Economist's Discuss The Risks With Growing Hemp
Industrialized hemp seemed to pop up out of nowhere back in 2018 and even still, the industry is referred to as the wild west. As Utah is getting ready to go into its second growing season for hemp, its important to understand what risks farmers are taking when planting this crop.
“Well it had some real ups and downs depends on who you ask if everything went right, people did pretty well. You know, they earn thousands of dollars an acre and profit Life was good, but also, there's a lot that can go wrong and a lot that at times did go wrong,” said Tanner McCarty.
McCarty is a Professor in the Department of Applied Economics at Utah State University. He currently is working on research on how risk factors such as cross pollination could effect CBD as more people are entering the market.
“When you use only female plants, that's going to get you higher concentration levels, but those concentration levels drop if you get cross pollinated, so some people had neighbors that were growing hemp for fiber or for seed and those use a mix of male and female plants," said McCarty. "Well, they got cross pollinated, their CBD levels tanked and when your CBD levels tanked, your crop isn't just worth much anymore.”
Cross pollination is not the only risk farmers need to consider before joining the market. Something that many farmers seem to overlook until it is too late is; who are they going to sell their crop to?
In 2020, production risk will be lower for farmers if they are able to be enrolled in the USDA’s farm revenue protection program which is expanding to cover hemp. However, in order to qualify, you have to be contracted first.
“That insurance is really important, because it does a lot to mitigate your risk and, you know, make an incredibly risky crop at least slightly less risky to grow. Not to mention that you know, if you signed the right contract, you can further reduce some of your risk is,” said McCarty
Before the hemp industry can work out some of the risks associated with growing, McCarty said it has to get worse before it can get better.