HEMP'S FUTURE BRIGHT SAY PROPONENTS

WOODSTOCK A crop for the future or a crop for crackpots?

The perspectives on hemp are as varied as its potential uses but the small
group of growers, marketers and researchers who gathered here earlier this
month is convinced of the grain's potential to earn a steady income.

Just make sure you have a contract lined up in advance of planting and,
when planting, choose a spot well in the public eye to prevent police and
others from mistaking your hemp from its more potent cousin, were the words
of advice offered at the Ontario Hemp Alliance's annual meeting March 1.

Currently, there are roughly 300 acres of commercial hemp grown in Ontario
produced by about 10 growers said Gordon Scheifele, president of the
provincial organization. That's considerably less than the 8,000 to 10,000
acres produced annually in Manitoba but he says the progress on acceptance
of the crop is right on target.

Niels Hansen-Trip, who helped set up the Health Canada's Industrial Hemp
Licensing and Authorization office in the 1990s, shares his point of view.

"Hemp has had a unique start," said Hansen-Trip, pointing out that up until
the mid-1990s the plant was linked very closely to marijuana in terms of
regulations governing its production. When it became legal to grow hemp in
1998 there was a surge of interest in growing the crop.

"A lot of people had the attitude if they grew hemp there would be
manufacturers out there to buy it," he said.

When it was realized the market for hemp was small, production dropped off.
However, with new uses being found for hemp, the amount grown will
gradually increase, he predicted.

Geoff Kime's Dorchester-based company, Hempline, is one of those processors
exploring new uses for the crop. At present, Kime's company uses the plant
to generate fibre and chips used in products ranging from animal bedding
and garden mulch to insulation, cement, plaster reinforcements and even
plastics destined for the automotive industry.

In a presentation to the association, Kime admitted developing consumer
markets for hemp has been challenging but expressed optimism for the
plant's future, particularly in connection with automotive products.

While Kime won't be contracting crops this year he said he has a surplus at
present he plans to get an expansion of his facility underway in about six
months to be completed in about a year and a half.

"We have to have that (expansion) otherwise we're not going to be able to
supply it (products for the auto industry)," he said, explaining the
ability to deliver products of a consistent quality in the volumes needed
is key to sustaining the automotive industry's interest in hemp.

Kime estimated that if the auto industry's interest in hemp continues, it
alone would generate enough demand for 40,000 to 50,000 acres of the crop
in the province within five years.

Hemp's future as a staple for the auto industry is very bright, he added,
noting there is a lot of pressure on the industry to reduce the weight and
complexity of its products and use renewable materials.

"In Europe, every car maker is using natural fibre composite inside cars,"
he said, noting on this side of the ocean, research is also taking place on
using natural fibres in the manufacture of exterior components.

Like Kime, Shawn Patrick House, president of Hempzel's, a Pennsylvania food
processor that specializes in making pretzels, mustard and even horseradish
using hemp, was optimistic about the grain's future.

House said his products have recently been picked up on the west coast of
the U.S. and are selling rapidly there.

He also described plans of marketing products like seeds and flour to
neighbouring food processors in Pennsylvania.

While he normally acquires hemp from Manitoba growers, House said he would
be interested in obtaining it from Ontario growers as long as the price was
right.

He noted Canada had a distinct advantage in the market over the U.S. it is
still illegal to grow hemp in the U.S. but given the current climate in the
his country, laws preventing the cultivation of hemp may be overturned
within a few years.

Exploration is also being made into the feasibility of establishing a hemp
processing facility in Eastern Ontario. Kathryn Wood of Natural Capital
Resources Inc., told those attending the meeting a business case for such a
facility had been developed. While an agreement to finance the project with
one firm had fallen through, three other parties were currently considering
the business case, she said.

Gerald Shepetunko, who grows 16 acres of hemp on his farm near Arthur has
opted to expand his business by introducing processing and oil extraction
facilities. He estimates he will acquire 150,000 pounds of hemp this year
for his new venture. "There's a lot of talk but not a lot of action," he
said during the meeting. "I'm looking at doing something."

During the meeting, other uses were also suggested with one grower pointing
out hemp might have potential as a biofuel. Such diversity of potential use
comes as no surprise to Gordon Scheifele, who first became interested in
hemp through his work in plant breeding research.

"It's a unique plant genetically," he said.

Scheifele noted hemp had been a staple of past generations and was used for
everything from making rope and clothing to sails for shipping fleets.

"The industry today is totally different," he said, noting alongside
textile use the plant can be used to make everything from plastics to
building materials.

His organization fields many inquiries about growing hemp but "they are
coming from people not coming out of a good farm background," that might
have a romantic or idealistic perception of the crop and don't have the
equipment required.

"What we are looking for are farmers in it for a life income and an
alternate for soybeans and corn," he said.

Hemp costs

If you're wanting to grow hemp, then it's important to consider planting
something that could be put to at least two uses, advises Ingersoll area
farmer Dan Scheele.

In a presentation during the March 1 Ontario Hemp Alliance annual meeting,
Scheele, who has grown the crop for several years, estimated the total cost
of production per acre for hemp to be about $520. Those costs included land
rental, plowing, fertilizer, planting, seed cost, herbicide, harvesting and
cleaning as well as miscellaneous costs (such as obtaining licensing to
grow the plant and mandatory lab testing), but don't take into account the
grower's labour costs, he said.

To break even, a grower would have to receive at least $0.65 a pound if
averaging an 800 lbs per acre yield; $0.52/lb if averaging 1,000 lbs per
acre; and $0.43/lb if averaging 1,200 lbs per acre. Those amounts are under
the average of between $0.70 Scheele has received in the past for the sale
of his crop, but may not be a competitive with Manitoba growers's pricing.
Production costs for growers in that part of Canada are lower because they
do not have to deal with land rent costs, he explained.

Scheele said what's needed is a way to earn at least another $100 per acre.
A dual purpose crop, such as one grown for both its grain and fibre is one
option, he said. However, Scheele noted such a combination would incur
additional costs such as cleaning, baling and transporting the plant's stalks.

If a viable way of adding those extra dollars to the crop is found, "then I
think guys are going to be looking at hemp," he said.