A USDA official said earlier this week that the U.S. hemp industry could have a producer-funded checkoff program coming soon. The Agricultural Marketing Service’s Director of the Specialty Crops Programs’ Promotion and Economics Division spoke at the Hemp Industries Association’s annual conference.
Hemp Industry Daily notes that the director said the hemp industry “clearly has shown interest” in paying fees to promote their product, saying that “the idea here is that a rising tide would lift every boat.” If a checkoff program comes to fruition, hemp would join 21 other crops that have their own checkoffs, including soybeans, cotton, milk, pork, watermelon, and even popcorn. Growers would pay mandatory fees to go into a fund that’s used for research and marketing.
A checkoff would benefit the emerging hemp industry struggling to get out from under marijuana-related misconceptions. A checkoff program would also be seen as an endorsement from USDA, making hemp a legitimate crop with long-term potential.
Thousands of farmers took the plunge into hemp production after the 2018 farm bill legalized production of the plant. That flood of new growers is why some hemp farmers are struggling to find markets for their first post-farm bill harvest. Despite increasing demand for hemp-related products, the rush of new growers appears to have driven down prices.
DENVER—Since the 2018 Farm Bill removed hemp from the Controlled Substances Act, the agriculture industry has been inundated with interest in and information about industrial hemp. Some of the information has indicated a large financial upside for the broadening industry. Producers responded, as hemp acreage in the U.S. tripled from 2017 to 2018. However, CoBank’s Knowledge Exchange division warns that false, outdated, biased or even contradictory information can make it difficult to navigate in this industry.
In its latest report, CoBank’s Knowledge Exchange division provides a foundation for understanding some of the key nuances of this growing market and highlights key risks and opportunities. Nine risks or uncertainties that face the hemp industry are identified and assessed on a low to high risk scale for each of hemp’s three crops and markets: fiber, grain/seed and CBD production.
“It is important when talking about the risks and opportunities of hemp to recognize that we are not talking about just one type of crop, and that opportunities and risks should be evaluated case by case,” said Crystal Carpenter, specialty crops analyst with CoBank’s Knowledge Exchange division.
“Overall, CBD production has the highest level of risk across the board due to a range of factors,” said Carpenter. “From seed quality, labor costs and availability, THC limit risks and long-term acceptance by the Food and Drug Administration, the industry could face significant headwinds.”
While some risks are inherent to a new industry, risks for the hemp industry are compounded by legal and regulatory hurdles, according to the report. The USDA is expected to release hemp regulations and guidance soon. The timing and outcome of future FDA regulation will be critical to the long-term demand for CBD.
To see Carpenter’s full risk table, a video synopsis and the full report, click here.