Author: Tyler Mark

The acres of hemp production in the United States have been on the decline since its most recent peak production of over 200,000 acres in 2019. By 2021 the acreage had shrunk to 54,000 acres, and in 2022 the production is under 37,000 acres. However, there is some light at the end of the tunnel for this crop. Over the last two years, acreage has shifted from floral production to grain and fiber production. This trend is expected to continue into 2023 as processing capacity and markets begin to emerge. There is also some good news for the hemp floral production segment, with existing stocks of hemp crude oil and floral biomass having degraded to a point of minimal economic value. For hemp to maintain current acreages and potentially increase acres in 2023, there will need to be a continued investment in genetic improvement, infrastructure development, and market research. 

Awards through the most recent rounds of Climate Smart Agricultural funding will help to propel research and production of this crop. In addition to research investment, there continue to be significant announcements of additional fiber and grain processing facilities across the United States. In 2023, Farm Bill hearings will continue, providing the next major opportunity to further develop the regulatory framework for the hemp industry. This will be a pivotal point in the development of the hemp industry and will set the course for its continued growth. Lastly, we are watching 2023 for increasing demand and access to international markets which will be key for the industry’s development and long-term growth potential.

There are also some bright spots from a profitability standpoint for the grain and fiber sectors. With additional increases in grain and fiber demands and rising prices, these products are becoming more competitive with traditional commodities. However, producers considering the production of hemp in 2023 need to proceed with caution and carefully evaluate the profit potential for their individual operations. Enterprise budgets that can be used to assist in evaluating the profit potential can be found on the University of Kentucky Industrial Hemp Agronomic Research webpage. Additionally, make sure to involve a lawyer in the evaluation of the hemp production contract to ensure it provides the relevant risk management protections for your operations. A contract checklist can be found at the University of Maryland.

Author: Tyler Mark

Associate Professor

tyler.mark@uky.edu

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Mark, Tyler. “Will Hemp Production Fair Any Better in 2023?” Southern Ag Today 2(52.3). December 21, 2022. Permalink

2021

The hemp industry continues to struggle to find its balance in the agricultural economy. As the industry continues to work through hemp inventories produced in 2019, 2020, and 2021, which have continued to suppress farm gate prices, retail pricing remains sticky. For example, in Kentucky, 1,675 acres of hemp were harvested in 2021 representing a 63% decrease over 2020. Multiple states around the country are experiencing these types of declines. Hemp production destined for extraction continues to dominate the national market. Consumers of hemp products are loyal and purchase mostly online. However, there is market confusion within the industry as consumers need additional education on the differences between hemp and marijuana, according to our research.

2022

For the market to move forward in 2022 the industry needs to educate consumers on the differences between hemp and marijuana. Furthermore, uncertainties around regulations, THC content, pet and livestock feed approval, inconsistent smokable laws between states, and FDA approval continue to hinder growth in the hemp sector. Some processors continue to explore new marketing channels by focusing on cannabinoids other than CBD (i.e. CBG, CBN, etc.) or other THC attributes (i.e. delta 8,10).  However, significant increases in floral hemp production are not expected until current stocks are processed (or destroyed because of storage issues) or demand shifts. Conversely, the grain and fiber industries are starting to see an increase in demand as investment in these sectors continue to increase. Hemp continues to be a small sector of agriculture that needs stability before significant increases in acreages are realized.

Figure 1: State and Region Hemp Biomass Price

Mark, Tyler. “Hemp Review and Outlook“. Southern Ag Today 2(4.3). January 19, 2022. Permalink