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Is the U.S. hemp industry experiencing a turnaround?
After years of wild fluctuations for domestic hemp growers, prices and acreage in many states are stable or growing, according to the National Hemp Report released Wednesday by the U.S. Department of Agriculture.
It was a welcome development for an industry that has known little stability since Congress legalized hemp in 2018.
“There was the big boom, then the big falloff, and this year everything is sort of leveling out,” said Joshua Bates, a USDA statistician who wrote the National Hemp Report – the first version since the agency added hemp to its landmark national agriculture census.
The positive numbers come just as the U.S. House of Representatives plans to begin work in earnest on the next Farm Bill, with progress expected to pick up this summer on a measure that could have big impacts on market opportunities for hemp growers and manufacturers.
Prices up for hemp flower
The National Hemp Report, which covers 2023 hemp production, showed a healthy increase in the value of outdoor-grown flower, which jumped 35% to $241 million last year.
Outdoor-grown hemp flower sold for an average of $31.60 per pound last year, up 8.6% from 2022.
Times are improving for indoor hemp growers, too.
Indoor hemp producers are growing fewer clones and transplants – but getting significantly more money from them – than they have since federal authorities started tracking the crop.
Hemp clone and transplant prices up 61%
Indoor hemp production for clones and transplants was down more than 25% from 2022 to 2023, with total production of 75,866 pounds.
At the same time, the prices for those clones and transplants jumped 61% to almost $26 million, a welcome change after two years of sharp declines.
Even the smaller niche market for hempseeds, used for oils, saw a surprising increase: The USDA reported a remarkable 96% increase, to $2.91 million, in the value of hemp grown for seeds.
The hemp industry still is recovering from the nosedive it took between 2021 and 2022 – both in acreage and value of harvested hemp – but the latest report shows the market is bouncing back after farmers fleeing price downturns in older commodities flooded the hemp market.
“Reports of the hemp industry’s demise were clearly exaggerated,” said Jonathan Miller, lawyer for the U.S. Hemp Roundtable, which lobbies for the industry in Washington, D.C.
Hemp-market highlights
The overall market for hemp – including plants grown both inside and outside, for all end uses – checked in at $291 million last year, up 18% from 2022.
The USDA’s reporting also showed that:
- Fiber is booming. American farmers grew 133% more hemp for fiber last year than in 2022, recording more than 49 million pounds. The increase, Bates said, is likely the result of additional processing facilities making investments in hemp, a bast fiber known for its toughness but also notoriously challenging to extract from the plant’s tough exterior.
- Hemp farmers are having more success selling what they grow. The amount of outdoor hemp flower that was harvested but not sold – an important metric the USDA follows to see how farmers adjust to market demand – dropped nearly 40% last year.
- California is catching up quickly with neighboring Oregon when it comes to outdoor-grown hemp, with acreage growing about 130% to 2,100 acres. Oregon planted 2,300 acres of outdoor-grown hemp in 2023 – though that’s down 9.5% from 2022.
- Montana held its position as the overall outdoor-acreage leader for hemp at 2,900 acres. The Upper Plains region is known for fiber and grain production, which requires expansive acreage even though prices per plant aren’t as high. Around 2,000 acres of Montana’s hemp plantings were devoted to fiber varieties last year.
- Farmers experienced enormous increases in their yields for hempseed varieties. Yields per acre for that small sector of the market jumped more than 210%, to 559 pounds per acre. The boost came in handy, because those seed farmers took in less money for what they produced, only $4.01 per pound, down 64% from 2022.
Who’s growing hemp?
U.S. hemp growers remain overwhelmingly white and male, reflecting the demographic skew of the entire agriculture sector.
The USDA found that 82% of hemp producers surveyed identify as male, the same numbers as in 2021, and 90% identified as white.
Just 5% of hemp farmers identified as Hispanic or Latino, with 7% identifying as Black. (Racial demographics in surveys often exceed 100% because respondents sometimes identify as more than one race.)
Where hemp producers do differ from overall U.S. farmers is their age.
The USDA survey found that just 17% of U.S. hemp producers were older than 65 last year, compared with 38% of all farmers in that age group in the 2022 Census of Agriculture.
Southern farmers adopt hemp
Sunbelt states came late to the hemp game, but they’re making serious moves.
Rounding out the top five indoor hemp producers after California and Oregon were Alabama, North Carolina and Texas.
Meanwhile, Colorado dropped out of the top five indoor hemp producers.
States with a climate suited to tobacco generally make good places to also grow hemp.
Kentucky agriculture officials noted that their state reported the nation’s highest yields per acre for outdoor-grown flower.
“Kentucky’s tobacco farmers and the favorable soils and climate here will keep Kentucky in the lead for floral hemp production in the United States,” Doris Hamilton, plant division director for the Kentucky Department of Agriculture, told MJBizDaily via email.
Weather conditions nationwide were a big reason the hemp industry showed solid gains last year, the USDA’s Bates said.
“There’s a saying in corn and soybeans that in Iowa, you could have a record drought and still have a record harvest,” he said.
“Hemp is not that kind of commodity. You need good conditions to get a good year.
“And that’s what helped everyone last year.”
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