HemperFi

Ms. Woertz:

Congratulations on your new post as CEO of Archer Daniels Midland. It's a notable switch for ADM to bring on a female from the Oil & Gas industry, and I was pleased to hear the news that ADM is serious about becoming a leader in the carbohydrate economy.

That said, HemperFi has not exactly praised ADM in previous posts. Given ADM's unmitigated pursuit for profit maximization with disregard towards the small-scale famer, it's unlikely that favorable entries will suddenly appear.

However, I'm hopeful that ADM sits at a historic crossroads. Here's a wonderful opportunity to fix a less-than-perfect (and I'm being gracious here) company history. Your noted advocacy against MTBE in the 1990s and your clear commitment to biofuels leads me to believe that perhaps we can look forward to more grounded, fairer, better governed, ADM.

And lastly, a favor. We need your help in the misguided, non-fact-based, anti industrial hemp campaign the current administration has brought to bear on the American public. It's not right for farmers and other would-be entrepreneurs, not to mention the environment and the public.

Thank You,
HemperFi

Posted by M at 12:00 AM | Permalink

Every industrial hemp discussion touches on ethanol. Every ethanol discussion touches on processing/refining capacity. Unfortunately, not every processing/refining discussion touches on farmer-owned facilities. The fact is that famers have been getting screwed out of the value--added processing that occurs after harvest. Capital intensive processing and refining facilities attract big business' deep pockets, and that means profit maximization. As HemperFi has already reported, farmer-owned processing plants are good, when executed properly, but as per recent experience in Manitoba, such plans can also lead astray.

Although it's a lengthy read, I've recently stumbled upon David Morris' excellent article Ownership Matters: Three Steps to Ensure a Biofuels Industry That Truly Benefits Rural America. In Ownership Matters, Morris lays out three governing principles to ensure an ethanol economy with the rural farmer as an active participant. Quoted directly from his work, the three principles are:

-- First, create an aggressive and broad national and even international educational effort focused on the importance of and benefits of farmer and local ownership.
-- Second, establish mechanisms to allow farmer-owners of ethanol facilities to get their equity out of the biorefinery while enabling continued local ownership.
--Third, change the federal ethanol incentive into a producer payment that favors local and farmer ownership.

According to Morris, John F. Kennedy once described Farming as " the only business where you buy everything retail and sell everything wholesale." Profitable rural farming hinges on equitable participation in profit margins enjoyed at the retail-end of agricultural output, not at the wholesale end.

As Morris states in The Carbohydrate Economy, Biofuels and the Net Energy Debate:

For farmers and rural areas to truly reap the rewards of a carbohydrate economy they must gain some of the value created by processing the agricultural raw materials into finished products. That can occur only if the farmer and rural residents own a share in the processing or manufacturing facility.

Posted by M at 10:31 AM | Permalink

I've found a great article by Don Lotter posted on the New Farm website. In two parts, the article covers the virtues of hemp and (more interestingly) reports on how two farmers are having a go at industrial hemp farming in Canada. A good reading for anyone considering hemp cultivation.

According to the article: "Hempseed yields in a good year are 1,500 lbs/acre for conventional and half of that from organic fields. Paul considers the 50% lower yields of organic hempseed to be attributable to inability to get enough nutrition to the crop, especially nitrogen."

The article also confirms what we've already reported on HemperFi...that growing hemp as a fiber crop (as opposed to seed) is risky business. The bailing, transporation and processing costs associated with hemp fiber makes it uneconomical in many geographies.

Posted by M at 12:00 AM | Permalink

Flax, much like hemp, has a myriad of commercial uses, many of which overlap with industrial hemp as a fibre and food crop (i.e., seed). It turns out that flax has had marginal success in the United States. Flaxseed prices peaked in 2004-2005 at nearly 700 Canadian Dollars per ton, but are projected to drop to 325 Canadian Dollars per ton in 2006.

For anyone seriously considering flax (or hemp) as a rotational crop, the Canadian government has published a useful guide called Flaxseed: Situation and Outlook. The guide states: "The US is forecast to produce 0.43 Mt of flaxseed for 2005-2006, a sharp rise from the 0.27 Mt per year produced for the previous 3 years. The increase is due to a rise in seeded area resulting from the unusually high flaxseed prices of 2004-2005." U.S. farmers, not wanting to miss the pricing peak, are ramping up production for a record U.S. 2006 harvest. Free market economics dictate that, barring any drought, frost or other externalities, the markets will shoulder a much lower price in light of greater supply.

