The U.S. hemp industry is accusing federal officials of downplaying its economic impact, with a new report warning that flawed data collection may be costing farmers both money and credibility.
Dispute Over Hemp’s True Worth
The Department of Agriculture began tracking hemp after the 2018 Farm Bill gave farmers the green light to grow the crop nationwide. Since then, the agency has been releasing annual surveys meant to reflect the market’s size. On paper, things look steady — the official numbers even suggest a slight rise in value between 2023 and 2024.
But that’s where the argument begins. Analysts at Whitney Economics, an independent research firm, say the government’s calculations are missing the mark. Their latest report bluntly states that USDA’s methodology is flawed, undervaluing hemp and painting a misleading picture of the industry.
Some farmers say this isn’t just an academic problem. Lower valuations ripple through the market, affecting investment, credit access, and how lawmakers shape policy. In short, the perception that hemp is underperforming could become a self-fulfilling prophecy.
Farmers Fear Policy Consequences
The hemp industry is still young, still volatile, and still struggling to define itself after decades of prohibition. Farmers who switched to hemp from other crops often did so with promises of growth and profitability. Yet, when USDA surveys suggest the numbers don’t quite add up, lenders and policymakers take notice.
For small-scale farmers, the impact can be immediate. Some have complained that banks are hesitant to extend loans, citing market reports that suggest hemp margins are slimmer than expected.
One farmer from Kentucky summed it up in a local interview last year: “The government says hemp isn’t worth much, so the bank figures it’s not worth supporting. That leaves us stuck.”
What Whitney Economics Found
The report from Whitney Economics doesn’t just criticise — it breaks down where USDA may be going wrong. At its core, the issue is data collection. Farmers are asked to self-report production figures, but the categories for hemp products are narrow and, according to critics, outdated.
Hemp is no longer just about rope or seeds. The biggest growth area is cannabinoids, especially CBD products, and increasingly newer compounds like CBG and CBN. Yet USDA’s surveys, analysts say, fail to capture the full scope of this market.
To put it bluntly, the government may be measuring an industry that no longer exists, while missing the one that does.
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Fiber and grain categories dominate official reports, though their market value remains modest.
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Cannabinoids, which have driven consumer demand and retail expansion, are underrepresented in the datasets.
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Wholesale and retail value chains are not fully captured, which reduces the perceived economic footprint of hemp.
The result? A picture of hemp as a struggling crop rather than a promising sector.
Hemp by the Numbers
To understand the debate, it helps to look at the numbers. According to USDA’s 2024 report, hemp was valued at around $270 million nationwide. Whitney Economics, by contrast, estimates the market at nearly double that figure once cannabinoid products are fully accounted for.
Here’s a simplified snapshot:
| Category | USDA Valuation 2024 | Whitney Economics Estimate |
|---|---|---|
| Fiber & Grain | $150 million | $160 million |
| Cannabinoids (CBD+) | $120 million | $300 million |
| Total Market Value | $270 million | $460 million |
That’s not pocket change. For rural economies in states like Colorado, Oregon, and Kentucky, the difference between $270 million and $460 million could mean the survival of family farms.
Regulatory Gaps Add Pressure
Critics also argue that undervaluation comes with a hidden regulatory sting. If hemp is seen as a marginal crop, policymakers may be less inclined to invest in research, infrastructure, or favourable rules. At the same time, the strict THC limits set under federal law continue to frustrate growers.
It’s a double squeeze: lower valuations on one side and tight restrictions on the other. Farmers say it feels like running a race with a heavy backpack while the referees keep moving the finish line.
The FDA’s long delay in clarifying rules for hemp-derived cannabinoids has added another layer of uncertainty. Without federal guidance, states have set up their own patchwork regulations. Some are supportive; others are hostile. For businesses trying to scale nationally, it’s chaos.
What’s Next for Hemp?
Despite the frustrations, optimism hasn’t completely vanished. The global hemp market — including textiles, building materials, and wellness products — is still forecast to grow substantially over the next decade. European and Canadian producers are already expanding exports, while U.S. farmers are eager not to be left behind.
Industry groups are now lobbying USDA to adjust its methodology. They argue that accurate numbers are essential not just for pride but for practical reasons: grants, loans, insurance schemes, and long-term credibility all hinge on reliable data.
A senior analyst at Whitney Economics told reporters: “If we don’t measure the industry correctly, we risk killing it before it ever really takes off.”
For hemp farmers, that’s not just theory. It’s a matter of survival.
