A Maritime Industrial Hemp Product
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Table of Conents
Industrial hemp, sometimes referred to as marijuana's misunderstood
cousin, has less than 0.3% THC (the psycho-active ingredient) whereas the illegal
crop has THC levels ranging much higher. Following a 60-year ban, it became legal
to grow hemp in Canada on April 1, 1998, under license from Health Canada under Bill
B. Study Objectives
The primary objective of the research is to gather statistical
and market information on industrial hemp to provide:
- a situational analysis or profile of the industrial hemp
industry in Canada and around the world;
- insight into Maritime opportunities for hemp production
- document the economic viability of the crop;
- identify new or emerging value-added opportunities and challenges
that may or may not influence the competitiveness of a Maritime industry; and,
- provide recommendations concerning the future development
of the industry in the Maritimes.
C.1 Data Collection
We conducted an extensive literature search and contacted
knowledgeable industry participants and observers (a contact list is found in Appendix H).
This study relied heavily on information from key contacts
and reports that are publicly available. It depicts the Canadian hemp industry as
of the writing of this report and to the best of our knowledge based on available
Considerable research, product and market development is
underway that will address many of questions and issues raised within this paper.
Readers are reminded hemp is in a dynamic stage of development. Which products and
markets, if any, will ultimately prove to be commercially viable is still an open
question. Many government agriculture personnel agree they have never before seen
the level of hype surrounding a new crop as has occurred with industrial hemp, Cannabis
sativa L. (hereafter referred to as simply hemp).
D. Hemp in North America: A Brief Look Over
- Hemp has been used as a food grain and as a source of fibre
for fish nets, clothing and rope for thousands of years and is documented as early
as 2700 BC in ancient Chinese writings.
- Hemp was so important to the navies of England and the American
colonies that farmers were legislated to dedicate a portion of their farm lands to
produce hemp each year. It was first cultivated in Canada at Port Royal, Nova Scotia,
- Hemp was a popular crop in Eastern and Central Canada throughout
the 18th and 19th centuries. The Canadian Department of Agriculture conducted extensive
research into the agronomics, processing and crop improvement across Canada in the
1920s and 1930s.
- Commercial hemp acreage in Canada declined over this period
(from a high of 1,640 acres in 1928 to zero by 1934) due to the high cost of production,
strong competition by other fibre crops produced in the tropics and the emergence
of the first synthetic fibres.
- In 1938, the cultivation of Cannabis sativa L.
became illegal in Canada under the Opium and Narcotics Act. In the U.S., the 1937
Marijuana Tax Act banned hemp production in the U.S. A small amount of production
continued during the 1939 to 1945 war period.
- Canadian research into hemp production was re-established
in 1994 when Joe Strobel and Geof Kime of Hempline Inc. in Ontario were granted a
research license. To date, only a handful of states have been granted research licenses
in the U.S. (for example, Hawaii and Vermont) and the crop remains an illegal species
for commercial production in all states.
- Hemp research was conducted in Ontario, Manitoba, Saskatchewan
and Alberta in 1995 and with the exception of Saskatchewan, again in 1996. In 1997,
these same four provinces as well as Quebec and British Columbia grew hemp on a trial
- 1998 is the first year both research and commercial licenses
have been granted in Canada, thanks to the approval of the new Hemp Regulation under
the Controlled Drugs and Substances Act which was enacted in March 1998. These regulations
also apply to the processing, importing, exporting, sale and the distribution of
- Hemp has now been planted in all provinces except Newfoundland
- The Health Protection Branch of Health Canada is charged
with enforcing legislation concerning hemp.
- Some of the requirements for a commercial license include
the use of OECD (Organization of Economic Cooperation and Development), approved
seed minimum acreage (10 acres), a police check of the applicant, GPS (global positioning
system) coordinates of growing location, sampling and testing, and whether the crop
is to be grown for the fibre and/or seed. Separate applications are required for
each growing season.
E.1 World Production
- World production of hemp fibre and tow has fallen from over
300 thousand tonnes in 1961 to 69 thousand tonnes in 1997. China accounts for the
lion's share (36%) of production (see Figures A.1 and A.2 in Appendix A). China, and a number of
other major producers, provide subsides to hemp growers which keep prices artificially
high. Yield varies considerably across countries.
