Time to enact the Industrial Hemp Farming Act! Time to prepare Ohio for that inevitability - "the state’s determination would be conclusive and binding."
Hemp as an Agricultural Commodity - Review and Analysis of Economic Studies
Hemp proponents base their economic arguments for legalizing the crop on its
potential value as a component in a wide array of industrial and consumer products,
and thus its potential as a profitable alternative crop for farmers. They contend that
a commercial hemp industry would generate its own profitable niche markets, even
where conventional or alternative commodities already exist, and that basing
estimates of future profitability on the current usage of imported hemp ignores the
crop’s larger potential.
Some supporters of industrial hemp legalization also argue that it could have
renewed value as a strategic crop for defense preparedness purposes, in line with its
role in World War II. In 1994, President Clinton issued an Executive Order, EO
12919, entitled “National Defense Industrial Resources Preparedness,” which was
intended to strengthen the U.S. industrial and technology base for meeting national
defense requirements. The order included hemp under the category of “food
resources,” which it defined to mean, in part, “all starches, sugars, vegetable and
animal or marine fats and oils, cotton, tobacco, wool, mohair, hemp, flax, fiber and
other materials, but not any such material after it loses its identity as an agricultural
commodity or product.”15 It could be argued that the government has already
recognized that industrial hemp is capable of contributing to national defense needs
and to the readiness of U.S. defenses during times of peace as well as national
emergency.
Opponents of industrial hemp point out that U.S. agricultural history illustrates
the great difficulty of bringing promising alternative crops into profitable commercial
use. USDA has supported research on alternative crops and industrial uses of
common commodities since the late 1930’s. Currently, under the Critical
Agricultural Materials Act of 1984 (P.L. 98-284), the supplemental and alternative
crops provisions of the 1985 and 1990 omnibus farm acts and other authorities, the
federal government supports about $15 million annually in research and development
on alternative crops at USDA and state laboratories.16 Some alternative crops that
have become established in certain parts of the United States — kenaf (for fiber) in
Texas, jojoba (for oil) in Arizona and California, and amaranth (for nutritious grain)
in the Great Plains states, for example — have benefits similar to those ascribed to
hemp, but are not complicated by having a drug variety within the same species.
One of the first economic analyses of industrial hemp’s potential as a profitable
crop for U.S. farmers was a report prepared by USDA’s Economic Research Service
in 2000. ERS based its domestic production assumptions on import data covering
hemp fiber, yarn, and fabric, but excluding seed and oil. The report concluded that:
U.S. markets for hemp fiber ... and seed ... are, and will likely remain, small, thin
markets. Uncertainty about long-run demand for hemp products and the potential
for oversupply discounts the prospects for hemp as an economically viable
alternative crop for American farmers.
The more recent study by Small and Marcus (2002) reflects the fact that interest
in the crop in the United States has deepened since ERS calculated its negative
forecast. It concludes:
It often takes 10 to 15 years for the industry associated with a new agricultural
crop to mature. While it is true that foreign imports have been the basis for hemp
products in North America for at least a decade, North American production is
only 4 years of age in Canada .... Viewed from this perspective, the hemp
industry in North America is still very much in its infancy ... and is likely to
continue experiencing the risks inherent in a small niche market for some time.
[However,] hemp ... has such a diversity of possible uses, is being promoted by
extremely enthusiastic market developers, and attracts so much attention that it
is likely to carve out a much larger share of the North American marketplace than
its detractors are willing to concede.
An update in 2007 of a December 2003 report from Agriculture Canada draws
an even more positive conclusion, based on its reading of consumer interest:
Hemp’s remarkable advantages are hard to beat: it thrives without herbicides, it
reinvigorates the soil, it requires less water than cotton, it matures in three to four
months, and it can yield four times as much paper per acre as trees. Hemp can
be used to create building materials that are twice as strong as wood and
concrete, textile fiber that is stronger than cotton, better oil and paint than
petroleum, clean-burning diesel fuel, and biodegradable plastics. In addition, it
can produce more digestible protein per acre than any other food source. These
advantages are in tune with the environmental and health preferences of today’s
North American public. The growing curiosity of consumers, the interest shown
by farmers and processors, and Canada’s excellent growing conditions for
industrial hemp allow optimistic views for its future.
The Canadian hemp fiber industry is not as developed. Because the crop
became legal to produce again in 1998, government and private funds have only
recently begun to support research on breeding fiber varieties and tackling the
problems associated with harvesting and processing. Similarly, the infrastructure
for efficiently transporting and handling the heavy, bulky product is lagging. CHTA
states, “The current economic reality of hemp [fiber] is that it cannot compete with
waste products (wood, straw, stover, etc.) on price .... Hemp is valued between 4-10
times that of waste fibers, so it must find its way to the right products and markets.”
Proponents of reintroducing hemp as a commodity crop in the United States are
watching the Canadian experience with interest. However, it also is important to
keep an eye on the larger picture. The world market for hemp products is relatively
small, and China, as the world’s largest hemp fiber and seed producer, has had and
likely will continue to have major influence on market prices and thus on the year-to-
year profits of producers and processors in other countries.21 Canada’s head start in
the North American market for hemp seed and oil also would likely affect the
profitability of a start-up industry in the United States.
Regardless, at least for the time being, government policy on the issue is
reflected in the DEA’s arguments against commercial hemp production. These are
that commercial cultivation would increase the likelihood of covert production of
high-THC marijuana, significantly complicate DEA’s surveillance and enforcement
activities, and send the wrong message to the American public concerning the
government’s position on drugs. DEA officials and a variety of other observers also
express the concern that efforts to legalize hemp — as well as those to legalize
medical marijuana — are a front for individuals and organizations whose real aim is
to see marijuana decriminalized.
Updated March 23, 2007
Jean M. Rawson
Specialist in Agricultural Policy
Resources, Science, and Industry Division
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