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Rising hemp acres not keeping up with demand for hemp products

Rising demand and good returns will see more acres devoted to industrial hemp production in Western Canada this spring, industry sources say.

Canadian hemp plantings have risen steadily over the past few years, with about 55,000 acres licensed in 2012, according to government data. Due to industrial hemp’s association with its cousin marijuana, farmers need to be licensed through Health Canada and pass a criminal record check in order to grow the crop. Testing is also required to confirm THC levels, the psychoactive ingredient in marijuana, are below the allowable 0.3 per cent.

“We’re anticipating a 10 to 15 per cent increase (in acres),” said Kim Shukla, of the Canadian Hemp Trade Alliance. She said rising demand for the food products was behind rising demand for growing the crop.

“We’ll see similar (acres) or a slight increase,” said Anndrea Hermann, of The Ridge International Cannabis Consulting and president of the Hemp Industries Association. She said licensed acres in Canada could come in as high as 70,000 acres in 2013, but larger gains would come in future years. Most of the current industry is geared towards grain production, but as the demand for the fibre expands that will be where the growth occurs.

“That dynamic will change as we move forward and there’s more demand for the fibre component,” said Hermann pointing to a number of international developments, including using hemp fibre for building materials.

On the grain side there is also room to create more demand. Hemp is currently not registered as an animal feed, but chicken feeding trials are underway in Canada. Hermann said hemp was producing comparable results to feeding flaxseed to chickens.

Farmers can expect to bring in $200 to $300 per acre gross margin growing hemp, said Hermann, noting that those returns compare favourably with other options and only take into account grain production.

“Farmers will only grow something that will be lucrative for them,” said Shukla, adding, “hemp has proven to be a great rotation option and provides a good return as well.” From a rotational perspective, hemp is a heavy nitrogen user and is best suited following a legume, such as soybeans, said Shukla.

A rising global demand for Canadian-made hemp products, as more countries approve it as a human food, has helped make it an attractive crop to grow for producers. With hemp production still restricted in the U.S., end-users around the world generally look to Canada first for quality hemp seed and products, said Hermann.

While efforts are underway in the U.S. to gain federal approvals for growing hemp, Hermann said there is more than enough demand to support increased production. “We’re not even scratching the surface,” she said.

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Phil Franz-Warkentin - MarketsFarm

Phil Franz-Warkentin writes for MarketsFarm specializing in grain and commodity market reporting.

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