everything right and following methods to have the highest yield of CBD, you crop will produce about 10 percent CBD, which will equate to about $25 to $35 per pound. On average, you will get about one pound per plant, and be able to plant about 2,500 plants per acre. This leads to you making about $60,000 per acre before subtracting the higher costs of optimizing your CBD yield.
Summary: How Much Can I Make? Hemp Farming Profit Per Acre
Your hemp farming profit per acre is mostly going to depend on what type of hemp crop you’re planning on harvesting. If you’re lucky enough to be near a co-op or hemp mill that can process your grain or fiber to make your crops competitive in the market, the more steadfast returns on these crops can be very attractive.
Now, if you find yourself interested in the more lucrative CBD market, you’ll just have to make a sure you take a deep dive and fully understand all the factors that play into securing a high percent CBD yield, putting your crops closer to the $75,000 an acre range, rather than the $2,500 an acre range.
However, no matter what crop you decided to plant, you’ll want to make sure you are using the best possible seed or hemp clones.