You won’t be able to farm hemp for long if you can’t earn a profit from your crop, but how do you actually sell your hemp biomass? Where do find hemp biomass buyers? Most importantly, how can you get the best price on the crop you spent so much time, effort, and resources growing? When it comes to selling your crop, you’ve got a range of options, from working with a hemp broker, to selling directly to wholesale hemp buyers, or even taking your crop to a tradeshow. Let’s look at the most common ways to sell hemp, and the steps you should take to ensure that you get the best price possible.
A Quick Review of Hemp Biomass
Before we dive into the questions of how and where to sell industrial hemp, it helps to understand the term “hemp biomass.” In the hemp world, “biomass” actually has two distinct meanings, which can be a little confusing. Some people in the industry use the term “hemp biomass” to mean everything other than the flower or buds on the plant that contain the majority of the plant’s resin, terpenes, and cannabinoids. This would include the hemp plant’s stalks and leaves. In most cases, farmers growing hemp for CBD or CBG can sell the leftover hemp biomass to biomass buyers who turn it into a range of products, from paper to textiles and more.
However, the way we will use the term “hemp biomass” in this article is to refer to portions of the hemp plant that includes the flower or bud. This hemp biomass is typically priced by the pound and sold to hemp processing or extraction facilities that specialize in extracting CBD or CBG from the biomass.
Determine the Price of Your Hemp Biomass
You would never sell your truck or a piece of expensive farm equipment without having at least a ballpark idea of how much it was worth, right? The same goes for your hemp crop. Before you start looking for hemp biomass buyers, you need to understand how much your hemp is worth so that you can negotiate the best price for it.
Many factors will affect the value of your hemp biomass, but the major factor is the amount of CBD or CBG your hemp biomass contains. If you grow low-quality hemp plants with, say, less than 10% CBD, then you won’t be able to ask for a high price per pound. On the other hand, hemp biomass with a high percentage of CBD or CBG will be able to garner top dollar.
This is why it is so important to invest in hemp seeds with proven quality genetics. You’ll also want to have your hemp biomass tested, analyzed, and certified so you can show potential biomass buyers what they will be getting.
Pre-Selling Your Hemp Harvest
For many hemp farmers, it’s a good idea to try and pre-sell your hemp harvest before your crop is mature. In fact, it is in your best interest to have a secure contract in place before you ever put seed in the ground. Searching for biomass purchasers early will give you time to do your research on potential buyers, negotiate a fair price, and review the contract before signing. Alternatively, if you wait until your hemp is harvested, you’ll have a short window to unload your crop. You’ll also be competing with other farmers who weren’t able to pre-sell their crop. Biomass buyers will have the upper hand in negotiations.
At the same time, if you decide to pre-sell your crop, make sure you review the contract carefully. Your crop may have to meet certain CBD or CBG percentage standards to qualify for your agreed-upon price. You’ll want to understand what happens if you aren’t able to meet the terms of the contract. Will you get a lower price, or will the buyer be able to walk away?
Hire a Hemp Broker
Perhaps the easiest answer to the question of where to sell hemp is to use a hemp broker. A good hemp broker is someone who is highly knowledgeable of the hemp industry, has many contacts in the field, and is a great communicator. A licensed hemp broker will essentially connect you to a hemp biomass buyer and facilitate the sale of your crop.
In a best-case scenario, a hemp broker will find a buyer for your crop and negotiate a great rate for your hemp. In exchange, the broker will take a commission on the sale, typically around 10% of the sale, though rates can go much higher.
For some farmers, especially first-time hemp farmers without many contacts in the field, a hemp broker can be an excellent option, alleviating the need for a farmer to find and negotiate with a buyer on their own. The broker may also get a higher purchase price than a farmer could achieve on their own, helping to cover their fee.
However, working with a hemp broker might not be all it’s cracked up to be. First, a hemp broker’s commission can take a notable chunk out of your earnings, especially if your profit margins are thin. Next, for every great hemp broker, there are many less experienced and less scrupulous individuals hawking their services. So before signing on with a hemp broker, check their track record. Mediocre hemp brokers may not have good contacts or may cut the first deal they can find in order to earn a quick commission rather than negotiating for the best price possible.
Sell Directly to a Customer
Farmers who have a lot of contacts in the hemp field and want to earn more by cutting out the middleman may prefer to sell their hemp biomass directly to a customer, typically a processor or extractor. This will require more legwork and a willingness to spend time negotiating on your own behalf. It may also be a good idea to retain an attorney to review any contract you and your buyer draw up together.
Selling directly to a customer can help you maximize your profit, but it will also require more effort on your part. Certain hemp biomass buyers, especially wholesale hemp buyers, may be hesitant to work with a new and unproven farmer or a farmer without an adequate amount of biomass to sell.
Sign a Profit-Sharing Agreement
Farmers planting hemp for the first time may struggle with all the costs associated with switching to a new crop. High-quality hemp seeds aren’t cheap, and farmers may have to invest in new equipment, a new irrigation system, and more.
One way to mitigate all the startup costs of planting hemp is to sign a profit-sharing agreement with a biomass purchaser. With this agreement, the buyer covers the upfront costs of growing and harvesting the hemp. Those costs are then recouped through the profit of the crop, and the farmer and purchaser share the additional profits. A profit-sharing agreement may also appeal to farmers who want to quickly grow their hemp operation but don’t have the capital to expand at the pace they want.
It may take some work to find a buyer willing to put up the money for your hemp operation, but if you need fast capital, this could be the right option for you.
Hemp Futures Contracts
Farming always carries some degree of risk. One way farmers seek to mitigate that risk is to sign a futures contract with buyers. This contract is typically signed before a hemp crop is planted and specifies the price per pound the buyer agrees to pay for the crop. Usually, the price offered in a futures contract is less than what the farmer could get on the open market, but it offers the farmer both stability and predictability. Also, crop prices can fluctuate. If there is a glut in the market and crop prices fall, the futures contract can protect the farmer from a volatile market.
Just make sure you review the futures contract carefully and work with a company with a proven history in paying for their contracts.
Other Places to Find Hemp Buyers
These days, farmers may need to get creative when it comes to finding the right buyer for their hemp biomass. A younger generation of farmers are setting up social media accounts on Facebook, Instagram, and LinkedIn where they can connect with buyers and hemp brokers and begin building a valuable network within the industry.
Do Your Homework on Your Buyer
No matter where you find your hemp biomass buyer, make sure to research them, review your contract carefully, and get your money before you put your biomass on a truck and send it off. The hemp biomass market is still new and, like any new market, there are people trying to take advantage of the unwary.
The hemp market is still maturing, but that doesn’t mean that there are not secure and reputable companies supporting the hemp supply chain. Let us help you navigate that path and don’t forget that a profitable hemp crop starts with high-quality seeds. Contact us today to learn more about our different hemp seed strains.