A Huge New Market & Industry Is Close to Being Born.
Everyone talks about sustainability in the creation and use of modern products. Yet few go much further than talk. What exactly does sustainability mean to particular industries and companies within these industries? How is sustainability viewed from the perspective of manufacturers?
There is little doubt that there is a current cultural movement to use products that are created from sustainable inputs that do not further add pollution to the environment. The fact that consumers search out these types of products creates a demand for them in the marketplace. But this is not a strong market force and while companies are influenced by cultural movements, it is unlikely they will search out sustainable inputs purely because of cultural influences. Rather, it is much more likely that companies will only move towards sustainable inputs for their manufacturing processes by 1) being forced to do this by government regulation or 2) by increasing costs of their unsustainable inputs. The second reason is an area that needs much more research and has much application to the use of hemp fiber.
Uses for Parts of the Hemp Plant / A Current “Gold Rush” for CBD From Leaves & Flowers
The talk of sustainability has been swirling around the recently legalized hemp plant and particularly the stalk part of the plant where hemp fiber comes from. The other parts of the plant – the flower, leaf, seeds – create consumer products such as CBD, food additives and various oils. While the stalk of the hemp plant also creates consumer products like paper and textiles for clothing, its far greater promise is not in creation consumer products but rather in raw materials for inputs into the manufacturing process.
For instance, the hemp stalk has found niches in certain industries. One example is hempcrete, an insulating and heat storing material used to provide an envelope around or within a structure. It is also being used to replace trees for building lumber with the creation of hemp wood. These two examples are only the beginning of the potential of hemp fiber in replacing many raw materials in the building industries. It also has great potential as offering new inputs for manufacturers of industrial and consumer products replacing petroleum in creating plastics (bioplastics) or even creating new fuels (biofuels) as a source of power.
A Home Made With Hemp Wood
The challenge is identifying these target industries and manufacturers for hemp fiber. As a starting point, the outside boundaries of this market would probably include manufacturers currently using unsustainable resources as inputs into their manufacturing process. This is a huge group and includes almost all manufacturers using mined materials rather than grown materials as manufacturing inputs.
Within the large group using unsustainable mined resources, there are some companies that are nearing the end of their particular mined resource making the resource more expensive to mine. The rising cost of particular unsustainable mined resources force a manufacturer to search out alternatives to replace the unsustainable resource. These replacements are either other unsustainable resources in greater supply and therefore less costly to acquire or sustainable resources.
When other unsustainable resources do not make economic sense as substitutes for manufacturing inputs, the manufacturer looks outside the world of mined, unsustainable inputs to sustainable or grown inputs for the manufacturing process. This is when the manufacturer might consider the hemp crop and specifically hemp fiber from the hemp crop. While hemp has many beneficial attributes, it still competes with other grown crops that might offer similar types of inputs needed by the manufacturer. In this competition, there are a number of important considerations. For example, Professor Lawrence Smart from Cornell’s School of Integrative Plant Science and a leading hemp researcher, writes to us upon reading this article, “I appreciate your advocacy for sustainable feedstocks, but playing devil’s advocate, why would I mess with all of the regulation around hemp instead of growing fiber flax or kenaf, which have nearly identical fiber yields and properties, or Miscanthus or willow which are far more sustainable perennial sources of stem biomass for compressed, non woven products.”
In addition to competing with other sustainable crops for use by a manufacturer as Professor Smart observes, hemp must also show the manufacturer that it is more cost effective than other sustainable inputs (crops) that the manufacturer might choose.
Hemp Fiber / Upstream in the Manufacutring Supply Chain
But even if hemp wins the test of being more cost effective and useful for a manufacturer, this still does not mean it will be chosen by the manufacturer. It must also be available to the manufacturer. This currently presents a large obstacle for domestic American manufacturers as there little tall stalk hemp grown in America and few machines to process it by striping it from the rest of the plant. My Canadian friend Bruce Ryan of CannaSystems mentions this “vicious cycle.” Many years ago, Bruce notes, the furniture manufacturer Flexform was looking to replace sisal, one of their raw materials, with hemp. However, no one had the 6″ long fiber. As Bruce says, “Breaking the cycle will take many folks working together.”
Finding hemp fiber presents less of a problem for foreign manufacturers, particularly those located in China, the greatest source for tall stalk, fiber hemp. Production of hemp in China has been increasing for a number of years. ACTIVEurope notes that after the establishment of the People’s Republic, the Communist Party-led government classified the plant as an illicit drug and introduced some of the world’s toughest cannabis laws. But China’s scientific, political and industrial communities have changed their attitude on hemp based on their needs for alternatives to cotton. As the European Industrial Hemp Association points out, “cotton is increasingly causing environmental problems due to its enormous need for water, soil, salinization and the use of pesticides.”
