University of Arkansas, Fayetteville Division of Agriculture


Economic feasibility, hemp, industrial hemp


United States farm policy and programs are governed by the Farm Bill. The 2014 Farm Bill allows for the legal production and research of industrial hemp as long as it meets the standards outlined in the Farm Bill. Although it has a wide range of uses (upwards of 25,000 products use hemp), there is a lack of recent information regarding the economic feasibility of hemp production for the private agricultural sector. Through an extensive search of existing literature, information was gathered to construct an enterprise budget for industrial hemp. Data from the enterprise budget were used in a constrained linear programming model to compare how introducing industrial hemp production could change crop allocations in all 75 counties of Arkansas When industrial hemp was introduced, the total number of acres farmed increased by 2.8% to 4.4%, the statewide profit increased by 0.3% to 18.2%, and rice was the only crop that increased in acreage by 5%. While these results suggest that industrial hemp may be an economically promising crop, there are still hurdles to overcome. The lack of clearance (permitting) by the Drug Enforcement Agency and the absence of hemp processing facilities in the United States are clear roadblocks to hemp production. Once permitting hurdles are overcome, additional research will be needed to identify optimal locations for processing facilities and target markets for hemp goods.