Hemp Production Update | September 2013
As the state's political leaders continue to debate the viability and legality of hemp production, agribusiness network members looked at the economics of growing the crop at a Sept. 11 meeting in Louisville.
University of Kentucky ag economists Leigh Maynard and Will Snell joined state Sen. Paul Hornback, R-Shelbyville, to brief the AIN audience on what economic impacts could be expected if the way is cleared for planting the first industrial hemp crop in the commonwealth since World War II.
Maynard, who heads up UK's ag econ department, said current demand for hemp products in the U.S. is relatively small, amounting to about $500 million a year, but that the number could increase quickly if production begins in Kentucky and other states. With no current domestic production of the crop, it's impossible to know what the demand might be should the industry blossom here in the next few years.
More certain is UK's projection that hemp seeds, and the oil and meal pressed from them, are far more likely to produce profits for growers than is the fiber from the crop. That's due, in part, to the availability of low-cost natural fiber alternatives such as jute, canafe and flax, Maynard said.
Looking at current production north of the border, Snell said last year Canadian growers planted around 58,000 acres of hemp, and officials there project that total will surpass 100,000 acres in the next few years.
By comparison, Kentucky farmers this year planted nearly 3.7 million acres combined of corn, soybeans and wheat. UK says that even at today's healthy grain prices, hemp seed production could generate profits equivalent to corn or soybeans, but only if hemp prices hold up as production increases.
But with the price volatility sure to accompany hemp farming, Snell said he doubts there would be a large scale shifting of acreage from grain to hemp, at least in the short term.
Hornback, chief sponsor of the bill in last year's legislative session that sought to legalize hemp production in the state, says no one believes industrial hemp will be a panacea for Kentucky farmers, but that there is considerable interest among growers and processors who would like to see the crop re-introduced in the commonwealth.
"I'm getting calls, frequent calls, from processors and manufacturers who are ready to invest, ready to contribute to a market infrastructure here," he said.
Hornback said the Kentucky Department of Agriculture stands ready to develop and implement a permit program for farmers, and the goal is to have a crop in the ground in 2014.
"We envision a system whereby a grower applies for a permit, and if granted, the permit holder would then negotiate for a contract with a processor," he said. "It would be a one-year permit only and could not be transferred."
He says he's confident the momentum exists for a processor to locate a facility here before next year, and if remaining legal obstacles can be overcome, farmers will be producing hemp by the spring.
The question of legality came to the forefront over the past two weeks as Kentucky Attorney General Jack Conway said despite the passage of state legislation and easing of federal restrictions, hemp production is still illegal in the state. He said growers could subject themselves to criminal liability as a result.
Ag Commissioner James Comer fired back at Conway, challenging his legal opinion and saying that Kentucky elected officials should be supportive of new profit opportunities for farmers. Comer has been an aggressive advocate for developing the crop and he insisted that legal roadblocks, both at the state and federal level, have been eliminated.
In a related story, representatives of Hemp Oil Canada were in Kentucky last week meeting with state officials, industry representatives and a Louisville seed company that has expressed interest in the hemp venture.
The firm wants to locate a hemp seed oil press facility in the U.S., and is looking at Kentucky and North Dakota as possible sites. A spokesman for the firm indicated that Kentucky is their top choice, given the state's history of hemp production and the suitability of the area's climate and soils.
Gary Huddleston | AIN Chairman