Herald-Leader Editorial

License hemp but don't oversell; crop no game-changer

September 5, 2013 

Goodness knows, a state that grows tobacco, which kills people, and champions products like gambling and liquor is hard-pressed to put on airs when it comes to industrial hemp, a botanical cousin to marijuana.

So we stand by our longstanding support for legalizing industrial hemp production.

But make no mistake about it, industrial hemp will not transform Kentucky's economy.

That's been clear for some time, but came into even sharper focus with a study written by University of Kentucky agricultural economists on hemp's market potential.

Canada has made significant investments in hemp production and processing and is way ahead of any Kentucky efforts.

But, the report notes, "If Kentucky's hemp industry would materialize to the size of the Canadian hemp industry, projected gross sales would total less than one percent of current Kentucky farm cash receipts."

The real heavyweight in hemp production these days is China, with more than triple Canada's hemp acreage, according to 2011 numbers.

So, a fledgling Kentucky industry could be affected, even devastated, if the Chinese choose to play with markets, as they have in the past. Prices for hemp seed fell 43 percent in the late 1980s and early 1990s when China dumped that product on world markets.

While it is admirable that Agriculture Commissioner James Comer is encouraging agricultural diversification by promoting industrial hemp, he is way overselling its potential for the foreseeable future.

Comer and other hemp proponents have predicted that industrial hemp could mean hundreds of new jobs in Kentucky, but the study indicates that dozens is more like it.

"In defense of UK, it's very difficult to do an economic impact study of an industry that doesn't exist," Comer said responding to the research results.

That's an odd reaction, since it seems that UK's research doesn't need defending so much as Comer's lofty predictions for the hemp crop.

If the push for hemp is really about economic development and not just politics, then Comer would do well to look at the market potential of marijuana.

In 1992. a reporter calculated a value based on the marijuana that law enforcement had destroyed. Assuming the almost 900,000 plants destroyed represented 60 percent of the crop, the surviving 40 percent would have been worth $819 million to $1.09 billion.

That year, tobacco was Kentucky's largest legal and recorded cash crop, with $880 million to $900 million in revenues.

So, in assessing market potential, it might be reasonable to ask if it's more likely that Kentucky farmers will be rewarded by the trend toward legalizing marijuana or a sudden explosion in the global demand for industrial hemp.

But we haven't heard any politicians asking that question.

It's a basic rule of economics that if supply increases while demand remains relatively steady, prices will fall. Right now, according to the research, demand for industrial hemp is simply not going off the charts.

More uses for hemp products and byproducts may be developed in the future, but it is not a public service to tout this product as a boon to Kentucky's farmers and economy before markets are demanding it.

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