- World hempseed (grain) production fell from 80 thousand
tonnes to 37 thousand tonnes over this same period. Again, China makes up the bulk
(73%) of world production (see Figures A.3 and A.4 in Appendix A). Production in China increased sharply in the mid-1980s, the influx
of grain on the world market depressed prices. A recent report suggests once China
ceased exporting, prices rebounded (Vantreese, 1998).
- Following this long period of decline, production of both
fibre and tow and hempseed has increased in recent years. While the bulk of this
occurred in China and France, Eastern Europe's production has also increased, a function
of the end of the ban on hemp cultivation in the United Kingdom in 1993, in Germany
in 1995, increased demand for natural products by consumers and bio-degradable materials
for manufacturing industries and the existence of substantial farm subsidies.
E.2 Canadian Production in 1998
Canadian hemp cultivation is in its fifth year with 1998
being the first for commercial licenses. Health Canada is in the process of compiling
a complete list of commercial and research licenses issued in 1998. A report of licenses
issued to the end of June 1998 is provided in Appendix A (see Exhibit 1). This information
is found, along with license applications, at their websit (HTTP://www.hc-sc.gc.ca/hpb-dgps/therapeut/htmleng/hemp.html).
Our own research shows at least 5,300 acres have been planted under the research
and commercial license issued this year (see
About a half dozen companies or consortiums account for the
bulk of this production. As such, hemp production is concentrated in specific areas
across Canada but is still composed mainly of small acreages. Maritime producers
account for about 150 acres of the total while a half dozen other groups together
planted over 80% of the total land area in Canada this year. Profiles of the key
growers and processors in the Maritimes and the rest of Canada are found in Appendix B.
Table 1: 1998 Hemp Production in Canada
||Known Research and Commercial Licenses
||Granby Hemp Co-op (Grand Forks)
Transglobal Hemp Products Corp.(Vancouver Island)
WestHemp Cooperative BC (Lower Mainland)
Canadian Hemp Corp. (Contracts: BC, AB, SK)
Jack Dobb (Dawson Creek)
approx. 35 ac.
approx. 20 ac.
<1 ac. (research)
||8-12 commercial growers
Chinook Applied Research Station (SE AB)
1 research license near Edmonton
|Primarily Grain (oil)
||Western Growers Seed Corporation (mostly organic)
GenEx (several organic growers, Regina)
|approx. 250+ ac.
||Canterra Seeds Ltd. (Winnipeg, 15-20 growers)
Consolidated Growers & Processors (Winnipeg)
Prairie Hemp (40 growers, contracted to Hempola)
HempOil Canada Ltd. (St. Agathe)
|approx. 200 ac.
pprox. 800+ ac.
approx. 500+ ac.
approx. 40 ac.
||Kenex Ltd. (Pain Court, 54 growers contracted)
Hempline Inc. (London, about 20 growers contracted)
Natural Hemphasis/Six Nations Reserve (Grand R.)
Approximately 30 others (various locations)
|approx. 2,000+ ac.
approx. 500 ac
10 ac. (research)
approx. 300-500 ac.
|Fibre, Grain, Seed
||Chanvre Esprit (Michael Gaudreau, organic prod'n)
Orverd (Sylvain Donvierre, Lac St. Jean)
Jerzy Prytyk, Ayers Cliff (assoc. w/GenEx in Regina)
|Oil, Grain, Fibre, Seed
Grain (Oil & Food)
||Dr. Chuck Schom (St. Andrews, plots widespread)
NB Department of Agriculture (Fredericton)
Canadian Hemp Company Ltd. (Fredericton)
Al Geddrey (Cambridge Narrows)
|10 ac. (research)
<1 ac. (research)
84 ac. (64 contracted)
||New Century Farms (Billtown, Kings Co.)
Don Hunter (Pugwash area)
NS Department of Agriculture & Marketing (Truro)
<1 ac. (research)
||Maurice Van Daele/Island Hemp Co. (Pt. Pleasant)
||17 ac. (research)
|approx. 5,300+ ac.
Note: (1) All acreages are estimates based upon personal
reports and news reports available on the Internet.
F.1 World Exports
- According to Vantreese (1998)(1) , since most
Chinese fibre and tow production is used domestically, the European Union (EU) and
Eastern Europe dominate the export market. Like production, exports are much less
today than in the 1960s. Western Europe has increased fibre export in recent years
through value-added re-exports from the Former Soviet Union and Eastern Europe.
