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Новости/Аналитика

Economic viability of hemp farming in the USA

10.03.2020

“Over the next few years, all legal issues limiting the production of industrial crops of technical hemp should be resolved in the country.” The state should create the conditions “ensuring the development of domestic production, reducing imports, increasing consumer demand and exports in order to control the development of the industry, as well as ensure an increase in the market in the long term”.

The pages of the profile electronic publication of Ukrainian hemp breeders have repeatedly raised the question that the development of modern hemp breeding involves the complex solution of industry issues, which is predetermined by the presence of an efficiently functioning analysis and forecasting system, some elements of which are developed on various kinds of pilot programs. For both Europe and Ukraine, the issue of amending the current legislation aimed at creating conditions for the development of this sector of agriculture is urgent and if in economically developed countries (France, Luxembourg, Denmark) any changes to the legislative framework suggest experience in implementing pilot programs specially provided for this, then in our country such changes to the current regulatory framework are unsystematic and for the most part have opportunistic character. Therefore, the logic of the actions of US government officials is interesting, who, within the framework of pilot projects, work out individual fragments of a mosaic of possible changes to the current legislation of the country, draw conclusions based on the results of the above programs, and plan to make changes to the current legislation based on them.

In February 2020, the US Department of Agriculture published the official bulletin, “The Economic Viability of US Hemp Farming: A Review of Implemented Pilot Programs.” A document prepared by government officials of the most highly developed country in the world analyzes the current state and development prospects of an industry specializing in the cultivation, processing, as well as sales of the most highly profitable crops in the world. 

It focuses on the fact that the pilot programs initiated as a result of the adoption of amendments to the US Law on Farming in 2014 can be called successfully implemented. In particular, the number of agricultural producers wishing to participate in the pilot programs increased annually, and the geography and areas of cultivated legal cultivation of industrial crops of technical hemp rapidly expanded. This kind of dynamics was the catalyst for the introduction of amendments to the US federal law in December 2018, according to which it became possible to cultivate industrial hemp crops throughout the country.  

The document indicates that when transferring this type of activity outside the scope of pilot programs and reanimating the field of industrial hemp breeding, not as a niche, but as a traditional agricultural crop, problems that will impede the further development of the industry are obvious. That is why "industry prospects for a period of 5-10 years with a reasonable degree of probability cannot be determined." Despite the fact that in the course of legislative changes in 2018, a number of problems that arose for the industry were resolved, the industrial hemp breeding industry still needs reliable transparent data, as well as studies conducted by experts that influence the improvement of the competitive environment in the modern American hemp breeding.

According to officials from the Department of Agriculture, the long-term economic viability of industrial hemp in the United States will depend on:

• competition from traditional crops and hemp (in those states where it is allowed) for sown area;

• the activity of established foreign competitors in various hemp products markets;

• Ability to reduce uncertainties in production and pricing through transparency in risk management;

• creating conditions for further growth in the market of modern hemp breeding in the USA.

In connection with the foregoing, a conclusion is drawn on what US government agencies need to do in order to ensure the further development of the industry. In particular, the document raises the question that “over the next few years, all legal issues limiting the production of industrial hemp crops should be resolved in the country." The state should create the conditions “ensuring the development of domestic production, reducing imports, increasing consumer demand and exports in order to control the development of the industry, as well as ensure an increase in the market in the long term”.

Commentary experts of the Association "Ukrainian industrial hemp"

In addition to the experience of creating decision-making algorithms useful for national hemp breeding on the appropriateness of amending the current legislation, the mechanism of “running in” the results obtained in the framework of the implementation of specially created pilot projects for this is also interesting. Under the pressure of external circumstances (market development, public activity, lobbying of interests by representatives of business structures), US government officials indiscriminately do not make any "fateful decisions." The responsible state officials initiate pilot programs on the basis of higher education institutions of the corresponding profile, based on the analysis of which the relevant analytical units of the relevant ministry formulate recommendations on the appropriateness of certain actions aimed at developing the industry, the necessary measures are outlined, including amendments to the regulatory legal base. Fundamental in this process is the financial component, which is carefully calculated, as well as the risks that the industry will face in different periods of time are identified. 

Unfortunately, we can say that in our country so far the experience of conducting pilot programs in the field of hemp breeding has never been applied. To our shame, in Ukraine, in addition to specialized analytical platforms that analyze individual sectors of the market for modern hemp breeding, there is no one to predict anything in this area of ​​business, therefore, for the most part, decisions made to amend the current legislation are “pushed through” by various lobby groups that are not appeal to the logic of numbers and facts, and turn to emotions. In the best case of this kind, the introduction of amendments to existing legal acts solves the local problems of the industry.

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