COWEN
COLLABORATIVE INSIGHTS
February 25, 2019
- Figure 4 - CBD Plasticulture Model - University of Kentucky
CBD%
Price per %
Dry Matter Yield
Gross Returns Per Acre
Transplants (clone} Fertilizer -Nitrogen (urea) -Phosphorus (P205}
-Potassium (P20) Planting/Setting Black Plastic/Drip Line Harvest Cost Cash rent Application & License Fee Lab Test Other
$36,000 $36,000 plants $5.00 $7,500
unit $0.47 $47
unit $0.60 $18
unit $0.38 $17 plants $0.20 $300 acre $515 $515 hrs $12.50 $405 acre $300 $300 per year $400 $400 $300 $300 $669
Total Variable Cost Per Acre
Margin Over Variable Cost Per Acre
Source: hemp.ca.uky.edu, Cowen and Company
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Sensitivity Analysis For CBD Plasticulture Model. As shown below, there is a significant change in return for every $1 change in price per CBD%. A deterioration of this pricing with no corresponding change in cost would impact CBD production. Breakeven for the model above is ~$9/Ib for dry matter yield compared to the $30/Ib used to calculate the margin over variable cost per acre used. While price % CBD can fluctuate, the second factor determining the dry matter yield/Ib price is CBD%.
Figure 5 - Sensitivity Analysis
Price per% CBD Total Revenue Returns Above Variable Costs
$43,200 $36,000
$28,800 $21,600 $14,400 $7,200
Source: hemp.ca.uky.edu, Cowen and Company
CBD Hemp Clearly An Attractive Option For Growers. No other crop in the U.S. offers the type of return of the CBD Plasticulture Model. We would expect the two largest crops in the U.S.: corn and soybeans to lose some acreage to CBD hemp, though given corn and soybean area planted was 89.1M and 89.2M acres respectively in 2018. (Total planted acres in the U.S. is ~320M acres.)
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