Alternative Agricultural Strategies in Vermont: The Case of Industrial Hemp*

Catherine Chan Halbrendt, Qingbin Wang,
and Matthew C. Mole



*Paper presented at the Vermont Agricultural Economic Development Conference, December 16, 1996. Sheraton Conference Center, South Burlington, Vermont.

Dr. Catherine Chan Halbrendt is a professor and Chair, Dr. Qingbin Wang is a research assistant professor, and Matthew C. Mole is a student in the Department of Community Development and Applied Economics, College of Agriculture and Life Sciences at The University of Vermont (UVM).

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Alternative Agricultural Strategies in Vermont: The Case of Industrial Hemp


Abstract

Industrial hemp as a potential economic crop has raised a number of public interest and policy issues in Vermont and many other states. This study is motivated by the need for information on public attitudes toward industrial hemp and sociodemographic factors that determine the differences in such attitudes among individuals. Based on the data collected from a random sample survey, this study suggests that there is support in Vermont for industrial hemp production, and there is a potential market for hemp based products. Logit analysis indicates that many Vermonters support legalization of industrial hemp production for reasons such as increase in farm profitability, reduction in use of chemicals in agriculture, increasing job opportunities, and reduced prices of hemp products. Attitudes toward industrial hemp are also determined by a host of sociodemographic factors such as age and gender.




Alternative Agricultural Strategies in Vermont: The Case of Industrial Hemp

Introduction
 The development of new opportunities for small to medium farms to increase profit making opportunities is often a difficult and arduous task. In Vermont there has been increased emphasis on developing production and marketing strategies which will work to strengthen the agricultural sector in the state, and to make farming practices more sustainable (Winsten and Petrucci 1996; Mitofsky, 1996).
In the spring of 1996 a potential alternative agricultural strategy arose as the debate over allowing the production of industrial hemp in the state entered the public arena and has received much attention from the public and the state legislature. Industrial hemp (Cannabis sativa L.) is a highly productive herbaceous annual plant which has been produced around the world for centuries (Robinsion, 1996). The stalks of the hemp plant are used for a variety of purposes, ranging from textiles, paper products, construction materials, and industrial products, while the seeds from hemp plants can be used to produce food products and oil which can be used both for human consumption as well as for industrial applications (Karus and Leson, 1990).
Significant development in the market for hemp based products in the United States over the last five years has stimulated discussions on industrial hemp production and legalization. Conservative estimates project that retail and wholesale revenues of industrial hemp in the U.S. will be approximately $23 million in 1996 (Bordenaro, 1997). Although this figure may not represent a significant influence on the national economy, it does represent rapid growth in the U.S. hemp market from practically zero five years ago. According to the Coalition for Hemp Awareness in Phoenix, Arizona, the number of importers, manufacturers, and sellers of hemp based products has grown from only four firms in 1991 to nearly one thousand firms today (Arnold, 1996)
A fundamental hurdle to further growth of the U.S. hemp industry is the inability of industrialists to be able to secure a reliable and sufficiently large supply of hemp (Friedman, 1996). The production of industrial hemp was made illegal in the 1930s with the passage of the Uniform Narcotic Act and the Marihuana Tax Act (Robinson, 1996). The passage of these two laws ended the production of industrial hemp and the growth of the hemp industry because of the association which exists between industrial hemp and marihuana. Hemp and marijuana are both of the species Cannabis sativa L., but are differentiated by the level of delta-9 tetrahydrocannabinol (THC), the psychoactive component of marijuana. The level of THC is generally found to range between 8% and 13% in marijuana but only 1% or less in industrial hemp (Reichert, 1994; Marcus, 1996).
When a bill was proposed in the Vermont legislature in the spring of 1996 to allow the production of industrial hemp for experimental purposes, considerable debate was stimulated over the rationale of this proposal. From one perspective people believe that industrial hemp is an economic crop which has the potential of increasing the profitability of Vermont farmers, through increasing farm incomes. Hemp is also seen as a possibility in increasing the number of manufacturing jobs in the state as supporting industries could be developed which would process raw hemp into both raw material for existing industries such as paper, or into finished products such as textiles and building materials. Some individuals speculate that the legalization of hemp production would facilitate the production of marijuana, place an undue burden on the law enforcement community, and send a wrong message to youth about drugs and drug use (Sneyd, 1996). Questions were also asked about the economic feasibility of hemp production and market potentials for hemp based products, in both the long and short run.
This study was motivated by the growing need for information on industrial hemp due to the lack of current studies on consumer opinions and market research on industrial hemp in the existing literature. This paper will provide information on how Vermont residents feel about some industrial hemp related issues. Understanding how consumers feel about hemp, both ideologically and economically, is needed in order for policy makers to be able to put together a complete picture on industrial hemp, and determine the potential benefits and drawbacks of its production in Vermont. In designing this study there were three principal objectives: (1) to collect information on public attitudes toward the prospect of industrial hemp production in Vermont; (2) to assess Vermont residents willingness to purchase and pay for selected products made from hemp, and (3) to identify factors that affect Vermont residents attitudes toward and willingness to accept industrial hemp production.

