Manitoba hemp processor doubles contracts

After a year of reduced production, hempseed acres are poised to jump substantially this spring.

Companies that contract hemp production and industry reps expect seeded acres to top 150,000, which could set a new record.

Buyers and processors are contracting more production because demand for hemp is up and the industry has worked through a glut of product.

Last year, Manitoba Harvest, which operates hemp processing plants in Winnipeg and in Ste. Agathe, Man., contracted no production in Western Canada.

The company, the largest player in Canada’s hemp trade, pulled back because it and farmers had excess hempseed in storage.

“This year we’re actively contracting,” said Clarence Shwaluk, Manitoba Harvest director of farm operations. “We expect our surplus to be gone (when) the new crop is coming off…. We’re going to be back into more of a normal cycle.”

Manitoba Harvest produces hemp oil, hemp protein and hemp snacks. It sells the products at Costco and other major retailers across North America.

The hemp sector became over-supplied because average yields jumped in recent years, going from 600 to 800 pounds per acre to 1,000 lb. or higher.

Processors lacked markets for the excess hemp, cutting into acres and production in 2016.

But to the surprise of many in the hemp business, South Korea became a major buyer of Canadian hempseed in 2016.

“From $600,000 of exports to $45 million this year,” said Russ Crawford, Canadian Hemp Trade Alliance president.

South Koreans became interested in hempseed after it appeared on a home shopping channel in the country. Then suddenly, Koreans began buying huge quantities of hempseed as a replacement for fish oil.

Crawford said South Korean demand changed the hemp industry because Canada previously relied almost entirely on the United States market for exports.

South Korean sales may have levelled off, but the market could be a launching pad to sell Canadian hempseed and hemp foods into Japan, Taiwan, Thailand and China, Crawford said.

Kendra Meier, Hemp Genetics International director of operations, said Asia is an opportunity but the North American market is also growing.

Hemp Genetics International sells hemp as an ingredient to food companies, who use it to make things like cereal or granola bars. Demand is increasing and the company needs more hempseed in 2017.

“Last year we contracted 30 million lb. This year we’re aiming between 50 and 70 million lb.,” Meier said recently at Manitoba Ag Days. “We were the only company contracting acres last year for conventional growers…. We maybe did around 30,000 (acres).”

Hemp is an attractive option because production contracts are about 78 to 85 cents per lb.

If a producer achieves 1,000 lb. per acre, it generates a gross return of about $800 per acre.

The returns on organic hemp are, potentially, much higher. Organic hemp contracts are running at $1.85 per lb.

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