Hemp processor won’t sign hemp contracts next year

Hemp acres could drop sharply on the Prairies in 2016 because Manitoba Harvest, the largest hemp seed processor in Canada, is not offering production contracts.

A Manitoba Harvest representative told growers at a Dec. 15 meeting in Bow Island, Alta, that there’s a glut of hemp seed in storage on farms in Alberta, Saskatchewan and Manitoba.

Consequently, Manitoba Harvest doesn’t need additional hemp grain in 2016 because the existing supply will last well into 2017.

Manitoba Harvest operates a processing plant in Winnipeg, where it produces hemp protein, hemp oil, hemp granola bars and hemp milk.

Ric Luimes, who manages hemp production for Quattro Farms in Bow Island, said the news was not a shock.

“We kind of new there were some issues,” he said.

“There’s inventory buildup in a lot of producers’ bins in the area.”

Rod Lanier, who grows hemp south of Lethbridge, had heard that hemp processors were struggling to use the existing supply.

“I’m not surprised (by the Manitoba Harvest move) with how far behind most companies are with taking their 2014 crop. I’ve heard lots of rumours from farmers that they haven’t moved very much of their 2014 crop, let alone last year’s crop.”

Manitoba Harvest spokesperson Kelly Saunderson said the production “pause” applies to all of Western Canada. Higher than expected yields are the primary reason for the oversupply.

“In the past we’ve had our production contracts averaging yields of 500 pounds per acre,” he said.

“The last two or three years, we’re seeing average yields of 750, 1,000 and 1,200, depending on growing zone.”

Industry estimates indicate 85,000 acres of hemp seed in Western Canada in 2015.

Saunderson said Manitoba Harvest contracted 65 percent of those acres.

There are other hemp seed processors in Western Canada, but Manitoba Harvest bought a major player in the industry Dec. 15.

Compass Diversified Holdings, an American firm that owns Manitoba Harvest, acquired Hemp Oil Canada for $42 million.

Hemp Oil Canada expanded its operations in 2015, building a $14 million processing plant in Ste. Agathe, Man.

Manitoba Harvest’s decision to halt production contracts in 2016 also applies to Hemp Oil Canada.

“It (the oversupply) is really industry wide,” Saunderson said, adding it’s difficult to estimate the size of the hemp seed carryover or acreage in 2016.

“There are more hemp players than there were three years ago…. There’s different processors coming into play,” she said.

“We could still see a fair amount of acres … but we don’t want too much grain out there. We want to make sure we use what we have.”

A significant drop in acreage would be a major setback for Canada’s hemp industry. The Canadian Hemp Trade Alliance was expecting acres to hit 250,000 by 2018.

Luimes said Quattro Farms will grow hemp seed in 2016, but other growers may not.

“We work with three companies …. (Manitoba Harvest) is just one of three,” he said.

“(But) there are producers that will pull out (of hemp).”

Stopping production contracts for a year could alienate prairie hemp growers, who may move on to other crops.

Saunderson said Manitoba Harvest wants to maintain relationships with growers.

“We’re are being very transparent in our communications with producers…. Give hemp a break this year and come back to us. Will make it worth coming back to us.”

Will Van Roessel of Specialty Seeds in Bow Island said the production cutback is significant, but growers are having success with hemp.

“It’s not unusual with some of these niche market crops that things go up and down and situations change.”

Saunderson emphasized that consumer demand for hemp seed, hemp protein powder and hemp oil remains strong.

“We’re seeing sales of hemp foods growing. This merger with Hemp Oil Canada actually means more innovation and more new products.”

Lanier isn’t as enthusiastic.

“It’s like lots of new crops. They start off and everybody gets very excited and everybody gets fights over the same sale to another country, so it sounds like there’s 10 buyers out there but there’s actually one just shopping around.”

Manitoba Harvest’s decision applies to conventional hemp. The company needs organic hemp seed and will contract organic acres in 2016.

Hemp acres in Canada:

2012    55,000
2013     67,000
2014     105,000
2015    85,000
2016       ???

Contact robert.arnason@producer.com or barb.glen@producer.com

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