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CoBank Report on Hemp: Big Risks, Big Rewards for Agriculture
USAgNet - 10/23/2019

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 However, CoBank's Knowledge Exchange division warns that false, outdated, biased or even contradictory information can make it difficult to navigate in this industry.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.


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