HEMP MARKET DOESN'T OFFSET OTHER CONCERNS

Gabriel of Cottonwood is a rancher and is South Dakota's Secretary of
Agriculture. He was a long time majority leader in the S.D. House of
Representatives.

Federal law classifies industrial hemp as a Schedule 1 controlled
substance under the Controlled Substances Act of 1972 and it is
therefore illegal to cultivate. The issue of allowing the cultivation
of industrial hemp in South Dakota has been addressed by the S.D.
Legislature in the past two legislative sessions and defeated in both
attempts. The Department of Agriculture has carefully analyzed the
research regarding industrial hemp and cannot support the efforts to
legalize its cultivation.

Proponents for the legalization of industrial hemp argue that the
potential marketability of industrial hemp and hemp products is so
great that it offsets law enforcement concerns. These proponents
contend there should be no law enforcement concerns since industrial
hemp is clearly distinguishable from marijuana.

The S.D. Highway Patrol has consistently pointed out that industrial
hemp is not easily distinguished from marijuana. The Highway Patrol
maintains that fields of industrial hemp will be difficult to
differentiate from fields of marijuana and may actually become a
refuge for marijuana.

While the cultivation of industrial hemp is legal in Canada, the
Canadian Food Inspection Agency reports, "Under identical growing
conditions, it is hard to distinguish between industrial hemp and
marihuana (marijuana)."

As previously stated, proponents for the legalization of industrial
hemp contend that the potential economic boom for agricultural
producers is great. Yet the Canadian Food Inspection Agency relates,
"...there are currently no established markets for raw hemp products"
and "Primary processors will have the challenge of developing markets
for hemp fibre, hurd, oil and cake."

Hemp oil is cold-pressed from seed because it is fairly unstable and may
become rancid unless quickly preserved. The prospect for hemp oil in
food markets is limited by its short shelf life, the fact that it cannot
be used for frying and its failure to receive a "generally recognized as
safe" certification from the U.S. Food and Drug Administration.
According to a 2000 USDA report, "Industrial Hemp in the United States:
Status and Market Potential," the U.S. market for industrial hemp fiber
is, and will likely remain, a small thin market. The report estimates
that U.S. imports of hemp fiber, yarn, fabric and seed in 1999 could
have been produced on less than 5,000 acres and that the potential seems
high to quickly reach market saturation for hemp products.

The report concludes, "Uncertainty about the long-run demand for hemp
products, and the potential for oversupply in the small, thin
industrial hemp markets, discounts the prospects for hemp as an
economically viable alternative crop for American farmers."

University of Kentucky Department of Agricultural Economics Professor
Valerie Vantreese describes the challenges of improving hemp
processing to make it cost competitive and asserts "...large
multinational paper, textile and oil companies are not stupid. Nor are
they shortsighted. They also have research and development budgets
that would dwarf that of public universities. If they can't make hemp
work in the marketplace, what type of costs and return differential
might small farmers and businesses work towards?"

A July 2000 article in The Western Producer entitled "Growers fleeing
hemp" describes Canadian concerns over the marketability of industrial
hemp after a hemp processor, Consolidated Growers and Processors Inc.
declared bankruptcy. The article explains how one grower expected to
lose about $500 per acre on land planted to hemp and another indicated
that he refused to grow hemp again.

It is difficult for me to support efforts to legalize the cultivation
of industrial hemp given the law enforcement concerns that have been
raised. It is especially difficult to justify when no proven market
for the product exists.