Hemp Processor to Canadian Farmers: ' Trust Us! '
I've been investigating the 1999-2000 Canadian hemp processing debacle to see what lessons can be gleaned for American hemp farmers considering (an eventual) switch to industrial hemp. It would seem that some enterprising (and not entirely straightforward) individuals at Consolidated Growers & Processors, Inc. a Californian Agricultural processing company actually contributed to the hemp hype and the ensuing "Canadian hemp glut" by providing seed, contracts and emtpy promises of new processing facilities. I've done some digging around...and the blow-by-blow is very interesting...there's definitely a lesson to be learned here for farming communities considering hemp production where processing options are limited. Read on...
You see, here's how it worked:
1. It's 1997. Consolidated Growers & Processors (CG&P) realize legislation legalizing hemp cultivation and processing in Canada is near! These guys know how to grease skids...they begin issuing shares to persons resident in Manitoba.
2. Having done the groundwork a year before, CG&P now need a hemp crop to process! It's easy pickins'...in 1998 they contract 31 Winnipeg farmers to grow 1000 acres of hemp and commit to "$1.30 a kg for seed and $20 a tonne for hemp stalks".
3. Again in 1998, with rising interest, CG&P sponsors at least one seminar, targeted at farmers and local officials. Later, these events are cited as evidence of "hype generation". At this point company representatives publicly promise to build a 25 million dollar hemp processing facility in Manitoba. CG&P ships 78 tonnes of hemp seed to Canada for farmers under contract with them.
4. We're still in 1998...and the dot.com frenzy strikes CG&P. In September, the company files with the Securities Commission as an official Over the Counter (OTC) security (the try, but are unable to raise enough capital to get listed on NASDAQ). Eight growers accept shares in CG&P in lieu of cash for their crop.
5. After a number of visits, Dauphin (Manitoba) is "selected as the preferred site [for the hemp processing facility], in part due to the expressed commitment of the members of the Parkland Hemp Growers Association ("Parkland Growers") to grow hemp under contract with CGP Canada". Not wanting to be left out in the cold, the Parkland Growers want a piece of the action (i.e., shares)...CGP agrees.
6. 1999...more contracts (covering some 17,000 acres) are signed and more seeds arrive..this time a 100 ton shipment in June of 1999. As quoted in a MarijuanaNews article from 1999...
Taking off from Chateauroux, France approximately ten hours earlier, a Russian Antonov 124, the largest commercial cargo aircraft in the world, delivered 100 tonnes of industrial hemp seed today to Winnipeg International Airport, fulfilling a major element in the business plan of Consolidated Growers & Processors, Inc. to meet the needs of farmers in the Manitoba region.
7. The best laid plans of CGP go to hell...the company is 5 million dollars in debt and files for Chapter 7 bankruptcy on March 20th, 2000.
8. Canadian farmers are screwed...particularly those in Manitoba. Hemp anyone? The Parkland Growers try to muster an organized marketing effort, but alas, the damage is done. Some 200 farmers are under contract with CG&P. With nowhere to turn, they are left hanging with an estimated 5-7 million pounds. As later reported in the Hemp Commerce and Farming ReportReport of March-April 2000: In its short history,
CGP drew attention with its aggressive acreage and production...A $25 million processing plant promised for Dauphin, Manitoba was not delivered. Much touted marketing didn’t happen and sales were not closed. One company document revealed that CGP had sold just 4 metric tonnes of its 1998 grain production; the rest was warehoused in Portage La Prairie along with 135 tonnes of baled straw.