Monday, December 19, 2011

Supply & Demand: The Heavy Cost of Hemp

I know there are a lot of you out there, who like myself, would love to create hemp businesses. Whether it's textiles, apparel, foods or other creative endeavors. Yet everywhere you turn, you seem to be thwarted by the high price of hemp.

This is a real problem for a lot of businesses and entrepreneurs that would love to be hemp centered. I've looked into the simple idea of having a simple hemp-tee business, and the costs are astronomic. In order to buy ordinary tee's, made from the cotton plant which is well known to devastate any earth it's cultivated in, I could order bulk t-shirts for anywhere from $1 to $5 a piece, depending on whether I want one's produced in sweat shops or ones that are of higher quality. For the same options in hemp tee's, it costs between $10 to $20 per tee on a wholesale level. So in order to cover over head and make any sort of profit, I'd have to sell the tee's for more than double the cost.

Hemp is an ultra easy plant to cultivate, even large scale, and the plant is well known for healing the earth it grows in and working very well in rotation with other crops, making it a very cost effective plant to grow. So why is it that it costs so much?

It's two things -

(1) The only hemp we can get has to be imported because we can't grow it

(2) The demand for hemp products isn't great enough at the current price

Now, the problem with only imported hemp, is that we have to pay the costs of importation and that gets passed on from the manufacturer - to the distributor - to the wholesaler - to the retailer and straight to the buyer.

This second problem, lack of demand, is the issue we should be more focused on. Many people are aware of the benefits of medical marijuana, but not so much on the benefits of hemp. So when they see that pricey hemp tee, they think "thats cool, but it's not for me at that price."

What the dont realize, is that if they want the price to come down, the demand has to go up. So high prices now, will go down when the rate of people buying then goes up.

So how do we get the demand up and get closer to being able to grow our own?

We need to start more hemp centered businesses and organizations. Crafts, foods, beauty, industrial, health, all of it. We need to customize and cultivate the hemp niche by coming out with better and more unique products.

we need to make these products highly visible and easy to access.

It starts with simple changes. I remember wishing there were more hemp beverages and foods, and I said it to everyone, I even write a few hubs about it. Then one day someone told me a local market carried Tempt, a very delicious brand of hemp seed milk. I was amazed with the product, but not with the price of $6 per half gallon. So I talked more about, on forums and social networks. talking about how good the milk was, but how drastic the price seemed. It was a few moths later that the milk started going on in sale for a few dollars less.

That was a cool change, so I focused on my next gripe (as must people naturally do), which was convenience. I live near three grocery stores and two convenience stores, none of which carry any hemp milk. So I sent emails dvds talked to mangers. Truthfully, it didnt seem to be going anywhere until one of the convenience stores started carrying it, just because I had asked.
It turned out to be a good move to, as I am not the only one willing to party for convenience. The idea caught on a bit and even a few local espresso stands got themselves some hemp milk for their customers.

Now, I'm not telling you this to take credit for the change or to toot my own horn, im telling you this because it is a great example if simple economics. Even just the slightest increase in demand can bring great changes in price and availability. And from those simple changes the hemp products gain more exposure and attention, the cycle goes on until hemp is not only cost effective but soon so saturated into our economy that the only thing left is to stop importing it and change the laws to grow at home.

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