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Canadian groups work together to create a niche market for hemp

Posted on October 8, 2000

Winnipeg, Manitoba — Industrial hemp has been a legal commercial crop in Canada for three years. The potential is good for new markets and industrial hemp is, right now, a profitable venture, according to Guy Cloutier. He cautions, however, that marketing the flora cousin to marijuana is new and risky and is not the “cure all” that many believe.

Cloutier, who works with Hemp Oil Canada Inc. and is production manager of Cloutier Agra Seeds Inc., is part of a team that is building a niche market in Manitoba with the hemp seed and oil. Under the label Prairie Emerald Products, toasted and salted seeds, shampoo and conditioner, hand lotion, cold-pressed hemp oil and seeds blended with coffee are sold to outlets throughout the Winnipeg metropolitan area. Markets for livestock are currently being sought on the seed cake and hulls and Cloutier admits that no current fiber markets exist in Manitoba.

“Winnipeg is a North American test city so if it flies here, it will fly anywhere,” Cloutier said from his St. Norbert, Manitoba, warehouse. “We are the wholesale capital of North America.”

Even though Cloutier calls Hemp Oil Canada “a small operation,” the fledgling company has recently secured a market contract with Canadian department store giant Hudson’s Bay Company. “The Bay” often caters to regional entrepreneurs to see how new products pan out. If all goes well, according to Cloutier, Prairie Emerald Products could become a nationwide label. “And just in time for Christmas,” he said.

The main focus of growing hemp in Manitoba is collection of the seed grain, just like sunflowers, according to Cloutier. The seeds can be crushed for oil or they can be used as a confectionery product. Bird seed potential has been increasing, he said. “In any of these markets, hemp runs up against other oil seeds. And, although it’s unique in some properties, it has to be price-sensitive to other commodities,” he said. “But now, we can almost guarantee a quality. Some of the problems before were that seeds were imported from overseas, mainly China and the quality wasn’t always there.”

Cloutier calls hemp “a defined market.” But there is growing interest in Manitoba. “To make this industry move forward; there will be some bumps and bruises as we go along,” he said. “And once a company wants your product, you better be able to supply it at a competitive price.”

This year’s top yield in southern Manitoba is about 1,300 pounds per acre, according to Cloutier, and is fetching 30 to 40 cents (Canadian) a pound. Darrell McElroy, however, reports a 1,700 pound-per-acre average on a 200-acre field near Darlingford, Manitoba, which is just 7 miles north of the Maida, North Dakota port of entry. McElroy contracted his seed to Fresh Hemp Foods Ltd, another Winnipeg company, for 50 cents a pound. That translates into $120,000 (Canadian) on that field.

But Cloutier says that a field harvest isn’t the same as dry weight. The average moisture content of hemp when combined is between 20 and 25 percent moisture, whereas 9 percent is the ideal moisture content. Cloutier says 1,700 pounds is possible, but puts the three-year Manitoba average at a conservative 750 pounds.

“To say it’s a wonder crop … there’s some hype to that, eh,” Cloutier said. “It’s susceptible to wind, water, hail and insects, just like other crops. It’s not the end all be all crop that survives everything.”

Cloutier and his brother Denis planted 40 acres this spring and lost 20 to flooding. The remaining 20 acres, he said, were 40 percent damaged. So the brothers’ 2000 yield is suspect. “But we’ve contracted 700 acres from across Manitoba,” he said. “We have some in the valley and some as far west as Brandon.”

According to Cloutier, there has been no trouble from the Royal Canadian Mounted Police concerning surveillance and he hasn’t heard of anyone in Manitoba trying to hide marijuana in hemp fields, citing cross pollination as a way to destroy both plants. “The first year it was legal, you should have seen it,” Cloutier said. “It was amazing the amount of traffic where people wanted to see the field of dreams. Between Health Canada and the RCMP, they give authority to local agencies so they have access to your field at any time and there are random checks and samples (field tissue and grain samples) have to be kept for 2 years. We are monitored fairly closely.”

In addition, there are research trials going on at the University of Manitoba as well as commercial research. “They take into account varieties, fertilizer rates and handling practices,” Cloutier said. “Research took a different turn this year. There was a big increase from ’98 to ’99 and now that acres are down, the immediate research is not so urgent.”

He added there hasn’t been any research on fiber in Manitoba, however, some has taken place in Ontario. “There is potential for all kinds of composite materials – there’s a wider range of uses than oils,” Cloutier said. “In that essence, fiber will eventually dominate. With oils, you either like the taste or you don’t. With fiber, there’s cardboard, newsprint – a whole range of uses. But it’s almost putting the cart before the horse. A guess? It will take 5 to 7 years before a product develops, unless there’s a sudden necessity. It takes four years of field testing and attach the same time frame for pulp and paper. So, in that respect, fiber is a lot more challenging.”

It takes conventional equipment to seed and harvest industrial hemp, although during harvest some modifications have to be made so the fiber doesn’t plug the combine. But with patience, according to Cloutier, hemp can be managed. “My thoughts are you have to do it on a small scale. You’re not going to want to put the whole farm into hemp,” he said. “Then, there’s only about a 45-day optimum time window to harvest. When the crop is ready, you have to be committed. In that respect, it’s a high management crop. You have to go after it today.”

Cloutier would like to see a good price maintained, but if hemp eventually becomes “another commodity,” the price could flatten. “And why would anybody want to change when flax works. That’s why it has to be price sensitive. Some of the things we’re just starting to realize is that France and China never stopped producing, so we’re obviously competing against them. And if 200 North Dakota farmers got into the act, then it would be 200 more people competing for the same market unless new ones are created. Hopefully, there’s a large enough demand. Although it’s something new, it still has to prove itself.”

But because hemp is environmentally friendly, Cloutier expects new markets to emerge in Canada and the United States, just as current markets demand in Europe. “It will take time, but it will create markets,” he said. “I don’t think one or two companies will be able to satisfy the entire market. But once it’s developed, there will be ample room.”

The next step is to continue searching for new markets and increase the amount of grain contracted, according to Cloutier. “Remember, this is a very small scale operation even compared to Carrington (AgGrow Oils), but we’re still meeting the supply and demand,” he said. “They say there are 25,000 uses for hemp. That’s fine and dandy, but if it doesn’t make money, what good is it. There’s a lot of initial investment in time and money in this. It’s challenging. But we’ll plug away, talk to people and try to figure it out.”

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