HEMP SHORTAGE THREATENS GROWING CONCERNS

Ontario's Producers Have So Successfully Cracked The Mainstream Retail
Market They Face A Supply Shortage

Ontario hemp producers have a problem on their hands.

As hemp-seed products move into the mainstream from health-food stores to
Loblaws, the producers have become more successful at marketing than
nailing down a supply of hemp seed from Ontario farmers who grow their raw
materials.

Back in 1998, the first year to grow commercial hemp in Canada, there was a
lot of hype at the farming level and so many farmers grew hemp there was an
oversupply.

In the second year, a group called Consolidated Growers and Processors
contracted upwards of 20,000 acres and then, according to Greg Herriott,
president of Hempola Valley Farms, declared bankruptcy at harvest, again
creating an oversupply. Farmers began to shy away from the crop, while
producers used what they could from the glut.

Until this year, supply kept pace with demand, but now that the products
are really taking off, the producers face a supply shortage for the coming
summer.

"Through the winter, the products have been growing and gaining," said
Gordon Scheifele, of G&GS Agricultural Services, a consulting and research
company. "Many of the producers are going into Loblaws. Doors are opening
for some serious marketing that requires larger quantities of grain to be
processed. The same thing is happening in Manitoba, and there's a market
developing in the United States. They're still not allowed to grow hemp
grain there."

Cool Hemp, a rapidly growing Killaloe company that produces a non-dairy
frozen dessert with hemp, saw a 50-per-cent increase in sales in 2002 over
2001. Three years ago, the company was producing everything from Killaloe.
Now it uses a large facility in Renfrew. Instead of transporting its frozen
wares in the back of a truck, tucked into sleeping bags, it uses
refrigerated trucks.

Now it's looking for seed.

"The farmers would like another cash crop, but they need to know there's a
demand," said Robbie Anderman, co-founder of Cool Hemp.

They got burned once, Mr. Herriott said, and are reluctant to come back.

"The challenge is to responsibly, and based on bona fide market demand,
create an industry from the field market upward," said Mr. Herriott, who's
also on the board of the Ontario Hemp Alliance.

"We have steady increases in demand for our products, and so do the others
in the industry, but we need the raw material. There is concern out there.
There's no question."

Not everyone is suffering though. Ruth Shamai, a veteran producer in
Toronto, has had no problems getting supplies from her growers, who are
mostly from Saskatchewan. Her products, Ruth's Foods, are available at
Loblaw's, as are Mr. Herriott's and Mr. Anderman's.