Canada’s hemp acreage has shot up by almost six times what it was last year.
The rise has some people in the fledgling industry worried about a glut in supply.
In a recent report, Health Canada said it licensed more than 35,000 acres of hemp in Canada. More than half the national acreage is contracted by Consolidated Growers and Processors (Canada) Ltd., a company with offices in Winnipeg.
Mark Kaeller, a director with parent company CGP Inc., said the company contracted 18,700 acres with farmers. The company is believed to have planted 800 acres last summer.
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Kaeller would not agree to an interview. The company is trying to stay away from the media after “less than favorable” press this spring, he said.
In previous interviews, CGP officials said the company will build two processing plants in Dauphin, Man. that will be ready by the spring of 2001.
The company has not started construction on the plants, which it said will produce oil, foods, paper and auto parts.
It is still storing most of the hemp seed and fibre it bought from farmers last year, according to Fred Rutman, a former CGP employee fired in May.
All companies involved in the hemp industry that were contacted by The Western Producer said they hope CGP succeeds.
A success would buoy the industry, and make it easier for other companies to get financing. A large and public failure would make it difficult.
But this fall, industry observers said the company could have enough stocks to flood the market, which could depress prices for growers and processors and kill farmer interest in hemp.
Greg Herriot of Hempola, an Ontario oil producer who also contracts with Manitoba farmers, called the large acreage “scary.”
Herriot has been developing markets for hemp oil and food since 1996, and is considered a leader in producing and selling hemp products.
Many hemp products require only a small volume of the crop, he explained.
For example, 80 acres will produce enough hemp for one million bars of soap made with the highest-possible content of hemp oil.
“I haven’t done the math, but I think you could cleanse the world for several years (with CGP’s acreage),” said Herriot.
He said there are many uses for hemp, but it takes time and money to develop the products, figure out how best to process them, and then convince traditional manufacturers to use hemp in their goods.
“But for someone to swoop in and promise tens of thousands of acres without any indication of what they’re doing in the marketplace is a pretty scary thing.”
His company wants to increase acreage as markets grow.
“If a lot of these growers get burned, chances are a lot of these guys won’t even look at the crop again,” Herriot said.
Last year, Hempola contracted 500 acres of hemp, plus 200 for seed propagation.
This year, its acreage is virtually the same. The company had a “slight overabundance in grain inventories compared to market development and product sales,” Herriot explained.
Jean Laprise of southern Ontario’s Kenex decreased his company’s acreage slightly this year to about 1,000 acres.
While he stressed he is not being critical of his competitor’s business, he said he thinks CGP’s acreage is aggressive.
“I don’t have any indication that the market is that big yet,” said Laprise, who is well-known in the industry. He also noted CGP pays growers 20 percent more than Ontario companies are willing to pay.
“I think everybody is watching very closely because they’ve had a lot of dramatic press releases in the past couple of years,” Laprise said.
Geof Kime, a hemp fibre pioneer from Ontario’s tobacco belt, said his company Hempline contracted 1,000 acres this year.
“We’re trying to build our business and our market slowly and based on actual sales and market demand,” said Kime.
He hopes to double his contracted acreage every year for five years, which would leave him with 32,000 acres in 2004.
But Kime said he is cautious about overproduction. Storing large inventories leads to low prices and dumping by farmers and processors alike, he said.
He is watching closely to see what CGP builds in Manitoba.
“It’s very easy to say these things: it’s another thing to deliver,” he said.
“They have a track record that is yet to be proven on some of the things that they’re saying.”
Kime, along with other hemp experts contacted by The Western Producer, noted prairie hemp can’t be readily processed for fine quality fibre.
The growing season is too short and dry for the stalks to ret, said Kime.