- The EU, Turkey and Hungary are major world buyers.
- World export prices have grown in recent years (price increases
have stayed ahead of inflation) but are sensitive to fluctuations in world production.
Export prices vary across countries. For example, export prices in Germany were about
US $12/lb whereas Romania, Belgium-Luxembourg and the United States vary between
US $0.30 and $0.40/lb ($1996). The world average has been calculated to be US $0.83/lb.
F.2 U.S. Imports & Exports
- According to Industry Canada, imports of raw hemp and tow
and waste into the U.S. have been relatively small (about CDN $150 thousand). Hungary,
the Netherlands and China are major sources for these exports (see Exhibit 2 in Appendix A).
It is interesting to note the data shows the US also re-exports raw or retted hemp
to Belgium, Panamas, Canada and Haiti after some value-added activities have occurred.
- About CDN $870 thousand of hemp yarn was imported into the
US in 1997, mainly from China, Romania and Poland. Vantreese reports the US imported
US $2 million in woven fabric. Many woven hemp products imported into North America
are actually a blend of hemp and other fibres such as flax, linen or cotton.
- Separate data for finished goods made of 100% hemp versus
other natural fibres is not available. A 1996 hemp business survey by Jon Gettman
suggests at least US $23 million of finished goods are imported into the U.S.(2)
F.3 Canadian Imports and Exports
- Imports of raw hemp, tow, waste or true hemp yarn have increased
from about $22 thousand in 1993 to $350 thousand (see Exhibit 3 in Appendix A).
- Chinese raw or retted hemp was imported into British Columbia
in 1997. Hemp tow and waste is sourced from Spain, Hungary and Germany and shipped
into Quebec, Ontario and Nova Scotia. True hemp yarn is shipped into British Columbia,
Ontario and Quebec from Hungary, Poland and Romania.
G.1 Value of Hemp Products
There are many uses for hemp as shown in Figure 1, but finished
hemp products can be costly. This is to be expected given the cost of importing,
manufacturing and its status among health-wise and enviro-conscious consumers. The
following hemp prices were gathered from published reports and interviews.
Fibre for Textiles:
- Hemp sliver (used to make high-quality textiles) is worth
US $17.50/lb on the Oxford Exchange.
- A Nova Scotia clothing manufacturer purchases bolts of Hungarian
hemp through US wholesalers at a cost of $24/yd (versus $2-3/yd for cotton).
- Imported hemp canvas costs $10/m FOB Hungary (based on 1,000
- The Oxford Hemp Exchange Commodity Market posts the following
- Consolidated Growers and Processors of Winnipeg offers $20/t
for field retted and baled stalks on a dry weight basis (they provide harvesting,
turning and baling services to farmers during the 1998 and 1999 seasons).
- Scutched fibre trades between Poland and Hungary for US
- Kenex Ltd. contract prices (source: The Ontario Farmer,
- Fibre Contracts (Pre season expectation @ 3.5 ton/ac.): $275/t
- Fibre & Grain Contracts: (Pre season expectation @ 3.5 ton/ac.): $200/t
- Baled Hemp Delivered @ 15% Moisture: $275/t
- The Oxford Hemp Exchange Commodity Market sells bulk sterile
seeds for US $1.14/lb ($50/bu on based 44 lb/bu).
- Kenex Ltd. offers 50¢/lb for clean grain @ 10% moisture.
- Consolidated Growers and Processors offers about 59¢/lb
for cleaned grain.
- One Canadian oil retailer offers 50¢/lb for non-organic
grain and 70¢/lb for organic grain.
- One Halifax store retails hempseed (grain) @ $10.95 for
280 grams (they retail hemp pants @ $85).
- Kenex Ltd. sells certified seed for $3.30 to $3.75/lb.
Other Contract Prices:
- One Maritime grower expects to offer contract growers $275/t
plus bonuses in 1999 if certain conditions are met.
- A spokesperson from Hempola Inc. suggests Chinese oil can
be purchased for about 75¢ to 85¢ per pound wholesale.
- German Oil is imported at a cost of US $11-14/Litre (FOB
for eastern seaboard).
- One Quebec grower suggest the Canadian retail value for
250 mg of oil ranges from $17 to $21 (this compares with $7 to $9 for oil combinations
of borage and flax).