Chinese Hemp Production / Much Fiber But Not Going to Industrial Use
The American manufacturer who has gone through the above process and decided that hemp fiber is the replacement input for one of their manufacturing materials, needs to either consider importing the fiber needed for their manufacturing process or growing the tall stalk hemp themselves.
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A recent report from Markets and Markets estimates the industrial hemp market projected to grow from USD 4.6 billion in 2019 to USD 26.6 billion by 2025, recording a CAGR of 34.0% during the forecast period. The hemp fiber segment is projected to dominate the market during the forecast period. The M&M report notes that while substantial growth is predicted, the growth could even be greater as developing research discovers new industrial applications for hemp. The report mentions a growing awareness of hemp fibers as a renewable resource to producer biofuels and bioplastics as a key factor expected to drive global demand. In addition, the hemp plant has great potential in markets such as food and feed outside industrial markets. For instance, there is a growing number of chronic diseases such as diabetes and the increasing usage of hempseed oil & hemp seed in various food applications.
Yet in spite of reports like M&M predicting a huge increase in the industrial hemp market, the North American hemp fiber market will represent a small part of this global market (as seen in the chart above). Perhaps the major reason is that the North American market is currently dominated by a focus on the flowers and leaves of the hemp plant in CBD rather than the stalk of the plant and its fiber for manufacturing. In this sense, the hemp fiber industry in North America seems to wait in the background, away from all the noise of the current “gold rush” to CBD. Yes, it might be a huge industry that will be worth tens of billions of dollars in perhaps just five years. But it is difficult that the American part of this business will be much unless it is “jumpstarted” into existence.
This jumpstart will require the target industries and companies mentioned above to step up to the plate and learn about the use of hemp to replace current unsustainable, non-renewable resources they use for current manufacturing. There needs to be active involvement and leadership from these target industries and manufacturers on the demand side of the supply chain to get the industrial hemp industry started. Industry associations and companies in these industries need to be educated about this potential new sustainable input resource. And too, hemp industry associations need to work to educate industry associations about the benefits of using hemp fiber in their manufacturing process.
An Overproduction of Hemp Across America
Farmers have learned a bitter lesson in 2019 with the overproduction of CBD and they are not about to repeat this mistake by over-producing tall stalk, fiber hemp. While some companies have grown (are growing) tall stalk hemp, it has never been grown for creating large industrial inputs as described above. Generally, it has been grown for such things as a replacement for cotton in textiles. This is really the “low hanging fruit” of the hemp fiber industry. Beyond this low hanging fruit, sits a vast market for hemp fiber.
Industry rather than agriculture will have to take the lead in really starting up the massive potential market for hemp fiber. It could very well become an overall new raw material “brand” similar to the great discoveries in matching raw materials to products. Dupont has been one of the best at this. Think of brand words like polyester and plastic both attached at the hip to particular producers of the input for the product. Think of the famous products that have acquired status of popular nouns for building materials such as Wall Board. How many could see a company by the name of Gypsum behind worldwide wall boards. Or consider the great companies whose products have come to own even popular verbs such as Xerox.
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Today’s leaders of corporations with large physical manufacturing operations are first targeted. Other industries like the Information Industry are much less affected. Heads of corporate manufacturing, whether within the R&D Department of a corporation. Manufacturing leaders need not depend on just their daily leadership skills to explore and understand the introduction of hemp into an industry. It makes the most sense for those leaders of companies with problems in the area of raw materials for their products to be the real key targets for these new leaders in the hemp industry.
This assumes that the company knows that their input resources are a key part of their business. For various businesses, this is more or less a key part of their business. This person needs to be aware in the rising or falling costs of acquiring particular resources. In a general direction, the non-renewable/sustainable inputs into the company are traced on an index of their current costs to acquire. A simple example might suffice here. At one time, a miner could find what they looked for near the surface to the ground. But after a number of years, the miner had to invade more and more earth that contains the mine. Until it looks like the mine in the photo below.
Mining Deeper Into the Earth to Find Increasingly Costly Unsustainable Resources
The new type of leader in this new hemp industry will be able to first visualize the coming of fiber hemp into the global, industrial market. Any corporate CEO and head of manufacturing operations need to understand the exploration of this grand replacement raw material invader of an entire industry. Their industry. A renewable resource that can very effectively and cost-wise allow for an entirely new product. It would give their company a large competitive advantage not in marketing but in resourcing new inputs into the manufacturing process.
