Is There a Hemp Boom on the Horizon?
A cousin to cannabis, there’s an increase in acres for this once-illegal plant
As the trade war with China drags on and low grain prices continue, many producers are experimenting with hemp, a plant that was illegal not too long ago. The 2018 farm bill, which passed last December, removed hemp from the federal Drug Enforcement Administration’s list of controlled substances and put it under the oversight of the USDA.
With the inclusion of this product in the farm bill, many groups — both inside and outside of agriculture — are trying to predict the product’s potential.
What’s it all about?
A cousin to the cannabis plant that produces marijuana, hemp can be used for various purposes, including rope, biodegradable plastics, biofuel, food and animal feed. Hemp seeds can be eaten raw, ground into meal, or made into dried sprout powder.
The close association hemp has with marijuana has given it a stigma and may have hampered its growth. But with the clearance from the 2018 farm bill, this crop is poised to flourish.
According to the 2018 U.S. Hemp Crop Report, the crop more than tripled in acreage across the United States last year. Reuters reports that industrial hemp plantings this year could double that number.
The U.S. hemp market is growing along with supply. U.S. sales of hemp reached $1.1 billion in 2018 and are projected to reach $1.9 billion by 2022, according to Vote Hemp and the Hemp Business Journal, a trade publication.
For producers, the profit potential is high. A report from Reuters says a good yield of food-grade hemp, for instance, can net farmers about $750/acre.
The American Farm Bureau Federation (AFBF) says one challenge is regulation. Uncertainty still exists about how and when regulations will be implemented. There is also uncertainty over how hemp will be treated under crop insurance. Most observers think hemp will be a covered commodity for crop insurance in 2020, but questions remain, says AFBF.
Procuring seed is another challenge. Since other countries have had legal production for a few decades, most of the seeds come from Canada and Europe, which can be expensive.
Harvesting hemp can be labor intensive: special equipment may be required; flowers are typically harvested by hand; and the fiber is grown in fields and must be cut mechanically and dried in the field before storage.
With the legalization of hemp in the 2018 farm bill and the optimism federal legalization brings, the potential is there for this market to grow rapidly. As more people become open to hemp products and the stigma surrounding the plant falls away, the more demand will appear. ■
Top 5 Hemp Growing States in 2018
#5 – Tennessee ... 3,338 acres
#4 – Kentucky ... 6,700 acres
#3 – Oregon ... 7,808 acres
#2 – Colorado ... 21,578 acres
#1 – Montana ... 22,000 acres
Information provided by 2018 U.S. Hemp Crop Report