Karhlyle Fletcher   |   May 07, 2020

Hemp Seed Buy-Back Helps Protect Farmers

To protect hemp farmers, one of the industry’s leading hemp seed suppliers is stepping in to offer critical financial support.
Detroiter Karhlyle Fletcher is the host of High Lit, a cannabis research and classic literature podcast featuring leading voices and independent music. In addition to years in written and video cannabis journalism, he is also a traditional author.

EcoGen Laboratories of Grand Junction, Colorado, has initiated a buyback program for farmers who purchase and plant EcoGen hemp seeds.  EcoGen will offer to purchase unsold, quality hemp biomass grown from their genetically unique seeds at a fair market price.

Under the terms of the buyback program, the size of the sale will be limited to the value of a farmer’s initial investment. So if a farmer bought and planted $100,000 worth of EcoGen seeds, the company would, in turn, purchase $100,000 worth of hemp biomass, while also arranging for shipping of the product to an EcoGen processing facility.

“The intent is to alleviate some of the uncertainty and volatility in the [hemp] farming sector,” says EcoGen co-founder and CEO Alexis Korybut. ”There’s been much volatility throughout all verticals of the industry. If the industry does not have a strong farming base, there really will be no industry.”

All for One, and One for All

EcoGen Laboratories, the largest vertically integrated manufacturer and supplier of specialty hemp-derived ingredients in North America, is also one of the most profitable companies in the hemp industry. Since its founding in 2016, EcoGen has risen to unquestioned prominence in the hemp marketplace as one of North America’s most successful hemp seed and wholesale hemp-derived product dealers. EcoGen is a pioneer in world-class genetic research and development, and for this reason, its name has become synonymous with quality and reliability.

But despite their success and profitability, EcoGen must ultimately rely on hemp farmers across the nation to produce the biomass they require to manufacture high-end hemp products. In the short-term, the buyback program will help farmers stay afloat during potentially tough times while giving EcoGen the chance to build a sprawling network of long-term suppliers.

“They [the hemp farmers] are establishing a relationship with us,” Korybut points out. “Hopefully, we could be buying a lot more of their product than we would continually commit to through this program.

“We prefer to buy our own genetics,” Korybut continues. “They’re very good genetics, and it’s more efficient for us to process genetics that we know very well.”

From the perspective of hemp farmers, the EcoGen buyback program is generous and could provide some much-needed security. While EcoGen won’t commit to buying a farmer’s entire crop under the terms of this program, those who take advantage of the offer could become full-time EcoGen clients in the future. This gives them even more incentive to purchase and plant EcoGen seeds, and the possibility of forming new, mutually beneficial relationships is another reason why the buyback program makes sense from the sponsoring company’s perspective.

There is yet another benefit for farmers who buy seeds from EcoGen. The company has invested considerable time and effort in perfecting their genetics, in a quest to create a superstar class of seeds that can elevate the whole industry. Their efforts have produced some excellent results—farmers who use EcoGen seeds are guaranteed to grow hemp plants that produce prodigious quantities of high-quality hemp oil with superior CBH-to-THC ratios.

 In hemp, genetics are everything, as Alexis Korybut points out.

“What’s happened, in the past, there’s been much fraud in the industry,” he says. “It’s very easy to perpetuate fraud in the seed/genetics business because neither you nor I nor any expert can identify [high-quality seeds] by looking at them. It’s easy for fly-by-night operators to go out and advertise their great seeds when it’s just absolute nonsense.”

With EcoGen, impressive seed pedigrees are guaranteed. That should entice many farmers to stay with EcoGen even after the Covid-19 crisis ends.  

Self-Help Strategies for Long-Term Survival

At first consideration, the EcoGen buyback program might seem to entail some risks for EcoGen. If hemp farmers encounter low prices and weak demand for their crops, it could signal a soft market for hemp products as well. That could lead to high expenditures for EcoGen that won’t be offset by robust sales of their wholesale CBD products.

But there are reasons to be encouraged about the future of valuable botanical ingredients, despite the economic disruptions caused by Covid-19. Before the current crisis, analysts with the cannabis-and-hemp-focused Brightfield Group were projecting exponential growth in the hemp market, with sales of CBD products in the United States expected to rise from $4.2 billion in 2019 to 24.2 billion by 2025. So even if severe economic problems linger, CBD has been rising so fast and generating so much momentum that significant growth in the CBD market seems all but assured.

To gauge current attitudes about CBD products, the BrightField Group conducted an extensive survey of CBD users in March. They found that 39 percent of the participants expected to increase their consumption of cannabidiol-based products during the coronavirus crisis, based on its capacity to help relieve anxiety, depression, and insomnia.

As a top-line wholesaler, EcoGen is well-positioned to supply retailers with a full line of hemp-derived products they require to meet customer demand. Analysts believe many smaller retailers will be pushed into bankruptcy during the crisis, but that shouldn’t affect the ability of EcoGen to find qualified buyers for its premium items.

Another potential game-changer for U.S. hemp is occurring overseas, where China is struggling to recover from its frontline encounter with Covid-19. Until now, sales of Chinese hemp in the U.S. marketplace have been brisk, but present circumstances may halt that trend.

“Given the glut of U.S-grown hemp and the huge downturn in prices of U.S. hemp, I don’t see, even after this outbreak is cleared and supply chains are open, how it’s attractive to ship hemp in from China, which is over 7,000 miles away,” says Brightfield’s CBD Research Manager Virginia Lee. “Even beyond the coronavirus, shipping things by boat takes a long time … I think that overall, demand for hemp grown from China will go drastically down.”

EcoGen’s buyback initiative is built on sound long-term strategy and an in-depth understanding of where the market for hemp, and hemp-derived cannabinoid products, is heading. With government bailouts of hemp or cannabis a nonstarter, the still-nascent American hemp industry has no choice but to help itself by betting big on its future.

“Hemp is new to many farmers, and certain market variables continue to be unknown,” Korybut declared, in the press release announcing the new initiative. “Adding a layer of financial certainty for farmers can be invaluable during these trying times and something we are honored to be able to do through the EcoGen Buyback Program.”

EcoGen has the resources to make the program work, and its genetics hold great promise for hemp, regardless of any obstacles the industry might face over the next several months.


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