By Carol Lea Spence
Special to KyForward
A recent University of Kentucky College of Agriculture, Food and
Environment study went beyond hope and hearsay and examined industrial
hemp’s true potential as a viable crop in Kentucky.
It found that profitable opportunities may exist for a limited number
of farmers and processors, particularly in seed and oil, but the
current lack of efficient fiber processing techniques, potentially
strong global and domestic competition and a high return from row crops
in recent years are some of the factors that could limit the number of
growers willing to shift much of their acreage into industrial hemp
production.
The Kentucky Department of Agriculture’s Kentucky Hemp Commission
asked the UK Department of Agricultural Economics to do the study,
called Considerations for Growing Industrial Hemp: Implications for Kentucky’s Farmers and Agricultural Economy.
It was predicated on the Kentucky General Assembly’s passage of the
“hemp bill” in March, which established a regulatory framework for the
production and marketing of industrial hemp if federal policy should
change or if the state could obtain a federal waiver.
“If political challenges are overcome, enticing processing interests
to locate in Kentucky, along with production research, will be critical
to capitalize on a relatively small, but expanding niche market for hemp
products,” said Will Snell, one of the study’s authors. Other UK
agricultural economists involved in the study included Lynn Robbins,
Greg Halich, Carl Dillon and Leigh Maynard. Dave Spalding, extension
associate in the UK Department of Horticulture, also contributed.
Hemp is grown in more than 30 countries; China boasts the most
acreage, but Canada, the U.S.’s likely chief competitor, is beginning to
influence both production and trade. Their acreage has grown steadily
over the past five years, and the Canadian government provides grants
and no-interest loans to support production.
Hemp can be grown for both fiber and seed. Some people have talked
about the potential for industrial hemp fiber to be a major market for
Kentucky farmers.
“Based on what I’ve seen, that is not going to happen in Kentucky,”
Halich said. “If people are doing this to make money, it’s going to be
on the oil seed side, not on the fiber side, at least in the foreseeable
future.”
To obtain the most value from the long hemp fiber, the outer layers
of the stalk must be removed, a process known as decortification.
Cost-effective mechanization for this has not been available. Using
Canada as a model, profitable opportunities to date have been largely
limited to seed and oil production.
“In the end, fiber production is going to depend on a processing
plant being fairly close and willing to pay a high enough price to
entice farmers to switch over to grow it,” Halich said.
The hemp oil processing chain is fairly well established. Maynard,
however, spoke with a representative of a Canadian processing company
who said even a large oil customer that might use 30,000 pounds of
hempseed oil per year would support only 96 acres of production.
“None of the processors with whom I spoke — and some of these are
well established companies in Canada — none of them thought it was going
to be an activity that would produce large numbers of employment or
require large numbers of acres,” Maynard said.
For about 15 years in the middle of the 19th century, Kentucky was
one of the major hemp producers in the country, until cotton and imports
of other materials became more popular. During World War II, industrial
hemp production peaked for the manufacture of, among other things, rope
and twine for the war effort. Kentucky, with its 52,000 acres, claimed
about 10 percent of the market share.
Today, though the U.S. market for hemp-based products is a shadow of
what it once was, it is growing, driven by a dedicated base that is
interested in natural foods and body care products. There is no
expectation, however, that hemp will ever be anything like tobacco,
which was highly profitable in many years.
“While our study, under the most optimistic scenarios does show some
promise, the current market for industrial hemp products would only
generate hemp sales and jobs in the short run that would be relatively
small compared to the rest of the Kentucky agricultural economy,” Snell
said.
The study is a reminder that should regulations relax and hemp
production be allowed, Kentucky producers cannot assume they will
automatically corner the U.S. market; other states will enter the
market, as well.
“If hemp proves to be profitable in the short run, without barriers
to entry, the emergence of new producers from other states and nations
could easily result in oversupply and price volatility, which could
erode long-term profits to levels comparable with other row crops,”
Snell said.
Hemp, however, could be another crop in a farmer’s diversified portfolio.
The full report is available here.
Carol Lea Spence is an agricultural communications specialist at the University of Kentucky and editor of The mAGazine.
To read other KyForward stories about hemp, click here.
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