PROFITS WAITING IF HEMP LEGALIZED, UK STUDY SAYS

Not only is industrial hemp a good idea for Kentucky, hemp might be the
best thing for the state to grow since tobacco, according to a University
of Kentucky study of the potential for profit from a crop that farmers in
the state have sued for the right to grow.

"We believe the UK study is a landmark, watershed event," said John
Gilderbloom, a University of Louisville economics professor who wrote a
foreword endorsing the study, Economic Impact of Industrial Hemp in
Kentucky. "This is the premier study done on the impact of hemp."

The 18-month study released yesterday concludes that the present market for
hemp grain and straw in various industries could support the cultivation of
82,000 acres of industrial hemp in the United States, and if Kentucky acts
fast, a lot of that could be grown right here.

"This crop is like a Rip Van Winkle, coming back to wake," said Jake
Graves, president of the Kentucky Hemp Museum and Library, which sponsored
the $23,000 study. Graves and other hemp advocates have been fighting for
almost five years to farm a crop that hasn't been grown legally in the
state since World War II.

"The returns from hemp fall somewhere between tobacco and other crops that
are already grown in Kentucky," said Mark Berger, director of UK's Center
for Business and Economic Research. Berger is co-author of the study with
economists Eric Thompson and Steven Allen. Their study sees a profit of
between $220 and $605 an acre in today's market.

"The potential depends in large part on how many processing facilities
locate in the state," Berger said. There are no facilities that can process
raw hemp straw in the United States.

These findings differ from a 1997 UK College of Agriculture study that did
not see much of a market for Kentucky hemp.

"Worldwide, the hemp market continues to shrink year after year after
year," said agricultural economist Valerie Vantreese, author of the '97 study.

"The European Union heavily subsidizes the hemp market, but it still
remains very, very small," Vantreese said. "Last year, the total trade of
hemp fiber and seed was only about $12 million."

Berger agrees that in developing countries such as China, one of the
world's largest hemp producers, the market for hemp is shrinking. "But in
higher-income, more-developed, more environmentally friendly countries,
it's growing," Berger said.

Vantreese also said that a significant increase in production 96 Kentucky
joining the world market, for instance -- would depress prices.

The new study stresses that the effect as assessed is only at today's
prices, which would probably fall with competition and rise with greater
demand for hemp products.

Allen said the market probably will increase for products people might be
willing to pay a little more for -- things like tree-free paper and
environmentally friendly cloth.

"It has wonderful qualities, but it's not cost-competitive," Vantreese
said. "I firmly believe that we can import from China or the European Union
just as cheaply, if not more cheaply, than what we can produce it for here."

But home-grown hemp might have an advantage with lower transportation
costs, Allen said. "A lot of the demand for the products is from Europe and
North America."

And Berger doesn't think competition from Europe and China would stop
Kentucky farmers from trying.

"If it were legalized tomorrow, I think you'd see Kentucky getting into
hemp in a moderate way," Berger said. "The economic returns are there for
people to take a stab at it, especially as we're looking for alternatives
to tobacco."

Joe Hickey, executive director of the hemp co-op, said the study lays the
groundwork for research to begin.

"Whoever has the industry that can use hemp as a feed stock will attract
the first growers," Hickey said. "Then farmers will ... get into
value-added production."

Gilderbloom said the environmental advantages of hemp, coupled with the
economic benefits predicted in the study, give hemp the edge over other
possible alternatives to tobacco.

"It's the knockout punch for opponents to hemp, including the nation's drug
czar," Gilderbloom said, calling director of national drug policy Barry
McCaffrey "the foremost opponent now of hemp."

Gilderbloom said he hopes the study will be the spark for lawmakers to
re-examine the crop, and serve as the basis for new hearings both in the
state and in Congress.

"We hope it sparks controversy, because out of controversy comes fact,"
said Andy Graves, president of the Kentucky Hemp Growers Cooperative. He is
also a plaintiff in a lawsuit that farmers who want to grow hemp filed in
U.S. District Court in Ashland in May against the DEA and the Justice
Department.

Andy Graves said copies of the study have been sent to national newspapers
and prominent lawmakers, including Sen. Trent Lott, R-Miss. "These are the
people who might be in a position to convince ... McCaffrey to find a
diplomatic way to change his position."

As for how much support hemp has in Kentucky's General Assembly, "my guess
is none at this point," said Andy Graves, who farms tobacco in Central
Kentucky. But, he said, it's important for lawmakers to realize that
tobacco probably has a limited lifespan.

"Something else needs to happen," he said. "We're not and never have asked
anyone to change drug law. This is not a drug crop."

Tommye Chaney of Ewing agrees. Her grandfather grew hemp on his Fleming
County farm during World War II and now she imports hemp from China to spin
into cloth to sell. She said the only people who don't understand that are
politicians and law enforcement officials. Chaney was one of about 35
people who came to Ashland, Henry Clay's estate in Lexington, for the
study's release.

"I talk to people in Renfro Valley," Chaney said, "People down there are
hungry for something to grow."

Jean Laprise, director of Kenex Ltd. in Ontario, said he sympathizes with
the problems U.S. farmers are having getting government permission to grow
hemp.

Canadian farmers are growing 4,500 acres of hemp this year, including
Laprise's 2,000 acres. Kenex, the largest Canadian importer of seed, has
about 50 farmers under contract, and Laprise said he hopes to double that
acreage next year, if the market permits.

He will harvest his first commercial crop in August, when his $4 million
processing plant in Chatham will begin turning 5,000 tons of hemp into
meal, oil, fiber and hurds for animal bedding and matting for the
automotive industry.

"Even though it's legal in Canada, it's still not that easy," It's
stringently regulated." Laprise said that 10 days ago, Health Canada, the
equivalent of the U.S. Drug Enforcement Administration, audited his site,
checking everything from security to inventory control.

"Regulatory officials understand the situation," Laprise said. "We have an
industrial crop growing that's no different from growing tomatoes or
brussels sprouts."

Copyright 1998 Lexington Herald-Leader.

Checked-by: Richard Lake