How to Calculate Your Hemp Crop Value

While many people rushed to enter the hemp industry after the promise of wealth, growing hemp is not a get-rich-quick scheme. Those who treated it as one were disappointed. Like with any business opportunity, investing in a hemp farm poses both risks and opportunities for reward if properly managed. The real question is, what will be your hemp crop value?

In this article we will discuss how to determine approximately how much you will make from your hemp grow. We’ll cover:

• Grow options: indoor vs. outdoor
• End product, demand, and your specific market
• Expenses
• Example calculations

Grow Options

The first consideration as you calculate how much you might profit from growing hemp is where you will grow it. Field growing and greenhouse growing each have pros and cons. Let’s go over some of the main factors that will influence your decision. (And therefore your hemp crop value.)

Room to Grow

Indoor grows are limited to the space you have in containers for root growth and inside your greenhouse for number of plants. Outdoor grows are limited only by the acreage you’ve registered with your state to be planted with hemp. An outdoor grow allows for more root and height growth. Larger roots can increase plant strength versus an indoor grow with root size minimized by container size. 

Environment Control

Indoor grows increase your ability to control pests, light, and water, creating a much more controlled growing environment. Managing pests is much more challenging outdoors. 

Field growing can improve the nutrient-content of hemp plants because of the natural environment and the plant’s need to develop strength against weather and sunny conditions. However, a controlled environment is ideal for growing for smokable flower. 

End Product 

While outdoor, field-grown hemp has more potential for high-yields, considering your end-product is key to choosing which environment is best. The second determining factor for your hemp crops value is the current industry demand and which end product you choose to grow. 

Demand

We see the majority of grows in the industry for smokable flower or CBD or CBG oils. We don’t know for sure that one is more profitable than the other, however, we do know what’s more desirable in the industry right now. As of July 2021, the industry is oversaturated with biomass for oil production because of the massive amount produced in 2019 and 2020. Right now, demand is for smokable flower. 

If you’re considering entering the industry now, let that demand strongly influence the end-product you choose, which will impact the grow environment you choose as well. If you’re reading this much later than July 2021, pay attention to the industry’s current demand. What are people looking for and most trying to sell? Talk to trusted industry sources and invest in areas that will fill a gap in the industry. 

Pay attention to your particular market as well. If you have existing buyers, find out what they need most or have difficulty acquiring. Carefully consider the options you have and aim to supply what’s in high demand. 

Grow Capability

As you’re choosing an end-product, consider what type of environment you are able to grow in. If you have the ability to do a field or greenhouse grow, you’re free to choose based on what will be best for your end-product. Indoor grown smokable flower, for instance, tends to be more profitable than field-grown due to the controllable environment. Consider what resources you need to do an indoor grow and what expenses you might incur. 

Expenses

The third factor determining your hemp crop value is the cost of growing your crop. Carefully calculate the expenses you’ll incur for setup, licenses, plants, and processors. If you’re growing indoors, you’ll end up paying for a greenhouse structure, lighting, an irrigation system, pest management supplies, containers, growing medium. If you choose an outdoor grow, you’ll have the costs of tilling, soil amendments, an irrigation system, and pest management. 

You’ll also need to investigate suppliers and factor in the cost of plants and processing. You’ll pay fees for licensing, and should find out the cost of testing your soil if you’re doing an outdoor grow. And for either environment, you’ll need to know the cost of your plants.

Calculate all of these costs against potential income. 

Example Calculations

There are many variables at work in calculating your potential profit as you invest in the hemp industry. Let’s use an example to work out specific numbers and calculate a theoretical hemp crop value.

We typically recommend that you grow 1,500-2,000 clones per acre in an outdoor grow or 3-5 foot spacing for an indoor grow, which works out to about 2-3 plants per 10 feet. 

A well-grown hemp plant can yield an average dry weight of 2 pounds. In May 2020, the Hemp Benchmark Report showed smokable CBD flower selling at $144 per pound on average. That price is closer to $100 per pound now, so each plant is valued at around $200 in smokable flower. 

Let’s say you grow for smokable flower and have a 30’x96′ greenhouse which contains 850 plants spaced at about 3 plants per 10 square feet. Each plant yields about 2 pounds dry of smokable flower, worth approximately $100 per pound. You send the biomass to an extractor who charges a percentage rather than a bulk processor who pays a flat rate per pound of biomass. Your 850 plants fetch $170,000, minus the 40% that goes to the extractor. 

Factor in the cost of labor, operating expenses, startup expenses (like your greenhouse structure, etc.), and clones at $2.75 each. You may barely (or not at all) break even your first year if you have to invest in a structure from the ground up. 

Remember the importance of monetizing your crop wisely. Estimate higher expenses and lower profits to get reliable numbers. It’s better to be surprised by good results you didn’t anticipate than by bad results you didn’t anticipate!

While expenses and the value of your end product are the main keys to creating profit, being able to sell your hemp grow profitably is the most important ingredient for success! Consider partnering with an extractor rather than selling biomass to a bulk processor.

Before you invest in growing hemp, consider all the factors that make the industry complex and challenging — and if you decide to jump in, reach out to us. We would love to answer your questions, provide you with detailed information on best practices, and offer high-quality hemp clones at a great price!