NE2105: Industrial hemp products, production, markets, and associated challenges for the stakeholders.
(Multistate Research Project)
NE2105: Industrial hemp products, production, markets, and associated challenges for the stakeholders.
Duration: 10/01/2022 to 09/30/2027
Statement of Issues and Justification
Industrial hemp is a robust crop that has the capacity to grow in different climates, altitudes, soils, and weather conditions. It competes for acreage with locally and regionally important food and feed crops but is still not considered a major crop in any country or region of the world. It increased from zero in 2013 to >90,000 acres in 2018 (Mark et al., 2020). Hemp’s versatility can be attributed to its ability to process each part of the plant from stalk to seed to its flower. Despite barriers to its production in the 19th and 20th centuries, the acceptance of hemp and its products has been consistently rising lately. There has been a renewed interest in industrial hemp since the passing of the 2014 and 2018 Farm Bills (Ruth et al. 2022; Johnson, 2018). The demand for hemp as a sustainable natural fiber, oil seed, hemp hearts, CBD-oil-based nutraceuticals, alternative protein sources, etc. has grown tremendously in the recent past. Although, CBD oil has been the primary focus of the industry (Burton et al. 2022; Lacasse & Kolodinsky, 2022).
Traditionally, industrial hemp has mainly been used as fiber or food, however, hemp-infused products have gained a lot of popularity worldwide. For instance, in China, hemp seeds are now regarded as a staple food item. Roasted hemp seeds are a very popular snack in Turkey. Hemp soup is becoming more popular in Germany, hemp butter is consumed in the Baltic States and Russia, and hemp is renowned as the "king of seeds' ' in Iran (Borkowaska, B & Bialkowska, 2019). Hempseed oil which is extracted from the grains of industrial hemp plants is regarded as healthy oil with various uses in cosmetics, nutraceuticals, and functional foods (Borkowaska, B & Bialkowska, 2019). Due to its high carbohydrate content, the development of its uses in biofuels, feed, and biochemical applications is also being researched. In addition, medicinal uses of hemp especially IH-derived CBD oil are also being explored. However, many such products lack clinical evidence of their performance efficacy. The diverse applications and uses of hemp-based products make it an attractive agricultural commodity. However, the lack of strong policies, regulations, subsidies and government support for growers, manufacturers, processors, and producers presents many challenges for the IH industry.
Therefore, synergies between academic researchers with different backgrounds, clinical researchers, and the industry are needed to develop a successful market and supply chain for hemp-based products. These synergies will provide new knowledge and will create reliable information instead of the grey literature that currently proliferates the industry. In addition, according to the Hemp Industries Association (HIA, n.d), National Industrial Hemp Council (NIHC), and university research, there is a dire need to educate lawmakers and regulators about the diverse value-added product portfolio of hemp, dispel the hemp-related public myths and misconceptions, and to enhance the IH-based economy in the United States. Research efforts across the country are needed to understand the rising demand for IH since each state has a unique set of environmental, and agricultural conditions that create a variety of unique characteristics in the plant. Also, the market and demand for hemp-based products vary from one state to another creating unique challenges for its stakeholders. We expect that this research collaboration across institutions and various disciplines will help develop new knowledge for all the stakeholders in the IH industry: policymakers, consumers, manufacturers, and producers.
Related, Current and Previous Work
The rich history of industrial hemp (IH), also known as Cannabis sativa, and its various uses in textile production, Chinese medicine, oilseed, food and supplement industry, and fiber-reinforced composites, have made it an important agricultural crop commodity. For centuries, IH has been a source of fiber and oilseed used worldwide to produce a variety of industrial and consumer products (Johnson, 2018). In addition to seeds and fibers, significant revenues can also be generated for some of the secondary metabolites highly abundant in industrial hemp including non-psychoactive cannabinoids such as cannabidiol (CBD) that are valued as pharmaceuticals, fragrances, and chemical feedstocks (Schluttenhofer & Yuan, 2017).
