Hemp: Potential future cash crop for Thailand?

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Hemp has the potential to become another cash crop for Thailand, with perceived utilization in downstream industries for varied purposes with high value-added. 

Since December 15, 2020, the government’s decision to remove several parts and extracts of cannabis and hemp from the list of controlled narcotics (excluding flowers and seeds of the cannabis plants) has sparked great interest among consumers and manufacturers alike. 

To us, hemp has good prospects of becoming a cash crop and is more accessible to farmers and investors than cannabis. The conditions for growing, extracting and developing products made from cannabis continue to revolve around its medical benefits as cannabis contains Tetrahydrocannabinol (THC), a compound that has psychological effects. On the other hand, growing and extracting Cannabidiol (CBD) from hemp seed oil and fiber will see more relaxed controls, though both plants are regulated and supervised by the government throughout their supply chains. The first batch of upstream hemp-based products following the recent delisting should be gradually released to the market during 4Q21.

Demand for CBD extract and hemp seed oil for usage in high value-added industries such as medicines, cosmetics, food and beverage, supplements, and pet food – as well as demand for hemp fiber as raw materials in the auto parts and bioplastics industries – are expected to enjoy growth in Thailand and on the global market. Such trends are pivotal to subsequent increases in hemp farming investments. The global industrial hemp market turnover is projected to reach USD 4.748 billion in 2020, and accelerate to USD 18.608 billion by 2027, or a CAGR of 22.4 percent p.a.[1]

However, it is worth to note that a payback period for hemp farming could be around 4-5 years, and hemp farmers’ income could be at higher risk over the longer term.

While demand for downstream products will likely see a positive trend of growth, one issue facing potential hemp farmers in Thailand is their ability to remain competitive in price and quality, especially if import restrictions on raw hemp and hemp extracts are lifted. Not only will Thailand’s upstream hemp products be weighed against substitute goods in terms of quality and price, but they must also be of premium quality with affordable price that will allow them to compete against raw hemp and hemp extracts from overseas. These are issues to be considered when it comes to hemp farming.

A successful hemp cultivation rests on several conditions, especially knowledge of good agricultural practices, investment in outdoor/greenhouse/indoor farming, and appropriate product management. Thus, the processes will not be simple, and new farmers must go through trial and error on their own during the initial phase. For this reason, investors must study the processes thoroughly and be able to account for potential shortcomings during the payback period which could take several years.

KResearch has assessed that the sales turnover of dried hemp flowers harvested from outdoor cultivation -which yields around 20-40 kilograms per rai – may be approximately THB 200,000 – 1 million per rai in 2021. This high price range can be attributed to the limited amount of products currently available in the market, whereas the cost of growing hemp is expected to be as high as THB 300,000 – 1.5 million per rai. Hence, the payback period for hemp farmers may take as long as four to five years. 

Although the price of hemp fiber is cheaper than that of hemp flower, its higher output mean that differences in the income, cost and payback period between the two parts may not be so significant. If hemp farmers are able to raise the standards of indoor hemp cultivation – even if the cost is higher than the outdoor alternative – the harvested hemp flower could fetch higher prices. For instance, medical-grade hemp flowers will likely make a quicker return on investment.

As hemp farming gains popularity, the growing supply may become a variable that puts pressure on hemp prices, keeping them from reaching the levels attained during the early years. Going forward, if the government allows imports of raw hemp and hemp extracts from other countries (preliminarily, within the next five years), it will inevitably have a negative impact on the income of Thai hemp farmers. Therefore, prospective investors in this industry should prudently consider all of the aforementioned factors. 

We at KResearch view that generating sustainable net income depends upon effective planning to shorten the payback period and the development of quality products that can be sold at competitive prices, both at home and abroad.



This research paper which is arranged by KASIKORN RESEARCH CENTER Co., Ltd. (KResearch) presents information and analyses for customers of KResearch, KASIKORNBANK PCL, and/or companies under KASIKORNBANK PCL only. It is based on public information that has been obtained from sources believed to be reliable as of the date of its dissemination, and may be subject to change at any time without prior notice. KResearch does not warrant its accuracy, reliability, appropriateness, completeness or recentness. Nothing in this research paper shall be counted as containing any persuasion, recommendation, advice, or motivation for decision-making in any circumstance. Users should carefully study related information and apply their own discretion before making any decision. KResearch shall not be liable for any damage occurring from the use of said information.  

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