HomeNewsFlaws Alleged In USDA Hemp Value Calculations

Flaws Alleged In USDA Hemp Value Calculations

A cannabis and hemp economist claims the U.S. Department of Agriculture (USDA)’s method of calculating the value of the nation’s hemp cultivation sector is flawed, and that’s negatively impacting farmers.

The issue is relation to floral hemp – plants that are cultivated for cannabinoid extraction.

“The lower value of the crop is making it tougher for farmers to raise money, inhibiting infrastructural development and suppressing market growth,” said Beau Whitney, founder of Whitney Economics.

While the USDA’s methodology to calculate the value of hemp fiber, grain and seed is fairly standard, what’s used to calculate the value of floral output has issues says Whitney as it is derived from a blended average of the sales of biomass and flower, which combined average a lower price per pound.

The difference in value of the two is huge — USD $330 per pound for flower in 2024, compared to $2 per pound for biomass. According to the USDA National Hemp Report covering the 2024 crop year, the value of floral hemp grown in the open last year was $386 million; an average value of $18.56 per pound.

In its report on 2024, the USDA pegged floral hemp production at 20.8 million pounds.

“It would take only 1.2 million pounds of flower to surpass the $386 million value of the crop,” Whitney says. “With this flaw in determining the value of the crop, the USDA is undervaluing the entire floral sector.”

He says the impacts of the incorrect values include:

  • Farmers are less willing to plant the crop.
  • Policymakers are basing decisions on erroneous data.
  • Investors don’t have an accurate picture of the market potential.

“This error by the USDA is having a profound effect on the entire hemp industry and must be immediately addressed, or the hemp industry will be negatively impacted, and the growth of the market will continue to be suppressed,” he said.

The USDA carries out a census of all growing operations in all 50 US states each year; gathering acreage, yield, production, and price data. The USDA report covering 2024 indicated for hemp grown in the open (all utilisations), 45,294 acres were planted, up 64 percent; while the area harvested was 32,694 acres, up 55 percent from 2023. Total production value in 2024 was $417 million, up 46 percent.

Gillian Jalimnson
Gillian Jalimnson is one of Hemp Gazette's staff writers and has been with us since we kicked off in 2015. Gillian sees massive potential for cannabis in areas of health, energy, building and personal care products and is intrigued by the potential for cannabidiol (CBD) as an alternative to conventional treatments. You can contact Gillian here.
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