The USA is the largest importer of hemp products, obtaining most of its seed and fiber from Canada and China, respectively (Cherney and Small, 2016). The IH industry in the U.S. grew rapidly after the 2018 Farm Bill legalized commercial hemp production but the industry's long-term economic viability is still uncertain. Nationally, the number of producers reported having approved hemp licenses increased from 292 in 2014 to 3,852 in 2018, although many of these producers are small, with an average cultivated area under 20 acres (Sterns, 2019). Because of various legal and logistical issues, such as lack of appropriate seeds, uncertainty in production methods, and other factors, not all licensed producers planted hemp or planted as many acres as they had licensed. However, the number of approved licenses more than doubled between 2017 and 2018, showing a growing interest in hemp production (Mark and Snell, 2019).
The establishment of a USA hemp industry may impact global commerce by reducing hemp imports from exporting countries. As consumer demand for organic and environmentally sustainable products increases, there is a potential for significant growth of the world hemp market. The economic dynamics of this multifaceted emerging market will create both opportunities and significant threats and risks for farm profitability. Market dynamics will change quickly, especially during the development of a new industry, as producers enter and increase production and demand patterns shift. Hemp is an international market and competition with alternative crops for acreage, relative competitiveness, market transparency, and the ability to manage regulatory and market risks will determine patterns of development in the emerging U.S. hemp industry. The policy situation is fluid and expected to change at the state and federal levels as the industry continues to mature.
Socio-Economic Barriers: Assessing hurdles associated with establishing a successful hemp industry and barriers to selling hemp.
Policy: Assessing barriers and bottlenecks for stakeholders in the hemp industry.
Value-added Hemp Products and Consumer Demands:3.1 Developing industrial hemp-based consumer products. 3.2 Identifying new markets for non-conventional uses of industrial hemp products such as therapeutic textiles for health and wellness. 3.3 Assessing the therapeutic efficacy of CBD oil and its derivatives for human health and consumption to support the IH industry. 3.4 Assessing the competitiveness of hemp products compared to the alternatives and premiums associated with them. 3.5 Understanding consumer awareness, attitudes, and perceptions of hemp-based products and their purchase intention of such products.
Market Dynamics: Assessing the benefits and costs, to producers, consumers, and other stakeholders of growing industrial hemp and hemp products using both theoretical approaches and empirical research.
The primary methods for the data collection for this project will be structured interviews, questionnaire surveys, and experimental work in the following main areas.
- Economic surveys: a) hemp production and consumption data that is starting to become available. This data will serve as baseline data. As new data becomes available, we will be able to assess the implications for hemp. b) The secondary data will also provide information to develop future primary data collection feasible.
- Experimental trials: a) Experimental trials will be done to test the mechanical properties of hemp fiber and consequently improve its properties through surface modification so that it has an expanded range of applications in the apparel and textile industry. b) Therapeutic efficacy trials of the hemp-based products will be conducted. c) Using the consumer neuroscience approach, scientific evidence related to consumer behavior, attitudes, and perceptions as applied to hemp-based products will be gathered. These findings will be helpful in developing marketing strategies for hemp-based products.
- Interviews with manufacturers and producers: a) Focus groups with stakeholders along the supply chain provide valuable information on the challenges of the industry. b) These groups also provide invaluable feedback on the survey and quantitative results and if they are relevant to the stakeholders.
Measurement of Progress and Results
Outcomes or Projected Impacts
- The major expected outcome associated with this project is a 'Change in Knowledge.' Due to the longstanding federal policies that made the cultivation of industrial hemp illegal, the supply chains, processing, and manufacturing facilities necessary to create market-ready products need to be reestablished in the United States. Hemp producers should carefully identify which industrial hemp product(s) and sales channels are available before starting production, secure any necessary permits before production, and ensure that production is done in accordance with state and federal laws. The difficulty in finding current market information on sale prices and demand makes any projections of the long-term profitability of industrial hemp a real challenge for potential growers. There is also domestic and global competition in the industrial hemp marketplace. Current challenges facing the industry include reestablishing agricultural supply chains, breeding varieties with modern attributes, upgrading harvesting equipment, modernizing processing and manufacturing, and identifying new market opportunities. There is little peer-reviewed economic analysis of IH available. Most of the existing economic literature discusses hemp fiber and grain products and was written before CBD oil became a major product category. There are significant gaps in the current economic and market literature. There is also a significant need for more farm-level enterprise research and research-on-demand for particular products to determine the profitability of industrial hemp for various uses (grain, fiber, and CBD, or other extracts) and by regions. Significant market research gaps also include international competitiveness and trade, processing alternatives, and market organization and structure. Therefore, it is important to understand the motivations for growing industrial hemp and bridge the gap between the production and processing of hemp products.
