Website Display
Search Website
News & Articles
GAME INDUSTRY TRENDS ANALYSIS 2024
.jpg)
Surplus Piles Up For Cannabis Farmers Due To Market Challenges
Surplus piles up for cannabis farmers due to market challenges
By Lindi Botha | 24 September 2024 | 10:00 am
Government has expedited hemp permits for farmers and has issued 1 100 since cannabis was declared an agricultural crop in 2021. However, little attention is being paid to the rest of the value chain, resulting in an abundance of biomass for which there is no market.
“Without feasible offtake agreements, farmers are essentially growing grass,” Shaad Vayej, legal cannabis expert and founder of OpenFarms in Cape Town, Western Cape, told Farmer’s Weekly.
“Government has made the permit application process relatively cheap and easy, which is good news. But there has been little scrutiny in where farmers applying for permits are based. Anything further than 100km from the market is not feasible since transport costs erode profits,” Vayej said.
He added that government’s strategy has been lopsided to date, with too great a focus on increasing farmers, and too little on pairing them with appropriate markets.
At a media briefing in September, Acting Minister in the Presidency Maropene Ramokgopa gave feedback on progress since President Cyril Ramaphosa signed the Cannabis for Private Purposes Bill into law in May 2024.
Ramokgopa referenced the 1 100 permits, and said that a National Cannabis Master Plan (NCMP) is currently being developed to provide a framework for the establishment, growth and development of the cannabis and hemp industry in South Africa.
The NCMP is anchored on nine pillars, including effective regulatory services, sustainable seed supply systems, research and technology development, producer support systems, market development, enterprise and supplier development, manufacturing and product development, education and training, and communication and awareness.
Vayej pointed to a tight deadline for the market to catch up with production.
“The growing season started in September, and with 1 100 farmers each planting around 50ha, there’ll be a lot of product that won’t have anywhere to go if processing facilities are not in place by harvest in April next year.”
While Vayej is in agreement that there is ample opportunity in the market for cannabis, both locally and abroad, pricing is mismatched.
“Locally farmers are offered around R2 000/t by builders looking for native building materials. But farmers need at least R4 500/t to be viable. The latter price is however not feasible for builders.”
He believed the solution lay in combining biomass production with seed projects to balance out low- and high-value industries. This however required more work to establish the market for seeds.
Ramokgopa reported that the Department of Agriculture has commissioned research to the value of R124 million with the Agricultural Research Council, which focuses on cannabis breeding for medicinal, fibre and other uses, cannabis plant disease surveillance, indigenous germplasm collection, and cannabis seed system development.
They have also developed two hemp varieties and are currently undergoing a second season of seed multiplication to make it available for the 2025 planting season.
Contact Us
