Hemp Benchmarks spoke with several of the largest and leading seed producers and suppliers in the U.S. to understand the trends affecting seed suppliers and seed buyers in 2024. Our observations and related insights are articulated below.
1. Aging seed inventories – some as old as five years – are still reaching buyers and creating price dislocations for seed providers.
As we have documented since 2019, the CBD boom that started with the 2014 Farm Bill, and accelerated under the 2018 Farm Bill, ended in the 2021 time frame with prices of most hemp products along the value chain experiencing price declines that devastated many industry operators (and paradoxically helped jumpstart the sector’s expansion into hemp-derived intoxicants). The number of active seed producers for the floral hemp industry has dwindled to a few small-scale boutique providers and a few larger operations.
Sizeable inventories of older seeds have continued to come to market at prices discounted below the break-even cost for suppliers. The volume of seed dumping appeared to many to be more extreme this year than in prior years. Reports from the field suggest that at least one inventory of more than 150 million seeds from a defunct supplier recently reached the market in the range of one-third of one cent per seed (0.33¢), versus a break-even price ranging from 5¢ to 10¢ for some suppliers. While the recommended number of seeds per acre can vary widely (from a few thousand to tens of thousands, depending upon the type and quality of seed, end product and growing conditions), given the decline in planted acreage versus the boom years, many assume that much of this aged inventory went abroad. In any case, U.S. seed suppliers have faced challenging economics resulting from the liquidation of surplus seed inventory.
2. Resource and bandwidth constraints among breeders, coupled with their desire for the hemp industry to be successful, are driving growth in partnerships.
Hemp seed suppliers engage in a variety of partnerships to enhance their operations, expand their market reach, and ensure quality and compliance. These partnerships are crucial for the growth and sustainability of hemp seed suppliers, allowing them to innovate and reach a diverse customer base.
Suppliers often partner with farmers and growers to ensure a consistent and high-quality supply of hemp. These partnerships can involve providing seeds, consulting on best practices, and sometimes even purchasing the harvested crop.
Collaborations with universities and research institutions help in the development of improved hemp seed varieties and cultivation techniques. These partnerships focus on breeding programs, agronomic research, and field trials.
Suppliers partner with retailers and wholesalers to distribute their seeds to a broader market. These partnerships help in reaching both large-scale commercial growers and small-scale home gardeners. Online sales platforms are critical for reaching a global customer base. Partnerships with e-commerce sites also allows suppliers to market their seeds directly to consumers.
Partnerships with certifying bodies ensures that hemp seeds meet regulatory standards for quality and legality. This includes obtaining certifications such as organic, non-GMO, phytosanitary and other relevant agricultural certifications for domestic and international markets.
3. Seed quality and diversity are enhancing farmer productivity and expanding consumer choice.
Improvements in genetic engineering and cultivation techniques are enhancing the quality and yield of both hemp and cannabis seeds. For several years, the market experienced growing demand for high-quality, feminized seeds to ensure higher yields of usable plants. Now that the use of feminized seeds has been widely adopted, new versions of feminized seeds are proliferating. Autoflower and triploid seed sales are increasing relative to traditional light cycle dependent photoperiod seeds.
Autoflower plants do not rely on light cycles to begin flowering. They automatically start flowering after a certain period, usually around 2-4 weeks, regardless of the light schedule. This makes them easier to grow. There is no need to adjust indoor or greenhouse light schedules to induce flowering; and with the number of days from germination to harvest in the roughly 65- to 90-day range, outdoor growers benefit from the ability to have multiple harvests as well as avoid August pollen drift.
Triploid seeds are a type of hybrid seed characterized by having three sets of chromosomes instead of the usual two sets found in diploid plants. This triploid condition results in unique properties that make these seeds particularly desirable in certain agricultural and horticultural applications. Triploid seeds are gaining attention in both the hemp and cannabis sectors for producing plants that are nearly sterile, with no viable seeds, which can improve the quality of the harvested flower and prevent unwanted pollination, particularly in regions with heavy feral hemp populations.