Survey Design and Administration

A consumer survey on industrial hemp was designed by the authors, refined through the use of a focus group, and conducted by the Center for Rural Studies at The University of Vermont in May, 1996. A random sample of 770 Vermonters were contacted by telephone, and 402 registered voters completed the telephone survey, resulting in a response rate of 52%. The average age of respondents is 47 and the range is from 18 to 95, where women made up a greater percentage than men at 53%. Responses to questions on household income levels show that 31% of the participant households have an annual income of less than $30,000, while 36% have total household income in excess of $45,000.

Survey Results

The survey results are summarized in four groups: (1) knowledge of industrial hemp and the sources of information, (2) opinions on legalization issues associated with industrial hemp, (3) willingness to purchase and substitute hemp products, and (4) determination of the factors that affect attitudes toward industrial hemp legalization and production.

Knowledge of industrial hemp and sources of information

Survey results show that 87% of respondents had heard about industrial hemp in the three month period prior to survey. Although such a large percentage of survey participants had heard about industrial hemp, only 50% knew the difference between industrial hemp and marijuana, and 56% knew that products made from industrial hemp were available in Vermont. When asked about knowledge of whether it is legal to produce industrial hemp, only 58% knew that it is illegal to produce industrial hemp in the United States today. The respondents identified the primary sources of information about industrial hemp as (1) newspapers and/or magazines (80%), (2) television (69%), (3) radio (52%), (4) through personal communication and word of mouth (48%), and (5) other unspecified channels (15%).

Legal Issues
 Following the questions on the knowledge of industrial hemp and sources of information, the following statement was read by the interviewer to provide all respondents with a minimal level of understanding of the difference between hemp and marijuana before asking the questions regarding opinions on the legality of producing industrial hemp:
Industrial hemp and marijuana are both from the same species, but are distinguished by the level of THC, the substance which causes a high from smoking marijuana. Marijuana contains levels of THC which can be greater than 10 percent, while the level of THC in hemp is less than 1 percent.

Several questions were asked to determine how Vermont residents feel about some of the legal issues concerning industrial hemp production in the state. Results indicate that 58% disagreed or strongly disagreed that hemp and marijuana should be controlled by the same laws, while 10% did not answer the question. In the debates over whether or not to allow industrial hemp production, an often mentioned concern was that legalization of hemp production was permitted it would inevitably lead to legalization of marijuana. Asked about this possibility 33% responded that they were very concerned or concerned that this could happen, while 64% replied that they were either somewhat not concerned or not at all concerned.
Another question was asked to examine how people perceive the impact of hemp production on individual attitudes about drugs and the effectiveness of drug education programs directed toward minors. We found that 22% agreed or strongly agreed that drug education in schools would be negatively affected, while 72% disagreed or strongly disagreed, while the rest did not know or did not reply to this question. The final legal issues question was if individuals would support changing laws which regulate industrial hemp so that it could be grown in Vermont. Results indicate that 77% of the respondents somewhat support or strongly support changing the laws so farmers could grow hemp in Vermont, while 17% somewhat do not support or do not support changing the laws. These results are consistent with the results of a consumer survey conducted in Kentucky which found that 77 percent of all Kentuckians favor the legalization of industrial hemp as a cash crop for Kentucky farmers(Hickey, 1995).