Body Care Products:
- Hemp hand protector purchased in England from The Body Shop
sells for £6/100 ml (about CDN $15). This is but one of five new hemp products
that will be marketed in Canada by year end.
- Hemp moisturizing cream retails for $12-13/100 ml.
G.2 Costs of Production
We have provided two examples of estimated production costs
in Appendix C for Manitoba and Kentucky (which sourced Canadian growers for some
of the cost estimates).
Recent cost estimates suggest hemp has the potential to be
a profitable crop. Estimates from Manitoba suggest hemp grain can be grown for about
$245 to $300 per acre depending on yields of 300 and 500 lbs/ac, respectively (see
Table C.1 in AppendixC).(4) This suggest the hempgrain must sell for at least 60¢ to 80¢/lb
to break-even, depending on the yield.(5)
A recent University of Kentucky analysis estimated profits
for fibre, grain, certified seed or fibre and grain could be in the order of US $316,
$220, $606 and $319/ac respectively (see Table C.2 in Appendix C). These results suggest
hemp producers would enjoy greater profits when compared with other US crops such
as alfalfa, corn, barley or wheat (Table C.3).
Kenex Ltd. estimated net returns for fibre contract, fibre
and grain contracts and cleaned grain (10% moisture) to be in the order of $337,
$421 and $550/ac, respectively.
The cost of producing hemp under various Canadian conditions
and management regimes will not be known until independent and methodologically similar
studies have been completed.
Interested growers must ensure their own estimates are accurately
calculated and include all relevant costs.
Basic agronomic information is presented in Appendix D of this report. Appendix E
provides an overview of hemp processing techniques.
H. Investment in the Canadian Hemp Industry: Actions to
Despite claims by some observers that many government departments
have adopted a "wait and see" attitude to industry support, there is evidence
to the contrary. The following are examples of hemp research and development in Canada:
- British Columbia: A total of $20 thousand has been
earmarked for the development of an association for hemp.
- Alberta: The Forest Products Business Unit of the
Alberta Research Council (ARC), in conjunction with the University of Alberta Department
of Renewable Resources is conducting a study examining the manufacture of panels,
ranging from medium density fibre board to insulation board, from hemp. Trials include
processing green hemp stalks to determine if there are quality differences between
off-field and stored materials and examining resin compatibility and pressing techniques.
- Alberta: ARC is testing industrial uses such as
panel boards made from both fibres and hurds. These activities are being funded through
the Alberta Agricultural Research Institute (AARI) to a maximum of $28 thousand under
a Matching Grants Program.
- Saskatchewan: The Saskatchewan Neutraceutical Network
in Saskatoon received about $1 million from the Agri-Food Innovation Fund to organize
an association, increase public awareness and investigate industry opportunities
in neutraceuticals, including the use of hemp. They are currently involved in a survey
of growers and processors involved in the industry.
- Manitoba: Both Prairie Hemp Ltd. and Consolidated
Growers & Processors (CGP) have secured matching funds through Manitoba's new
Agri-Food Research and Development Initiative to conduct agronomic research. CGP
has received a $60 thousand Agri-Food Research and Development Initiative (ARDI)
grant to investigate commercial production techniques that will enhance and accelerate
the development of Manitoba's hemp industry. The project's goals are to increase
seed supply, maximize yields and quality and make hemp products more cost competitive.
Prairie Hemp Ltd. has been awarded about $68 thousand for a commercial-scale evaluation
of hemp to determine optimum production.
- Ontario: The University of Guelph Agricultural
Research Station in Thunder Bay continues research in the agronomic potential for,
and feasibility of, field production of low-THC hemp for seedgrain in Northern Ontario.
This $192thousand project was made possible through funding from a number of sources
including the Northern Ontario Heritage Fund, the local Federation of Agriculture,
farmers and Kenex Ltd.
- Kenex Ltd. ($60 thousand) and Hempline Inc. have received
financial support from the Ontario Agricultural Adaptation Council's Can-Adapt Program.
The support to Kenex Ltd. will help fund a non-woven fibre matting line to create
products from fibre for use in textiles, autoparts, manufacturing and construction
- Quebec: Jerzy Prytyck and a group of farmers received
$37 thousand under a Regional Development Agreement to assist in the costs of research,
engineering, field days and preparation of a hemp production manual.