4. Hemp seed producers are offering an increasing variety of THC-producing seeds as market participants along the entire value chain seek to capitalize on loopholes in the 2018 Farm Bill.
As interpretation of the 2018 Farm Bill’s definition and application of Total THC potency has expanded market opportunities for hemp seed suppliers, they have responded by diversifying their product lines to include both hemp (low-THC) and marijuana (high-THC) seeds. This allows them to cater to a wider customer base, including both industrial hemp farmers and cannabis growers. This diversification helps hemp seed companies mitigate risks and tap into the lucrative marijuana market, which can be more profitable than CBD, other minor cannabinoids, and industrial hemp due to higher consumer demand for THC-rich products.
The same genetic expertise used in breeding high-quality hemp seeds is applicable to breeding THC-rich cannabis strains. Suppliers are leveraging their breeding programs to develop and offer superior marijuana seeds that meet market preferences for potency, flavor, and yield. This strategic move helps hemp seed suppliers remain competitive and profitable in the evolving hemp and cannabis industries.
5. Seed sales to international commercial markets and retail home-growers are increasing, while seed sales to U.S. commercial operators appear to be decreasing.
The hemp seed market is increasingly bifurcating into segments that cater to commercial customers and retail home-growers. Seed companies are segmenting their products to cater to these distinct markets. For commercial growers, the focus is on high-yield, resilient strains, while for home-growers, the emphasis is on variety, ease of growth, and novelty. Commercial growers buying large bulk (e.g., 25,000-50,000 seeds) might pay from 5¢ to 15¢ per seed; whereas home-growers are willing to pay from $3 to $7 per seed and as much as $7 to $15 per seed for top-end full-spectrum. Seed suppliers are still exploring the price elasticity of demand in the home-grower segment, and some suppliers believe there is room for price increases. One supplier noted that retail sales were up 500% this year, while commercial sales were down 50%; and that their profits from retail sales were projected to exceed those from commercial sales within two to three years.
Many Asian and Latin American countries are reforming their cannabis laws, making it easier to cultivate and export hemp. These legal changes are opening up new markets and encouraging investment in hemp cultivation. Countries like Thailand and Mexico have recently passed laws to legalize hemp cultivation, aiming to tap into the lucrative global hemp market. While some suppliers sell principally to domestic commercial operators, others are experiencing growing demand from international operators in Asia and Latin America, including Thailand and Afghanistan, with some buyers exceeding 50,000 and even 100,000 seeds.
Moreover, as seed sales to commercial operators in the U.S. have declined, suppliers fulfilling international demand have improved their processes and procedures to efficiently and effectively serve foreign buyers with little to no issues related to approvals for international commerce, payments and credit worthiness, or confiscated products.
6. Integrity across the seed supply chain is a continuous concern.
In nearly every discussion, the integrity of the seed supply chain was a concern. There are extensive opportunities for manipulating laboratory results, leveraging confusion over Farm Bill vs. state THC potency definitions, misrepresentation of seed attributes and characteristics, and exaggeration of producer/supplier achievements and capabilities.
Some hemp seed suppliers struggle to provide consistent and genetically stable seeds. This can lead to plants that do not perform as expected, with variations in growth patterns, cannabinoid profiles, and other critical traits. The rush to meet market demand has sometimes led to inadequate breeding practices. Seeds are often sold before thorough testing and stabilization, resulting in genetic drift and inconsistency.
A major issue is the misrepresentation of THC and CBD levels. If seeds produce plants with THC levels exceeding legal limits, growers can face legal penalties and financial losses. Accurate labeling of THC content is crucial for compliance, particularly in regions with strict regulations. Similarly, seeds advertised as high-CBD may not deliver the expected cannabinoid content, disappointing growers who rely on these plants for CBD production. For example, a hemp seed with a CBD:THC ratio greater than 30:1 does not yet exist (at least at the time of this publication). Therefore, CBD potency is theoretically capped at 9% given the Total THC requirement in hemp of 0.3%. Despite this, some CBD seeds are advertised as having much higher CBD potency.
