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Lumber Volatility Affords Opportunity for Hemp-Based Alternatives

Lumber Volatility Affords Opportunity for Hemp-Based Alternatives

hemp wood

By Eric Singular, Director, Hemp Business Journal

In May 2021, lumber prices reached an all-time high of $1,689 per thousand board feet, representing a 640% increase from $228.23 in 2016. The spike was fueled by destructive wildfires (which during the past two years have consumed millions of acres of forests and a handful of lumbermills across California and the Pacific Northwest), surging demand for new homes, and a boom in renovations and DIY hobbyist projects during COVID-19 lockdowns. This year, rising mortgage rates, growing inflation, and a decline in home renovations have brought much-needed relief to lumber prices. Today, lumber is going for $519.86 per thousand board feet, still up 128% over the past six years.

However, as of May, wildfires in 2022 have burned over 1.1 million acres, more than double the acreage impacted year-over-year from January-May 2021. In New Mexico, the Calf Canyon-Hermits Peak Fire — the largest in the state’s history — has exceeded 300,000 acres while being only 40% contained. The National Interagency Fire Center’s Predictive Services is forecasting above-normal fire potential in May and June for most of the Southwest; by July that will extend from central Oregon to southwest Oregon and central Washington, and to much of the Pacific Northwest in August. Significantly above normal fire potential is also forecast to increase across northern California from May into July, with rising potential along portions of the Sierra Front. To make things worse, 53.4% of the country (i.e., 187.5 million acres of cropland) is experiencing severe and extreme drought conditions, according to the U.S. Drought Monitor.

HempWood

While the threats to the stability and extended outlook of the lumber markets are alarming, they may fuel interest in wood alternatives emerging from the hemp fiber industry. While timber farmers harvest oak trees grown 30-40 years old, hemp can be cultivated and harvested in between 90-120 days. Kentucky-based HempWood has been leading the charge in bringing its wood substitutes to market to serve as a viable substitute for anything that oak might be used for. According to HempWood Founder Greg Wilson, the company’s range of flooring, board, furniture, and turning products are fashioned from wood composite comprised of greater than 80% hemp fiber.

“We take the whole stalk and put it through a crushing machine which breaks open the cell structure,” he explains. “Then we dunk it into these enormous vats of soy protein, mixed with water and with the organic acid used by the paper towel industry.” To date, HempWood has attracted high-profile customers, like BMW and H&M, who are embracing the use of sustainable materials for built environments.

HempWood has been focusing on vertical integration, producing most of its raw material within 60 miles of its 16,500 square-foot pilot plant located in Murray, Kentucky. While HempWood products are available through 30 retailers across the U.S., Wilson looks forward with a vision for franchising. The company is offering one HempWood factory license per U.S. state, European Union member nation, and Canadian or Australian province, representing a total potential output of 1 million board feet per press/shift/year.

Beyond Kentucky, DON Processing LLC has answered the call. Last month, the New Castle, Pennsylvania-based company completed Project PA Hemp Home, Pennsylvania’s first complete renovation of a home using hemp-based materials. The project included HempWood board for flooring, with Hempcrete (a mixture of hemp, lime, and water) blown into the walls as insulation. This week, DON Processing’s company officials testified in Philadelphia before the Pennsylvania House Democratic Policy Committee regarding the company’s plans to build a decortication facility and a HempWood production facility. Elsewhere, HempWood has opened an office in Belgium, and is in negotiations to establish facilities in Oregon, Texas, and Montana.

Price Parity

While hemp-based wood alternatives could certainly prove disruptive to the North American wood products market which is forecasted to reach $230 billion by 2025, the primary obstacle for wood-alternative products has always been achieving a competitive price point.

Since the company’s inception, HempWood’s median price of a 72” board has decreased 15% from 2018 to 2022 by dialing in processing efficiencies and scaling production. HempWood has already achieved price parity with American white oak. Nevertheless, the prospect for achieving price parity between HempWood and structural lumbers is unlikely considering the differing applications between softwood and hardwood.

Sustainability

According to Alyssa Trombetti, HempWood’s communications director, the company’s products are “carbon squared.” As she explains, “because 1.6 is the rate at which carbon is sequestered and the compression ratio for making HempWood, we like to call it carbon squared. We also use a bio-burner, which allows us to use our waste to heat our ovens, dryers, and even our facilities, and are located near Kentucky Dam, so our facility utilizes hydropower.”

It is possible that economic incentives for such sustainable and renewable alternatives will increase affordability and accelerate adoption. This month, the New York Senate and Assembly passed Senate Bill S8496, a bill to “amend section 519 of the Agriculture and Markets Law to update the hemp economic development section of law to clarify that the Commissioner shall work with the urban development corporation, the New York State hemp workgroup created in cannabis law, and representatives of industries that currently use, or may potentially use, industrial hemp in their products, to develop and promote the use of hemp by businesses for purposes such as packaging, construction, and other uses.”

More broadly, the drive for sustainability is gaining international momentum, as demonstrated by the United Nations defining and promoting its 17 Sustainable Development Goals as discussed by legal cannabis professionals this month at the United Nations in New York City.

Beyond government incentives, hemp-based building materials offer potential to help reduce carbon emissions by replacing cement and steel as primary materials in construction. Bio-based materials (e.g., hemp and bamboo) convert CO2 into biomass through photosynthesis during the growth of the plant, before their being processed and used as materials. According to a 2020 study, an international team of interdisciplinary scientists found that broad-based adoption of engineered wood such as HempWood throughout the next few decades could effectively turn timber buildings into a global carbon sink.

Aside from price parity, widespread use of hemp-based building materials for construction would require code approval. In the U.S., the International Code Council (ICC) develops and oversees testing programs and certifications for building code enforcement and construction professionals nationwide. In January, the U.S. Hemp Building Association submitted a code change proposal for hemp-lime (i.e., hempcrete) construction for the 2024 International Residential Code.

Carbon-negative, hemp-based wood alternatives likewise offer environmental benefits by reducing deforestation. While the lion’s share of deforestation is attributed to cattle ranching, the Union of Concerned Scientists (a U.S.-based nonprofit science advocacy organization) estimates that approximately one-third of wood being extracted from natural forests worldwide is used for timber products.

Perhaps most notably, between the perennial volatility in the lumber market, and the hemp fiber industry’s demonstrated ability to use renewable building materials as a means of carbon drawdown, the industry should see hemp’s attainment of price parity within the coming years.

The post Lumber Volatility Affords Opportunity for Hemp-Based Alternatives appeared first on New Frontier Data.

#CBD #Hemp https://newfrontierdata.com/cannabis-insights/lumber-volatility-affords-opportunity-for-hemp-based-alternatives/ May 26, 2022 1:39 pm

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