Understanding the U.S. Hemp Industry: Current Structure and Challenges

Grants and Contracts Details

Description

Since the reauthorization of hemp production through state pilot programs in the 2014 Farm Bill, U.S. industrial hemp acreage has grown from zero to over 54,000 acres in 2021 with an estimated production value exceeding $800 million. The 2018 farm bill put in place a national regulatory framework and USDA published a final rule for hemp production in March 2021 that standardized U.S. hemp production licensing and testing, and also enabled USDA to develop insurance, conservation, direct loan, and other farm programs specially tailored for hemp producers. Yet, despite the rapid growth in domestic production, relatively little is known about this emerging industry and its market in particular – with much of the current literature focusing on regulatory hurdles to hemp producers and outcomes observed in state pilot programs. Through this cooperative agreement, the identified partner will leverage new data to analyze post-pilot U.S. hemp production, markets (including hemp floral, fiber, and grain products), and market structure. The research team will identify the location and value of production, hemp-based product prices, organization of buyers/processors, and most commonly used marketing channels. Given that production requirements vary by hemp use (floral, fiber, or grain), it is important to examine these markets comprehensively, from individual to multi-use outputs (e.g., dual grain and fiber production). APPROACH: Through the University of Kentucky/ERS collaboration funded by this cooperative agreement, partner researchers will work together to conduct research and draft reports that examine U.S. hemp production, markets, and market structure. The research team will evaluate U.S. hemp production in terms of total value and acreage. The team will use information from national surveys (2021 NASS Hemp Survey; 2020-2022 ARMS Phase 3 Survey; 2022 Ag Census) and AMS administrative data to decompose value of production into prices and quantities, by state. The research team will compare the price data to proprietary historical spot price data on hemp floral, grain, fiber, and refined products from New Leaf Data Service''s Hemp Benchmarks and PanXchange datasets (provided by university collaborators). Finally, the group will work with the ERS farm income team to develop a method for estimating (farmgate) state and national hemp cash receipts consistent with longstanding estimation methods for other crops. STATEMENT OF MUTUAL INTEREST: This project will contribute to hemp research by documenting: (i) the status of the domestic hemp industry, (ii) how the reintroduction of hemp production has affected both the state and Short Coop Agreement Title or Topic: ERS Investigator(s): Name(s) Name of Principal Investigator, University of X, City, State 2 national economy since its inauguration eight years ago, and (iii) the challenges still facing the industry. The cooperators bring a wealth of expertise on issues related to U.S. hemp production and markets and have access to proprietary price data on hemp-based products. The ERS research team complements the skill sets of Dr. Mark and his research team with specific knowledge of the USDA programs and farm income estimates. THE COOPERATOR AGREES TO: Conduct at Cooperator facilities and elsewhere as appropriate, research directed toward completing this plan of work. Activities include: 1. Working with ERS personnel in the planning and conducting of the research plan. 2. Providing the proprietary historical spot price data on hemp floral, grain, fiber, and refined products from New Leaf Data Service''s Hemp Benchmarks and PanXchange datasets. 3. Working with ERS personnel in drafting a comprehensive overview and findings of the hemp industry structure as an EIB publication or other ERS publications. 4. Disseminate information using several communication vehicles (workshops, forums, and peer-reviewed publications) and electronic delivery modes. 5. Prepare quarterly written reports to ERS regarding progress on the above research. ERS AGREES TO: 1. Work closely with the cooperator in planning and conducting the project. 2. Coordinate with the cooperator in producing ERS research reports and in the development of presentations of the research in progress. 3. Pay travel and per diem expenses of ERS employees. 4. Provide necessary office space, office equipment, and supplies for ERS employees assigned to the project. MUTUAL AGREEMENTS: Auto-generated by AIMS system. CONTACT INFORMATION FOR ERS AND THE COOPERATOR: Agency Section: Contact: Toshiro Settles USDA, ARS, EAD [address, phone, and fax in AIMS system] ERS/PI: D. Adeline Yeh USDA, ERS Short Coop Agreement Title or Topic: ERS Investigator(s): Name(s) Name of Principal Investigator, University of X, City, State 3 [address, phone, and fax in AIMS system] Agency Finance Office: David Lee USDA, ERS [address, phone, and fax in AIMS system] Cooperator Contact Information: Cooperator/Sponsor/Recipient (Sponsored Programs Office) Name: Kim Carter Title: Associate Vice President for Research and Executive Director Institution: University of Kentucky Address: 109 Kinkead Hall, Lexington, KY 40546 E-mail: kccarter.1@uky.edu Telephone: 859-257-9420 Cooperator/Sponsor/Recipient Designated Representative (PI) Tyler Mark Associate Professor Dept. of Agricultural Economics, University of Kentucky. Address: 417 Charles E. Barnhart Bldg E-mail: Tyler.Mark@uky.edu Telephone: 859-257-7283
StatusActive
Effective start/end date9/7/229/30/23

Funding

  • Economic Research Service: $30,000.00

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