- New Brunswick: The Canadian Hemp Company, located
in Fredericton has secured IRAP funding (Industrial Research Assistance Funding through
the National Research Council of Canada) for a research and development project dealing
with a variety of fibres.
- Prince Edward Island: Maurice Van Daele of Point
Pleasant PEI is conducting a three year research project ($44 thousand) with the
PEI Food and Technology Centre and made possible by the PEI Department of Agriculture's
ARIF Program (Agriculture Research Investment Fund) and a Federal Matching Investment
- Nova Scotia: Mike Lewis has recently obtained several
thousand dollars in provincial funding for a research and development project which
will examine technical and marketing issues.
Clearly, there is government support for an industrial hemp
industry in Canada. Hemp in North America is also supported by a diverse group of
individuals and corporations. Supporters include farmers, non-agricultural businesses,
scientists, unions (such as the Canadian Auto Workers), environmental advocates,
financial institutions such as the Bank of Montreal(6) and marijuana advocates.
I. Analysis of Market Potential
The markets for hemp products can only be described as developing.
This industry is in its infancy, having lain dormant on the supply-side for 60 years.
Despite increased imports into Canada in recent years, volumes of imported raw fibre
and manufactured goods are small. Little is known of the extent of markets available
for Maritime, or for that matter, Canadian hemp produced.
The existing North American market for hemp is estimated
to fall between US $28 and $30 million with annual increases of $8 to $10 million.
The global market for hemp is valued at between $100 and $200 million annually.(7)
Many of the independent growers with whom we spoke are quickly
approaching harvesting dates yet have not secured markets for their crop. In some
cases, they are unsure of how they will harvest and process the crop and are frequently
unsure of the price they will receive for what they harvest. Maritime growers are
for the most part seeking out the same local markets. This is in sharp contrast to
some of the key Canadian players who have made inroads in establishing not only markets
but also new and in some cases innovative methods of processing hemp fibre and manufacturing
In general terms, the demand for hemp products is expected
to ride the wave of the growing market for environmentally and economically sustainable
- elevated consumer environmental awareness, and increased
interest in purchasing natural fibre products grown with little or no pesticides;
- increased business environmental concern fueled by regulatory
pressures such as the adoption of ISO 14000 (environmental management standards).
The following discussion presents our research findings and
conclusions on major new and emerging hemp product markets. They include:
I.1.2 Health Foods
I.1.3 Textiles-Woven and Knitted
I.1.4 Textiles-Molded or Pressed
I.1.5 Pulp and Paper
I.1.6 Building Materials
I.1.7 Alcoholic Beverages
I.1.8 Livestock Feed
I.1.9 Livestock Bedding
I.1.10 Biomass Fuels
In summary then, the various markets for hemp products are
developing and should generally be considered at an immature stage. The best example
of a concrete opportunity for Maritime fibre (the focus of our growers) is expressed
interest from Minas Pulp & Power. On a more general level, the oil, food and
body care markets are said to growing and require less infrastructure investment
than with fibre processing. Unfortunately, we must wait until at least 1999 before
there are opportunities to rigorously test the suitability of available oilseed varieties
to Maritime conditions.
We have prepared responses to a set of market potential questions
that are based on the findings of this section. These are found in Table F.1 in Appendix F.
A glossary of hemp industry terms has been provided in Appendix G. Appendix H lists the individuals contacted
as part of the research for this study.
J. Overcoming the Obstacles to Growth
The results of the last section suggest a number of obstacles
must be overcome before widespread development can occur in the Maritimes, or for
that matter, the rest of Canada. These are described below.
J.1 Better Understanding of the Technological Hurdles
- Hand-cutting is a traditional method in low-wage countries
but considered impractical for large-scale production. Mechanized harvesting can
be done but it is very rough on machinery because hemp easily wraps itself around
revolving parts. Development and testing of harvesting technology to Canadian conditions
is still on-going with some prototypes only becoming recently available.(12)
- Processing technologies are generally regarded as antiquated
and there is a need to adapt current technology from other fibre crops (such as flax)
to commercial field production of hemp. Some industry experts opine economical processing
infrastructure will be several years in the making.
- No processing facilities are available in the Maritimes
even as we approach plant maturity.
J.2 Access to Seed and Appropriate Varieties Developed for
- There is limited certifiable (OECD), low-THC seed and fewer
seed-bred cultivars are climatized for Canada.(13) Seed multiplication
may help curb this demand but varieties need to be developed for Canadian conditions.