Attitudes and Perceptions

Four questions were asked to determine if people support the legalization of hemp production for factors concerning increasing farm incomes in Vermont, enhancing the environment, increasing jobs through the development of a new industry, and to reduce the prices of hemp based products that are currently available. Seventy-two percent strongly agree or agree that they favor hemp production because it would increase profitability of Vermont farms; 56% said they supported hemp production because it would reduce the use of agricultural pesticides and chemical fertilizers; 77% are in favor of hemp production because of the potential for job creation if a processing industry developed; and 55% said they support hemp production because it would reduce the price of hemp products which are currently sold.
Willingness to purchase and substitute for hemp products
To evaluate the merits of developing industrial hemp, questions were asked about willingness to buy hemp based clothing and paper products. Prior to asking questions about consumer willingness to purchase hemp products, the following statement was read to each respondent:

A product which can be manufactured from industrial hemp is clothing. The original Levi blue jeans were made from hemp. Industrial hemp is among the worlds strongest natural fibers, giving clothing made from it greater durability, extended life, and increased comfort as hemp can be processed so that it is softer than cotton.

When asked about willingness to purchase hemp jeans versus cotton ones under the condition of same prices, 55% said they would substitute all of their purchase of cotton jeans with jeans made from hemp; 10% would substitute between 51% and 99% of what they purchase; 3 % would substitute less than 50% of current purchases; 19% would not substitute hemp jeans for cotton ones; and 13% do not purchase jeans at all. Substitution of products is often easier when the price is the same for two different products. When it comes down to paying more for new products, consumer willingness to change their purchasing patterns is generally reduced. When asked how much more consumers would be willing to pay for hemp jeans as compared to cotton jeans with an average price of $30.00, 64% said they would not pay any more than $30.00; 17% said they would pay $1 to $5 more, 14% would pay $6 to $10 more; and 6% would pay $11 or more for jeans made from hemp. It is important to note here that although a large segment of the sample population is not willing to pay any more for hemp jeans, the 36% that is willing to pay more could represent a significant niche market opportunity.
Willingness to purchase paper products made from a hemp based pulp was also asked in this survey. When asked how much hemp based computer paper people would substitute for what they currently buy under the condition of competitive prices, of the 47% who purchase computer paper, 69% said they would substitute all computer paper purchases; 5% would substitute three-quarters of what they buy; 12% would substitute between one half and one quarter of what they buy; and 9.5% said they would not substitute any. For the 81% of respondents who purchase writing paper 63% would substitute all they currently purchase with hemp based paper; 5% would substitute three-quarters of purchases; 15% will substitute one half to one quarter; and 13% would not purchase hemp based writing paper. When asked if they are willing to pay more for hemp based paper products 67% said they would pay between 2.5% and 10% more for paper products made from hemp, while 26% said they will not pay any premium for hemp-made paper products.

Major factors affecting attitudes toward industrial hemp

In addition to determining levels of knowledge, opinions on legal issues, and willingness to purchase and substitute hemp products, this paper identifies the major factors that influence the opinions of the respondents. This section presents some results of logit analysis done to measure the impacts and significance of demographic variables on responses to several specific questions.
Logit analysis is used to examine the impact of explanatory variables on selected dependent variables. In order to use this model which only evaluates dependent variables with two possible values, 0 and 1, the multiple response values from the survey were consolidated into two categories. For example, responses of agree and strongly agree were combined into one category and strongly disagree and disagree were combined into another category while all other responses (dont know, no opinion, or refused) were left out of the analysis.
The logit model can be represented as follows:



where