Hemp: USDA Report Has Methodological and Data Errors, Paints Inaccurate Picture of U.S. Hemp Market
- Jason Beck
- May 16
- 3 min read
May 13, 2025
Whitney Economics conducted a basic review of the recent USDA (NASS) report on the state of the U.S. hemp market. As was the case with the initial report, the summary paints an inaccurate picture of the U.S. hemp cultivation market. The value of the hemp cultivation market is materially inaccurate in its assessment. It is way too low.
A little bit about the USDA report…
Ever since the USDA took over the regulation of hemp cultivation, annual surveys have been conducted with hemp licensees in all states. Despite the surveys being mandatory, the data is self-reported and not always validated. In many instances, the data is incomplete and is not comprehensive.
What does the report say?
In general, the report does a good job in terms of the direction of the cultivation of hemp. Acreage is up (but not necessarily accurate), and there is a shift over from cannabinoid production to fiber, grains and seeds. This trend has been occurring ever since the bottom fell out of the cannabinoid market in 2020 and 2021. This is actually a good thing, because it helps support the fiber-based industries such as construction, automotive, textiles and plastics and opens the door for an expansion of grains for animal and human consumption.
The report also does a good job examining the production output and yield per acre. This is all very valuable information that is useful for operators and investors in the space.
Where did the report go wrong?
The USDA claims that the value of the hemp production is roughly $445 million. This cannot possibly be correct, and the methodology related to calculating the value of the production has always been the issue with this report.
The USDA has a major flaw in the calculation of the value of the crops, especially with hemp cannabinoid flower. In previous reports they calculated the value of the crop by multiplying the number of acres harvested times the sales price of the crop. However, they calculated the value of the cannabinoid crop by averaging the flower sales price with the biomass sales price, and this is a fundamental error in determining the value of the crop. This year’s report has made the same mistake.
How does $445 million of output produce a cannabinoid market of $28.4 billion? Simply put, it does not.
The average price per pound the USDA uses to determine the value of this year’s crop for flower was $19.10 per pound. In addition, the yield per acre of a hemp cannabinoid farm is estimated to be roughly 1,700 pounds. W.E. models 2,000 plants per acre, so this is less than a pound per plant in terms of yield. The total yield according to the report was roughly 20,784,000 pounds or slightly over $400 million in value.
This does not add up. Who do you trust: USDA or the industry?
Based on data from Hemp Benchmarks, the average price per pound of hemp cannabinoid flower has consistently been in excess of $310. In December 2024, the price per pound topped $374. If this is the case, then the value of the hemp flower crop would range from $6.5 billion to $7.8 billion. This is more in line with a cannabinoid end-product market that is valued at more than $28 billion. So either the USDA is wrong or Hemp Benchmarks is. They cannot both be true. W.E. feels that Hemp Benchmark’s data is closer to the actual market price of the crop.
Conclusion:
The USDA report is actually doing a disservice to the hemp industry. The methodological errors and the widespread distribution of this report is conveying inaccurate data to the market. This is impacting the investment opportunities and development of the infrastructure. The USDA has tried to use the same old formulas used to track soy, corn and wheat and apply them to hemp. This simply does not work. The inaccurate data is impacting the growth of the hemp market and shows that even after five years since the passage of the 2018 Farm Act, the USDA still does not collect and publish good data about what could be America’s fourth largest crop.
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