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