Conclusions
Based on the prices and yields projected in this paper, I estimate that growing for seed and fibre will generate long term combined revenues of $825-920/ha. Since the total expected costs of growing hemp for seed are $713-822/ha, even in a ‘worse case’ scenario, a minimum return of $98.00 is expected. As illustrated in the table below, this is slightly better than the expected return from winter wheat, and in the range of soybeans, when using average prices from 1995-1996.
The further advantage of growing hemp for seed and whole stalk is that very little is required in terms of capital investment for new harvesting or processing technology and facilities. The crop can be planted and harvested with existing machinery (though modifications will likely be required), and existing processing facilities can transform the crop into valuable oil and fibre products, both of which have certain qualities which are superior to products currently being produced out of more traditional raw materials.
Because of the labour intensive nature of traditional fibre separation,
in order to competitively grow hemp for its valuable bast fibre requires
processing technology which is not yet proven at a commercial level. In
the future, the viability of this process will have to be determined by
weighing the probably significant capital investment required to establish
this industry, and the processing costs against the expected incremental
revenues this value adding procedure will generate. A primary stage of
processing resulting in clean, separated bast fibres will service industry
requiring these fibres in their raw form (for specialty paper or fiberglass,
for example). If the high revenues that, in particular, fiberglass would
seem to generate were to be realized, it seems there will be more than
ample incentive to further pursue this alternative.
Creating a Canadian hemp textile industry require an additional, secondary
level of processing. After the bast fibre is separated from the hurds,
it must be combed, then processed into a sliver (an assemblage of fibres
in a continuous form), then into a rove (a finer sliver) before being ready
for spinning and finally weaving. Since Canada presently does not produce
ANY agricultural crops for fibre, we do not have even the basic infrastructure
available. The potential revenues are substantial, however, and if any
of the new "cottonizing" technologies prove themselves on a commercial
level, this may yet be a viable opportunity. The other possibility, especially
more in the short term may be to export raw bast fibre to the U.S. for
processing into textiles, since the U.S. already has established cotton
and more importantly flax processing infrastructure in place.
Since hemp would seem to be financially viable without having to make any
of these significant capital investments, it seems that if hemp production
were legalized it would be able to more than adequately support itself,
and further research into the best approaches to value adding processing
could then be undertaken using Canadian grown hemp. Furthermore, Canadians now also have an
important first mover advantage in relation to the U.S.. Since the U.S.
is a much larger potential market which cannot satisfy its own pent-up demands
for hemp, a high demand and thus initially higher price level for Canadian grown hemp should result. It should be mentioned, however, that the market for hemp seed products is still in its infancy stage. Much consumer education and awareness is necessary before hemp seeds and oil will be accepted as a mass market commodity.
Recommendations
- Legalize commercial hemp production, the sooner the better to capitalize
on first mover advantage - DONE…MARCH 1998!!!
- Granting of permits should be under the ministry of agriculture, and the
process simplified to reduce the risk of not being able to guarantee supply
(the most substantial risk for potential industrial end users)
- Canadian grown seeds are essential to ensure hemp's competitiveness:
to reduce seed cost
to reduce exposure to unstable international supply of certified seed
to produce seeds which are specifically adapted to Canadian (even local)
growing conditions
to produce seeds which maximize yield of desired qualities (i.e. stalk
yield or bast or oil content)
Canadian seed must also be "certified low-THC" to ensure
that farmers will not be at risk of losing their entire crop because of
being even slightly above the allowable THC limit.
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