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The Potential of Hemp as a Replacement for Tobacco
October 07, 2016
#tobacco #kentucky #hemp #featured
Edward Woodford

Changing Nature of Tobacco Production in the United States

Despite its long history in the United States, tobacco has experienced some dramatic market shifts in recent years. Reduction in consumer demand for tobacco products due to health concerns, coupled with diminishing government support programs have put the domestic cultivation industry in a state of flux.

2014 marked the final year of the Transitional Tobacco Payment Program commonly referred to as “the buyout.” This program was designed to ease tobacco growers, who had been the beneficiaries of government controlled quota programs implemented in the late 1930’s designed to control supply in order to stabilize tobacco farm incomes, into a free market. 2004 was the first year of these transitional payments which totaled nearly $10 billion over a ten-year period. 2015 was the first growing season without these payments and many have observed structural changes in the tobacco growing industry in the United States as a result.

Figure 1 gives a look into the changing nature of the tobacco industry.

The number of acres devoted to tobacco declined sharply during the first year of the buyout in 2004 and the final year in 2014 with a total decrease of 32% from 2000 to 2016. While this constitutes a large decrease, total acreage still remains relatively high due to growing demand from overseas consumers, particularly in Asia. One factor that has changed substantially is the number of farmers. The 2002 Census of Agriculture conducted by the USDA placed the total number of tobacco farmers at 51,247. Five years later, the 2007 Census had just 14,872 farmers with the 2012 Census only showing 9,160. This constitutes an 82% decrease over the ten-year period. With acreage not falling nearly as sharply as the number of farmers, this points towards consolidation within the industry. In 2002 a farm typically had around 8.3 acres devoted to tobacco. However, by 2012 the typical farm had 36 acres, more than 4 times the number in 2002. In order to compete without the government support programs, tobacco farms have needed to consolidate in order to take advantage of economies of scale and find lower, more competitive prices. This has prompted many small to medium sized farmers to leave tobacco with many of them looking for a new cash crop to plant in their once profitable tobacco fields.

Hemp as a potential substitute

In 2014 Congress passed the most recent version of the Farm Bill which included Section 7606, an important and historic provision that allows for the cultivation of industrial hemp for the first time in the United States in decades. In the Farm Bill industrial hemp is defined as the cannabis sativa plant with no more than 0.3% THC on a dry weight basis. Many farmers in Kentucky, North Carolina, Tennessee and other tobacco states are looking at this crop with great interest as a possibility to take the place of tobacco in their fields.

Industrial hemp holds many similarities to tobacco in terms of its production methods. This has many former tobacco growers looking at the crop as a viable alternative. While hemp can be grown for a variety of purposes, including grain and fiber, it is the cultivation methods for raising CBD-rich industrial hemp that most resemble the production models of tobacco. Both CBD hemp and tobacco are typically first raised in greenhouses to protect and enhance their early stages of growth. After the plants reach a few inches in height they are ready to be transplanted into the field with plant densities in the thousands rather than the hundreds of thousands you find in other field crops. Both crops are planted by mid June and harvested by hand in early fall for a growth period of around 16 weeks. Both crops require a drying period with tobacco being dried for several weeks. Both tobacco and hemp require significant amounts of labor as care and harvest are conducted by hand. Researchers at the University of Kentucky are currently conducting field experiments to look at the effects of a tobacco production model on hemp cultivation with David Williams, an agronomist at the University of Kentucky and lead researcher of the Industrial Hemp Research program, noting that “we are able to optimize CBD production with tobacco production methods through transplant production in greenhouses, space-planting with tobacco setters and manual crop management.”

If more acres transition out of tobacco, the amount of land available for hemp cultivation will increase, and farmers will look to it as a possible alternative. Figure 2 provides an overview of the total tobacco acreage in 2016 in tobacco producing states as well as the legal status of hemp. Nearly all of the tobacco producing states have legalized the growth of industrial hemp with only Georgia’s hemp legislation still pending. These figures represent a significant opportunity for hemp as they show potential acreage should tobacco farmers chose to transition to hemp.

Hemp in the Future

Hemp has the potential to fill the gap in farmers’ fields that has been left by tobacco. With a similar production model, hemp could be the new cash crop farmers in places like Kentucky and North Carolina are looking for.Many former tobacco growers are experimenting with hemp in their fields and greenhouses

and large corporations looking to transition from tobacco towards hemp are also performing initial R&D. One of the best examples is that during the summer of 2015, GenCanna Global, partnered with Atalo Holdings, to purchase a 147 acre, former tobacco seed development and breeding facility in Winchester, Kentucky. They have plans for storage, processing and formulating as well as an 8000 square foot laboratory devoted to hemp seed breeding programs. However, while signs are promising, there are a number of significant challenges in the world of hemp that still need to be overcome and are hindering its widespread production.

As one of the first states to grow hemp and cultivate CBD from the plant, Kentucky’s pilot program has been focused on some of the challenges facing CBD hemp farmers. For example, CBD hemp growers are trying to determine the most efficient ways to adapt the crop to Kentucky’s rainy conditions. Growers are experimenting with techniques to solve several of these agronomic issues that are unique to CBD hemp.

We have written in detail on our blog about the extraction of CBD, hemp seeds, as well as how the world of sports has adopted CBD treatments.  With the decline in tobacco farming and the increased demand for hemp products, this is a space to keep your eye on.