Not a glamour part of the finished product but perhaps the much-overlooked beginning of the process of becoming a product. In effect, the birth of a new industry for a particular crop. Here, it is the crop hemp that has just been legalized in America for a few years. Perhaps the great crop of American history. Made illegal for many years. By some large corporate leaders of the day such as legendary business names in American history?
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Basically, the question comes down not to any save the earth feelings (no matter how important they might be) but pretty much straight math. There is little subjectivism or “feeling” in this particular process. All required is the recording and acting on a set of numbers suggesting the cost of inputs onto a manufacturing process. This cost relative to the other costs. Its movement up or down relative to the other costs. This number compared to a number of other indexes. Certain algorithms applied and actions for inputs suggested. Using AI technology to a large extent, most likely.
This is monitored and classified in constantly changing indexes showing CEOs and those controlling manufacturing how close the company is to an advised substitution of raw materials products into the current manufacturing system. A basic premise behind this is that unsustainable resources have an estimated lifetime of use and a cost of mining these resources each year. Compared to other raw materials as an input into a product.
The Powerful Unsustainable Resources Industry
But the unsustainable resource industry is perhaps the greatest (unseen, hidden) industry in the world today. It represents the greatest brands or products that surround us each day in our contemporary world. Brands carrying on the tradition in their great founder’s names who mixed a particular resource with the manufacturing of a particular product. Always making sure products are manufacturer from patentable, non-renewable/sustainable resources. Rather than renewable resource ideas.
There are manufacturers who use unsustainable raw materials more than others today. Not just in someone’s opinion but rather in a particular index or ratios providing info to the new players in a hemp company or a company that is monitoring hemp as a substitute input into the manufacturing process. Here we are within decisions determined more numbers than passion or emotions. This is one of the potentials for the new hemp fiber industry in America.
The image in the photo of pushing deeper and deeper into earth to pull final things from her. At greater and greater real costs to a manufacturer as quantities of the resource decrease at a certain rate each year. New costs are established at certain times perhaps.
A new, larger perspective of the manufacturing world to the agricultural industry, the farming industry. Manufacturing and farming as a team in creating a great sustainable new resource for a manufacturer. In many ways it makes sense that those who decide what materials to use for products today team up with their major suppliers such as hemp farmers.
Ratios and Indexes Should Determine Transfer from Unsustainable to Sustainable Resource Mix
Everyone talks about sustainability in the creation and use of modern products. A few business leaders, perhaps only one, will do something about this. Their investigation of materials will be an investigation into an entire industry. Such as the airplane manufacturing industry with the promise of lighter and stronger materials for many parts in this industry, the manufacturer of an airplane. One corporation might do this. Or maybe a group. Perhaps some-day an industry. An industry standard.
There might be some new leader in American business through the introduction of hemp into American manufacturing. A particular moment caught and posted by a number of smartphones. And the additional savings of billions and billions each year on this new replacement product in the manufacturing process called hemp fiber.
The company has gotten into this new hemp industry, armed not just with things of the heart or Hallmark stories, but a number of math tables, algorithms. The indicators surrounding someone running an important part of a company today: the manufacturing inputs. This person is someone like an old engineer on a steam engine looking at various gauges. Or a pilot of an aircraft looking at gauges. Or the pilot of a drone.
New Business Leaders Will Birth New Industries
After a while, the declining unsustainable raw material inputs into the company no longer appear. But more than likely the involvement of the company in farming activities will increase.
More than likely, the manufacturer has contracted to have a certain number of acres of tall stalk hemp being grown as a new input for the manufacturer. Not just a few acres but perhaps hundreds of thousands of acres for first testing and then expanding up to millions of acres under production. Perhaps it makes sense for a number of manufacturers to get together on this whole thing?
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The first few years, the manufacturer and grower need to maintain a very close relationship. Two sections of culture interfacing with each other. It seems imperative for the two sides to get together and work together to create a new industry. One that has not existed before. There will be the possibility that this might be a real world from sustainable products and not just a world of sustainability called up in the speeches of politicians that we all should use renewable resources.
In all of this we’re talking about the transfer of unsustainable inputs to sustainable inputs into key manufacturing companies today. An index developed to find these companies (and their leaders) based on the above information. Yes, everyone talks about sustainability in the world today. But a small group of people in today’s manufacturing companies have the power – and urgent need – to do something about this.
See our article “The Promise of America’s Bittersweet Crop”
John is principal in a hemp start-up business
See his page on this site at John
Thanks to Bruce Ryan & Steve Allin for their comments.
Also thanks to Professor Lawrence Smart
Zev has been deeply involved as a leader in the U.S. hemp industry since late 2012. He was the creator and founding Executive Director of the National Hemp Association and the co-founder of Raw Hemp Marketplace. He regularly consults with individuals, companies, and organizations on many aspects of hemp.