The Thai government has removed particular parts and extracts of cannabis and hemp from its list of illegal drugs (except for cannabis inflorescences and seeds), effective from December 15, 2020 onwards. This move has sparked widespread interest both from consumers and producers, and has brought up the question whether or not cannabis and hemp will become a new cash crop.
Hemp has the potential to become Thailand’s next cash crop due to its higher accessibility to farmers and investors than cannabis, because the purposes of cannabis farming, extracts, product development and launching still mainly focus on medical uses as cannabis contains tetrahydrocannabinol (THC) that affects nervous system. The cultivation and utilization of hemp for either cannabidiol (CBD) extracts, hemp seed oil and fiber will be more relaxed; therefore, it is expected that the initial supply of hemp after restrictions have been lifted will likely hit the market in the fourth quarter of 2021.
Demand for hemp-based CBD extracts and seed oil for the use in high value-added industries tend to grow both at home and abroad, covering pharmaceuticals, cosmetics, food and beverages, food supplements and animal feeds, as well as fiber and raw materials used in innovative products such as auto parts and bioplastic, etc. This trend will drive more investment in hemp farming. Meanwhile, it is expected that the global hemp market will be worth approximately USD4.748 billion in 2020, reaching USD18.608 billion in 2027, or an average growth of 22.4% per year (CAGR).
KResearch has preliminarily assessed that the income from outdoor hemp farming in 2021 may average at between THB200,000 to 1 million per rai, due to its high price which mainly stems from its limited supply. At the same time, the cost of growing hemp may range from THB300,000 to 1.5 million per rai. For this reason, a breakeven point for hemp farming could be around 4-5 years.
Over the forthcoming period, it is likely that hemp farmers’ income will gradually decline owing to increased availability, which would consequently put pressure on price. Additionally, hemp farmers can expect to face challenges from foreign competitors who are expected to sell fresh hemp and hemp extracts once import restrictions are lifted. Therefore, those who wish to invest in hemp farming should carefully consider a number of important factors.
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