Many of the European cultivars are bred for fibre and not oilseed production. Environmental
conditions necessary for seed production are said to be more favourable in areas
outside of the Maritimes.
- Present members of the Canadian Seed Growers Association
are expected to pursue this market. They have the experience, know the regulations
and procedures and have the cleaning equipment required. While several hemp growers
and processors are positioning themselves for the pedigreed seed market, it can take
decades to develop new varieties.
J.3 Access to Information and Expertise
- While a number of well attended Canadian hemp symposiums
and published government research have broadened the information base for this new
crop, much proprietary management and technological expertise is being developed.(14)
Indeed, a number of projects are cloaked under non-disclosure agreements between
government and private industry. This will impede growth of the Maritime industry
to some degree.
- According to one contact, while partnering arrangements
with other key Canadian players can assist in information transfer, the Maritimes
needs to be at the forefront of research, development and testing if we are to successfully
and economically penetrate the hemp market.
J.4 Biophysical Conditions
- It is unclear the extent to which biophysical variations
in the Maritimes will tend to concentrate production and therefore processing facilities.
Given the observed success of at least one grower, we know hemp can be grown, although
yields will only become apparent following the harvest.
- A study by Sara Francis entitled, "Hemp (Cannabis
sativa L.) as an Alternative Fibre Source for Nova Scotia" suggests Nova
Scotia has soils deemed as only fair to poor for hemp growing (based on soil conditions
and based on major limitations in slope and depth). This may also contribute to concentrated
areas of production and processing.
- Hemp has a number of competing fibre alternatives for major
fibre markets. For example, in 1997, farmers in Western Canada seeded 1.8 million
acres of oilseed flax and over 200 thousand acres of edible oilseed flax (solin)
with a total production of about 1.25 million tonnes of flax straw. Nearly a million
tonnes of straw will be sold for $6 to $9 per tonne, burned or simply left in the
field. Given the value-added potential and the need to reduce environmentally unfriendly
practices, there is pressure to find markets for the flax straw. Given the earlier
arguments made for only niche market specialty papers, fibre markets will require
considerable development before they can support large-scale commercial production.
- Maritime producers have only just entered a market in which
several major players have some lead. Whereas some of the key players have focused
on particular markets that do not overlap, Maritime growers are to some degree chasing
the same markets in the region and will compete with larger players at the national
level. Economics and market positioning will be vital to success.
J.6 Markets and Marketing
- Many independent growers are still in the process of developing
markets for this year's crop. This suggests primary processors will likely play a
key role in developing markets and that at present, the market is not structured
for large scale and long-term growth.
- Contrary to many reports, hemp is at present a niche market.
Increasing demand for hemp products over the last decade has not yet fueled an increase
in world production of fibre and grain. Furthermore, there are limited markets for
this year's production, although some key players are said to have markets secured.
Expanding the range of value-added industrial products available and fostering the
necessary consumer demand will take time.
- Careful product positioning and advertising for consumer
awareness will be important to success in the higher-value oil and food markets.
To quote one respondent, "the sizzle sells the steaks". Growers must understand
that while infrastructure investment tends to be less than that required for fibre
markets, considerable working capital is needed to launch a new product into the
- One respondent suggested there is a danger in trying to
pursue hemp in too large a scale for the Maritimes. Local uses and niche markets
should be the focus initially suggesting a "get there first" situation
versus unlimited demand.
J.7 Vertical Integration
- This is considered by many to be blueprint for success in
hemp. The fibre market, the primary focus of Maritime growers, is not one where one
individual farmer is likely to develop given the volume that is needed to economically
sustain processing facilities. For example, HempFlax in the Netherlands complements
its large growing base (over 5,500 acres) with two decorticating plants and a recently
purchased a paper mill with an annual capacity of 30 thousand tons of paper (25%
hemp composition). The company has spent millions developing harvesting and processing
- Primary processors should consider contracting hemp production
to guarantee price and consistency of supply.
- There appears to be opportunities for partnering both within
and outside the Maritimes. We are aware Maritime growers have been networking with
each other and with major players, to varying degrees of success. Given the level
of partnering that is already occurring within the industry, Maritime growers and
processors will need to develop a critical mass for production, marketing and distribution
channels and partnering may be the key to quickly gaining a leg-hold in the industry.
