By Jordan Strickler
A producer-funded checkoff for the hemp industry could be coming down the line. The National Industrial Hemp Council (NIHC) and The Hemp Industries Association (HIA) have announced that they have entered into an agreement to work together to explore the creation of a marketing checkoff program for the crop.
“Today is another step forward in the right direction for hemp farmers and consumers of hemp-related products,” said Patrick Atagi, NIHC board chairman. “A checkoff program further legitimizes a rapidly growing industry and will help hemp farmers compete on a level playing field with producers of other agricultural-related commodities.”
The NIHC and HIA are forming a workgroup to explore the concept and to answer questions regarding the specifics of the checkoff. Once formed, the plan will be presented to the USDA for the formal proposal.
“We’re in the very early stages of creating the workgroup,” says John Johnson, a member of the NIHC board of directors and former COO for the National Pork Board. “The whole process is a lengthy process and won’t happen overnight. Most likely it will be a year to 18 months until the proposal would be ready.”
According to the NIHC, the hemp industry was valued at $4 billion in 2019. By 2023, it is expected to hover around $20 billion. This year, the USDA estimates that hemp producers will increase sales by $25.5 million. The agency expects sales to increase to $64.5 million in 2021 and to top $100 million in the year 2022.
“Different sectors of the hemp industry each have a different value proposition,” Johnson noted. “CBD oil is probably the highest value product, while grain and fibers are at a lower value. So if you have a checkoff established based upon a percent of value then you’ll have different sums coming in from each of these different segments of the industry. I think this is really important from a political perspective that the research and promotions get funded in a way that’s consistent with what their contribution is.”
The USDA Agriculture Marketing Service currently oversees 23 checkoff programs for various commodities ranging from beef to pork to Christmas trees. A study in 2018 by Texas A&M found that the existing 23 checkoffs had a return on investment for farmers and ranchers of $3-$17 in value that came back to the producers for every checkoff dollar invested.
“At some point, there will be a referendum where every producer will have the opportunity to express their opinion on whether the checkoff would be something positive for the industry,” Johnson said. “We want this workgroup to be represented by every sector of the industry across all sizes of operations and we intend for this checkoff to be transparent, and whose main priority will be the farmers.”
In 2018, hemp was planted in 18 states. In 2019, that number had more than doubled to 37 states. According to USDA data, 146,000 acres of hemp were planted in 2019, a 350 percent increase from the prior year.