Hemp Co-Operatives: A vital ingredient for industrial hemp success?
I've been thinking about the market mechanisms needed to ensure a thriving North American industrial hemp economy: processing techniques, cultivar imports and certification, processing and harvesting machinery and co-operatives.
Farming cooperatives have a 200 year tradition in the United States...A cooperative is defined as a business with two unique characteristics. First, it's members own the business. Second, the earnings of the cooperative are paid back to the famers (user-owners).
In many ways, farming cooperatives are similar to cartels...in fact, the U.S. anti-trust code has a farming cooperative exemption. This means, that farmers can legally price-fix, collaborate on go-to-market strategies, legally influence market dynamics through supply-managed strategies, and buy collectively for better volume discounts on seed, farming implements, etc.
In short, cooperatives are generally a good deal for farmers. Particularly for inchoate markets like industrial hemp, where collective thinking and strategies can help mitigate market risks and provide the political clout to spur local government agencies to help.
One model, and perhaps the archetype for soon-to-be hemp growers in the United States, is the Kentucky Hemp Grower's Association. All aspects of hemp cultivation are handled through the co-op...many of these practices are based on time tested tobacco cooperatives.
Listed below are the Kentucky Hemp Grower's Association "rules of the road". These are taken directly from David P. West's Industrial Hemp Farming: History and Practice available here.
- Farmers plant seed provided by the co-op; this provides for control of genotype.
- The co-op manages issues related to hemp variety evaluation and certification in compliance with legalities. Just as the cannery specifies the pea variety to the farmer, so does the hemp co-op allot acreages for specific hemps.
- The co-op forward contracts with fiber end-users for the needed production. Acreages are alloted accordingly among co-op member farmers.
- Marketing of the fiber is handled through the co-op.
- The crop can only be grown under contract to the co-op. It cannot be grown "on spec."
- Supply/demand relationships are managed to maintain profitability for the farmer.
- A grower must be a member of the co-op and bonded.
- Members found violating variety control regulations lose their allotment and forfeit their bond.