- Partnering with other key players in the industry will also
help to transfer expertise between growers, processors, manufacturers and retailers.
J.9 Price Uncertainty
- There is much price uncertainty in thin markets where the
volume of trading is low. The degree to which production can increase without affecting
prices is not known. Growers and processors need to do their homework on the economics
and market potential of hemp. As production comes on line, prices will fall unless
growing demand for hemp products outstrips supply.
- It is important to keep in mind that as subsidies in Europe
are further reduced and phased out, the true economics of hemp will appear. If they
are poor, world production may decline and this could act as a boon for Canadian
- Quality is a key determinant for market success, especially
for use in textiles. While quality from some countries can be highly variable, low
and medium wage countries tend produce some of the best quality hemp products such
as fabrics. Maritime growers must be keenly aware of market specifications and ensure
standards are maintained.
- Given the need for economies of scale, growers and processors
will need to ensure they provide a consistent and adequate supply of raw and processed
hemp if the industry is to attain the necessary critical mass. Key players in the
industry have accomplished this through contracting and guaranteed pricing mechanisms.
J.12 Regulatory Environment
- The 1998 hemp licensing process was frustrating for many
growers and processors. Many were given the go-ahead late in the season but seeded
anyway. It is unclear how licensing may change or the extent to which hurdles encountered
during the 1998 season may pave the way for next year's licensing procedures. It
is imperative interested growers do their homework to ensure a smooth licensing process.
J.13 Testing Facilities
- THC-testing is a mandatory requirement for licensing. A
number of testing laboratories are found across Canada but none have been established
in the Maritimes. This should be addressed if the industry experiences rapid growth.
We understand the Nova Scotia Agriculture College is examining the potential for
becoming a licensed testing facility. The PEI Food and Technology Centre may also
be a potential candidate.
K. Conclusions and Recommendations for Industry Direction
- World production of hemp fibre and tow and hemp grain has
followed a long period of decline. Increased demand for hemp products over the last
decade has not yet fuelled an increase in world production of fibre and grain. Volumes
of imported hemp raw fibre and manufactured goods into Canada are small.
- It is clear a culture of believers in hemp and its variety
of uses has developed in North America. This is reflected in the growth of hemp-based
products, all based on imports of hemp fibre, grain and oil. Some individuals within
the agricultural community have observed this and believe there is an opportunity
to supply this demand with domestically produced hemp fibre and grain.
- The markets for hemp products can best be described as developing.
They are primarily a loosely connected set of niche markets. This industry is in
its infancy, having lain dormant on the supply-side in North America for 60 years.
- Despite the high degree of interest in hemp, little or no
hemp has been sold by Canadian processors to date. The first sales will occur when
the approximately 5,300 acres are harvested and processed this year. Only then will
the there be a demonstration of the real market potential of various hemp products.
By next spring, the potential markets should be substantially better defined.
- This study was aimed at identifying the potential for a
Maritime-wide industry. Maritime production is small, made up of only a handful of
growers. In the absence of a well-developed distribution system, there appears to
exist only niche-market opportunities for a small number of growers. Our research
suggests that at this time substantial effort will be required to develop a Maritime
industry for many of the markets claimed for hemp products such as textiles, building
materials, alcoholic beverages, livestock feed, bedding and biomass fuels. The main
reasons include insufficient processing and value-added infrastructure and incomplete
research and development results.
- There appears to be some potential for oil production if
both the agronomic and economic feasibility can be demonstrated and local cold press
crushing facilities are established. The heath food market also offers some potential.
However, testing oilseed viability cannot occur before 1999 given limited production
and the fibre-focus of Maritime growers this season.
- If the interest reportedly expressed by Minas Basin Pulp
& Power Co. in using hemp fibre in its paperboard products is confirmed, this
may be the best example of a concrete market in the Maritimes for hemp.
The priorities for the departments of agriculture in the Maritimes
appear to be:
- Monitor the production, processing and marketing of fibre,
grain and seed across Canada.
- Monitor the regulatory system.
- Acquire and test as many varieties as possible from European,
Canadian and plant breeders.
- As market opportunities become clearer, the direction for
testing, whether it be for fibre or grain varieties, will become evident as will
the need to maximize yields under Maritime conditions and management schemes.
