Crop acreage portfolio analysis of introducing more hemp in Kentucky

Introducing new crops or promoting the incorporation of environmentally beneficial crops into agricultural fields could alter acreage, crop mix, and on-farm revenue. For instance, promoting hemp in Kentucky is expected to shift the crop mix to align with producers’ desire to maximize profitability. Despite the perceived benefits of crop portfolio changes with new or promoted crops, less attention has been given to their analysis and modeling due to the complexity of handling multiple outputs. We employed a Dirichlet regression model to address this gap, using county-level hemp production data in Kentucky (2020–2022) from the USDA Farm Service Agency, along with weather, geographical, and production variables. We first estimated the response parameters to describe changes in crop ratios in Kentucky counties in the midterm, assuming no innovative changes in production technology and an extensive margin of agricultural expansion. Subsequently, we projected potential changes under 14 representative price and climate change scenarios and discussed the effects on harvested acres and revenue by crops. Our findings highlighted that short-term price variation could drive a corn- or soybean-dominant crop mix to sustain stable on-farm revenue, potentially countering hemp promotion objectives. Furthermore, we explored the implications of substitution and complementary relationships among crops, suggesting that consumption-driven policies could mitigate price volatility and enhance hemp's market stability. We also found that policy considerations were necessary due to the profound negative impact of climate change on long-term hemp-based farm revenue, stemming from its vulnerability to temperature stress.