Ok, but what yield rates does one need to sustain to make money from flax? Canadian farmers need about 32 bushels per acre yield rates if they are to cover their costs. However, in 2000 Canadian farmers only managed to harvest approximately 20 bushels per acre.

That said, it's somewhat puzziling why Canadian farming acreage dedicated to flax has been on the rise. The short answer seems to be that farmers are willing to gamble that prices will rise again, and therefore include flax as a rotational crop.

Where processing facilities exist, especially processing facilities that target niche commercial segments (e.g. organic flaxseed oil), things seem to be going well. This is perhaps the biggest takeaway for soon-to-be industrial hemp farmers in the U.S.: entrepreneurs must link with co-operatives and local governments to ensure success. I'll have some examples shortly on HemperFi.

Posted by M at 02:28 AM | Permalink | Comments (5)

While you're blissfully munching on your next hemp bar, consider that since October 2001 some very determined Canadians and Americans have joined forces to combat the DEA's self declared ban on hemp seed and oil. I'm not going to take you through the grueling legal details, but one thing is for sure...the DEA frittered away bales of taxpayer dollars.

On February 24th, 2004 --after much legal wrangling-- the 9th Circuit Court fo Appeals issued an opinion which invalidated the original 2001 DEA interpretive rule. Then came the DEA appeals, which eventually culminated in the June 28th denial by the 9th Circuit for a rehearing. Besides the fact that the industry successfully joined forces with hemp activist groups, the cherry on the sundae was delivered in February of 2005 when the 9th Circuit forced the DEA to reimburse 21 thousand dollars of legal fees to Dr. Brommer's Soaps. The significance? The court can only force reimbursement of legal fees in cases where the claim was "not substantially justified". In other words, the 9th Circuit Court of Appeals told the DEA they'd wasted everyone's time. Since the DEA was overruled, you'll be happy to know that the industry experienced a reported 65% rise in hemp bread, bars, and granola products between 2004 and 2005.

While all this was going on, TestPledge was created because the industry recognized that many people worried about false positive drug test results as a result of consuming hemp foods and products. TestPledge is not a watchdog or certifying organization, but it does require its producers and processors to: "commission THC tests on each and every lot of shelled hempseed and oil, performed by a properly accredited laboratory according to the official Health Canada protocol." Ah yes, we can now breathe a little easier.

Ok, enough for now...tune in to HemperFi later this week to read about a judge that recently deemed the DEA's hemp cultivation ban "asinine".

Posted by M at 10:21 PM | Permalink

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...

Continue reading "Hemp Processor to Canadian Farmers: ' Trust Us! '" »

Posted by M at 01:01 AM | Permalink

I am surprised that the 1999-2000 Canadian hemp processing bottleneck issue suffers under-exposure given all the recent U.S. hemp hoopla. Here's what happened...

The year Canada legalized hemp cultivation (1998), the acreage dedicated to hemp production totaled some 5,587 acres. One year later, the total cultivation area grew sixfold to an astounding 34,657 acres. With relatively little processing capacity in key provinces, such as Manitoba, overcapacity of harvested hemp followed. It took years for the extra capacity to work it's way through the system...that is, up until 2004 when license requests nearly rebounded to 1999 levels. The good news is that the processing shortfalls spawned many smaller entrepreneurs into action...today there are well over a dozen hemp processing companies. So, is there a lesson to be learned here for (hopefully) soon-to-be American hemp farmers? Interestingly enough, the company behind the Canadian processing woes was a Californian company that would fall into bankruptcy.

Continue reading "Hemp Processing in the U.S. - Not Enough Focus?" »

Posted by M at 07:12 PM | Permalink

USDA Organic Hemp is here...or at least in Canada. The Organic Producers Association of Manitoba (OPAM) provides a "credible certification system" in order to "promote organic food production and consumption." Manitoba Hemp's "certification specialist" has been busy...their home page boasts eight "certs" including a the "USDA Organic" seal of approval. It turns out that OPAM is an USDA Accredited Certifying Agent (ACA) and, therefore, can bestow the seal on anyone complying with the USDA requirements. A quick glance at the USDA 'question and answers' page reveals that all "naturals" are allowed unless prohibited on the National List." And yes, I did check the National List...hemp is not on there.

Posted by M at 09:49 AM | Permalink