CANADA'S FIRST LEGAL HEMP CROP MEETS EXPECTATIONS

The first legal hemp crop in Canada since 1938 has been harvested in
south-western Ontario and Kenex Inc. President Jean-Marie Laprise says most
of the 50 farmers under contract to his company have had few unpleasant
surprises.

'Some did better than anticipated and some did worse,' Laprise said. 'For
the most part they came up with the budgeted yields.'

Despite unusually dry weather, hemp plants varied in size from five feet to
12 feet on the 2,000 acres planted by the farmers.

'A five foot plant is not necessarily a problem unless the farmers were
growing only for fibre,' he said, adding that soil and location also played
a factor in varying yields. Fibre yields averaged around three tons per acre.

The Pain Court processing plant was started by hemp pioneers Laprise and
Claude Pinsonneault who have been growing hemp under a research license
since 1995.

Kenex contracted for both seed and fibre crops, with combined seed and
fibre crops representing 60 per cent of the total, the rest of the farmers
growing for fibre alone.

Growers for fibre alone who harvest three tons per acre can expect to net
$235 an acre after expenses of $590 per acre. Those who reap 3.5 tons per
acre should net $337 per acre after $626 in expenses and those who net four
tons per acre should receive $437 an acre after $663 in expenses per acre.

Those farmers who grew hemp for both seed and fibre will net $200 per acre
for fibre (varying at $75 less per acre since hemp is seeded less densely
than when growing for fibre alone), but including the seed harvested will
net $420.50 per acre after estimated expenses of $530 per acre.

Kenex provided the seed and the farmers will pay for it when they receive
their first payment on or before October 31st.

One of the major surprises for the farmers and Kenex was that the hemp
stalk was even tougher, and thus harder to harvest, than anticipated.
Laprise said the farmers used different kinds of equipment with varying
degrees of success.

'The farmers are on a learning curve, and they need more experience to use
the equipment properly,' he said.

Conventional cutting equipment was used for fibre and a modified combine
for grain.

Kenex is processing the crop for a wide variety of uses. Oil is extracted
from the seed and the nut is extracted from the grain. Seed meal is
produced as a by-product of extraction operation and a high fibre flour is
being made from the grain.

A fibre separation process removes the bast fibre from the stalk to be used
in the paper industry and for high quality fabric. Extracts from the plant,
a light weight alternative to glass, can also be blended with polypropylene
to reinforce plastics. Hemp stalk chips will also be used as a high-quality
animal bedding alternative to wood chips.

Asked if he had any advice for farmers contemplating growing hemp in 1999,
he said, 'make sure there is a market for your crop. Bailed hemp just
sitting in your field has no market value.'

Kenex's policy for next year is to contract for only as much hemp in the
spring as they are sure they can process and sell in the fall, LaPrise said.