Projected ParticipationView Appendix E: Participation
1. The findings of this project will be published in academic journals, and outreach outlets, and will be presented at national and regional conferences.
- Additionally, information will be disseminated through virtual workshop/s hosted by one or more of the involved institutions. A 2–4-hour workshop will be offered for research scientists, extension personnel on campus, external stakeholders, and students. The workshop will also be offered in webinar format and will be recorded and available for no-cost download available via YouTube.
- Further, this project will provide an opportunity for collaborative efforts between academia and the industry, which advances the outreach goal of land-grant universities. For instance, Local hemp producers, processors, and manufacturers will be assisted with product evaluation, performance efficacy, advertising, and marketing strategies for successful product promotion using universities labs and resources.
The recommended Standard Governance for multistate research activities include the election of a Chair, a Chair-elect, and a Secretary. All officers are to be elected for at least two-year terms to provide continuity. Administrative guidance will be provided by an assigned Administrative Advisor and a NIFA Representative.
- Burton, R. A., Andres, M., Cole, M., Cowley, J. M., & Augustin, M. A. (2022). Industrial hemp seed: from the field to value-added food ingredients. Journal of Cannabis Research 2022 4:1, 4(1), 1–13. https://doi.org/10.1186/S42238-022-00156-7
- Cherney, J.H., and E. Small. (2016). "Industrial Hemp in North America: Production, Politics, and Potential," Agronomy 6(4):58.
- CBS.com. (2019, May 05). CBD: On a real market high. Retrieved: https://www.cbsnews.com/news/cbd-on-a-real-market-high-swiftly-growing-demand-for-cannabidiol-products/.
- Hemp Industries Organization. (2020, December 7) https://thehia.org/
- Johnson R., (2018). Hemp as an Agricultural Commodity, U.S. Congressional Research Service. Washington DC.
- Lacasse, H., and Kolodinsky, H., (2022). Consumer trends and the consumption of industrial hemp-based products. Industrial Hemp. https://doi.org/10.1016/B978-0-323-90910-5.00011-7
- Malone, T. and K. Gomez, K. (2019). "Hemp in the United States: A Case Study of Regulatory Path Dependence," Applied Economic Perspectives and Policy 41(2):199-214.
- Mark, T.B. and W. Snell. (2019). "Economic Issues and Perspectives for Industrial Hemp," in Industrial Hemp as a Modern Commodity Crop, D.W. Williams, ed., Madison, WI: ASA CSSA and SSSA.
- Mark, T., Shepherd, J., Olson, D., Snell. W., Proper, S., and Thornsbury, S. (2020) Economic Viability of Industrial Hemp in the United States: A review of State Pilot Program. https://ageconsearch.umn.edu/record/302486/
- Ruth, T.K., Colclasure, B.C., Conner, N., Holmes, A., and Brooks, T.D. (2022) View of Hemp on the horizon: Understanding the influences on industrial hemp purchases. https://agdevresearch.org/index.php/aad/article/view/189/147
- Schluttenhofer, C. and Yuan, L. (2017). "Challenges towards revitalizing hemp: A multifaceted crop" Trends in Plant Science 22(11): 917-929.
- Sterns, J. (2019). "Is the Emerging U. S. Hemp Industry Yet Another Boom-Bust Market for U. S. Farmers?" Retrieved November 17, 2020, from Choices: choicesmagazine.org/choices-magazine/submitted-articles/is-the-emerging-us-hemp-industry-yet-another-boombust-market-for-us-farmers.