- Prepare and provide to growers and processors a summary
of the information in this report and include any agronomic reports completed over
this fall and winter. The information should be provided no later than the spring
- Research and information dissemination should be supported
rather than investment into infrastructure, given the immaturity and uncertainty
of the markets for hemp.
1. Industrial Hemp: Global Operations,
Local Implications, July 1998, Valerie L. Vantreese, Department of Agricultural Economics,
University of Kentucky.
2. Hemp Entrepreneurs and U.S.
Public Policy: The 1996 Hemp Business Survey, July, 1996, John Gettman.
3. Kenex Ltd. is attempting to
secure long-term growing contracts from farmers while pursuing long-term market contracts
with buyers such as General Motors of Canada. They deduct the costs of management,
harvesting, retting, baling, etc., from this price unless the grower assures responsibility
for these activities.
4. In comparison, 1995 estimates
for growing costs for hemp for fibre and hurds ranged from $268 to $285 per acre.
Growing hemp for seed was estimated to cost $238 per acre. Source: Gordon Reichert,
Market Analysis Division, Agriculture and Agri-Food Canada, 1996 Crop Budgets 1995,
Publication #60, OMAFRA.
5. The net returns from growing
hemp for fibre are estimated to be between $100 and $300/acre, depending on the growing
region and the management practices. More accurate data is expected by January, 1999.
Source: Mike Columbus, OMAFRA.
6. The Bank of Montreal has recently
announced a Sponsored Advertising Program whereby they pay for advertising costs
in Commercial Hemp Magazine. Companies must be in the start-up phase (less than one
year). For more information, requests can be faxed to 604-662-8621 or e-mailed to
firstname.lastname@example.org (the publisher of the magazine).
7. Source: G. N. Chaudhary, Special
Products Team of Alberta Agriculture, Food and Rural Development in Alberta Hemp
Symposium Proceedings in Red Deer, (March 10) and Edmonton (April 8, 1998).
8. In 1996, Alcell Technologies,
a subsidiary of Repap Enterprises, experimented with pulping both wheat straw and
whole hemp stalks. Alcell Technologies Inc. is a patented process that pulps hardwood,
annual fibres and agriculture residues. The process is said to result in product
yields of 76% to 86%, compared with conventional pulping processes yielding 51%.
Sale of the company put the project on hold. A news release posted March 2, 1998
at the Pacific Rim website indicated Malaspina Capital Ltd. was at the time negotiating
with Repap Enterprises Ltd. to purchase shares in Alcell Technologies Inc. and stated
there is enormous potential for the technology in Asia and other international markets.
Currently, there is an idle demonstration plant at Atholville, New Brunswick.
9. We have been unable to confirm
these reports with the company.
10. It is important to note
corrugated cardboard does not require the same level of processing as that of higher
grade papers produced by many of the other Maritime mills.
11. As found on the website
for the Washington Hemp Education Network (WHEN) located at HTTP://www.olywa.net/when/secto1.html.
12. Tilby Systems Ltd., of Victoria,
BC has a long history in sugarcane, kanaf and sweet sorghum fibre separation techniques.
They are awaiting green hemp stalk to test the viability of using existing equipment
to determine what modifications, if any, are needed for hemp. Another piece of machinery,
The Tornado, marketed by Bolton-Emerson Americas Inc. of Massachusetts,
has been developed to process non-wood fibres into papermaking material. While there
are conflicting reports as to its effectiveness, the non-plugging machine is said
to accommodate plants directly from the field and processes them into a homogenized
fibre slurry by subjecting the fibre to repeated scissors-lime action thereby cutting
the fibres into shorter lengths. Another piece of machinery, the Chaflin,
then refines the pumpable slurry into papermaking stock. This has potential to eliminate
the need to cook the slurry. For more information, visit their website at HTTP://www.papermaking.com/tpmc/addeck/bolteme.htm.
13. There are 26 approved cultivars
in Canada for 1998. Kenex Ltd. has reported there is seed left over from this season
as orders were reduced due to delays in licensing. Furthermore, seed prices are expected
to fall by 10-15% in 1999.
14. For example, the following
statement can be found on the Kenex Ltd. website: We have compiled a great deal of
knowledge, expertise and technology at a very high cost over the last several years.
Much of the information has been provided to the public at no charge but we hope
you understand we must maintain some proprietary information in order to create a
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This page last updated on 18 April 1999.