Economics of Growing Hemp for Cannabidiol (CBD) in NYS: Expected Costs, Revenues and Returns for Three Hemp CBD Production Systems, 2022
Working Paper
Hanchar, J., S. Shelnutt, D. Vergara, L. Pashow, Cornell University/CALS & CCE
Funding provided by the New York Farm Viability Institute, Syracuse, NY.
Summary
Estimated variable costs of production per hemp plant equal $9.84, $9.64, and $4.42 for the greenhouse, high tunnel, and outdoor scenarios, respectively, while fixed costs per plant total $33.95, $9.36, and $0.26 for the three scenarios, respectively.- Initial value of production (revenue) estimates equal $6 per plant, but value of production varies by output price and % point CBD per pound of plant material.
- Estimated returns above variable costs per plant equal negative $3.84, negative $3.64, and $1.78 for the greenhouse, high tunnel and outdoor hemp CBD production systems.
Introduction
Currently in New York State (NYS), the economic viability of hemp production, processing, marketing and other activities for various end uses are subject to considerable risks and uncertainties – production, marketing, legal, human resources and financial (Pashow and Hanchar). The NYS Office of Cannabis Management (NYSOCM) is working to establish, clarify the legal framework, environment in which hemp industry firms will operate. Other work focuses on addressing other sources of risk and uncertainty.
As risks and uncertainties are addressed, industry firms will evaluate hemp enterprises for viability. What are the conditions for entry or exit? What enterprises, at what sizes make sense? For farm business owners, information needed to best understand the situation, and make decisions include the expected costs of production for various enterprises –fiber, grain, CBD, multipurpose, and others. Information regarding optimal production systems and practices by end use will also help producers with decision making.
The purpose of this work is to estimate expected costs, revenues and returns for three hemp CBD production systems in NYS: greenhouse; high tunnel; and outdoors, where the outdoor scenario is similar to a horticultural setting for vegetable production. The work adds to previous analysis from NY (Hanchar and others), and to analyses from other states.
The full paper is available as a pdf file, please click the title below.
