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A Maritime Industrial Hemp Product Marketing Study
Appendix C
Estimated Costs of Production
Note: The information provided here is the most recent cost of production data found in Canada. Accurate cost and returns for the 1998 growing season are not expected to be available until spring 1999. Interested growers are strongly advised to carefully examine the data and compare it to their own situation.
Table C.1: Estimated Costs of Production of Hemp: Manitoba
Low Scenario
High Scenario
Hempseed
Residual Stalk
Hempseed
Residual Stalk
Cost/Return Low seed rates,
yield and $/Ac.Low $/Ac.
High seed rates,
yield and $/Ac.High $/Ac.
Seed (1) 49.50
100.00
Fertilizer (2) 38.15
38.15
Chemicals (3) 10.00
10.00
Fuel 11.00
4.00
11.00
4.00
Machinery Operating (4) 15.00
6.00
15.00
6.00
Crop/Hail Insurance (5) 6.00
6.00
Other Costs 7.50
7.50
Land Taxes 5.50
5.50
Licensing Fee (6)> 15.00
15.00
Sampling/Analy. Fee (7) 16.00
16.00
Drying Costs (8) 2.14
3.57
Cleaning Costs (9) 3.00
5.00
Interest in Operating 6.33
0.36
8.20
0.36
Total Operating Costs 185.12
10.36
240.92
10.36
Land Investment Costs 17.80
17.80
Machinery Depreciatio 17.50
5.00
17.50
5.00
Machinery Investment 7.00
7.50
7.00
7.50
Storage Costs 2.14
2.14
2.14
2.14
Total Fixed Costs 44.44
14.64
44.44
14.64
EM>Sum 229.56
25.00
285.36
25.00
Labour 15.00
15.00
15.00
15.00
Total Costs (10) $244.56
$40.00
$300.36
$40.00
Expected Yield (lb/ac) 300
3,000
500
5,000
Break-even Price ($/lb)(11) 0.82
0.01
0.60
0.01
Source: Dr. Jack Moes in his presentation at the Alberta Hemp Low-THC Hemp Symposia, March 1998.
Table C.2: Estimated Growing Costs and Returns for Hemp in Kentucky Using Current Technology, Yields and Prices ($US/Acre)
Cost/Return Straw
Seed
GrainSeed
CertifiedStraw & Grain
Seed $125.00
$25.00
$25.00
$125.00
Fertilizer <45.01
45.01
45.01
45.01
Herbicides 0.00
10.95
10.95
0.00
Lime 12.12
12.12
12.12
12.12
Fuel, Oil 18.43
14.06
14.06
22.25
Repair 16.14
30.38
30.38
23.12
Interest 8.38
5.24
5.24
8.94
Storage 5.00
5.00
5.00
5.00
Transport to Processor 27.20
8.00
5.60
24.00
Total Variable Costs $257.28
$155.76
$153.36
$265.44
Fixed Costs 50.27
45.00
70.73
75.05
Operator Labour 56.00
56.00
70.00
63.00
Total Enterprise Costs $363.55
$256.76
$294.09
$403.49
Stalk Yield (tons/acre) 3.4
0.5
0.5
2.25
\US $Price per Ton $200
$120
$120
$200
Stalk Revenue/Ton $680.00
$60.00
$60.00
$450.00
Seed Yield (lbs/ac.) -
1,069
700
700
Price Per Pound -
$0.39
$1.20
$0.39
Total Seed Revenue $0.00
$416.91
$840.00
$273.51
Profit $316.45
$220.15
$605.91
$319.51
Fixed Costs include depreciation, taxes and insurance. Figures are updated to 1997 based on estimates by Dave Spalding in the report to the Governor's Hemp and Related Fiber Crops Task Force. Several additional adjustments are included in the text. Herbicide, storage and transportation to processor costs have been added to these estimates. Spalding's repair estimates were increased by 50% and seeding rates for fibre increased form 40 lbs/ac. to 50lbs/ac. It is worth mentioning Hempline Inc. of Ontario is recommending growers use 60-65 lbs/ac (Kime, 1998).
Source: Table 3, Economic Impact of Hemp in Kentucky, July 1998 by Dr. Eric C. Thompson, Dr.Mark C. Berger and Steve N. Allen of the University of Kentucky Centre for Business and Economic Research.
Table C.3: Estimated Relative Returns to Land, Capital and Management per Acre for Hemp and Common Kentucky Crops ($US/Acre)
Hemp, Grain Only $220.15
Hemp, Straw Only 316.45
Hemp, Grain & Straw 319.51
Hemp, Certified Seed Only 605.91
Alfalfa Hay 141.34
Grass Legume Hay, Round Bales 161.56
Continuous Corn 75.71
Barley-No Till Soybeans, Double Crop, Following Corn 158.09
Wheat, Reduced Tillage 14.24
Grain Sorghum, Conventional Tillage 10.51
Source: Table 4, Economic Impact of Hemp in Kentucky, July 1998, by Dr. Eric C. Thompson, Dr.Mark C. Berger and Steve N. Allen of the University of Kentucky Centre for Business and Economic Research.
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This page last updated on 18 April 1999.
