Seedy Business: Hemp in Canada

Hemp seeds are a valuable commodity to farmers who have survived the bureaucracy.
It’s late June, and Hugh Campbell has seen the window shut close on his hemp ambitions. “We had a product that could have been sold this year,” he says. “We had buyers. But we have lost our chance.”

Campbell, of Terramax Seeds in Qu’Appelle, Saskatchewan, spoke about his struggles to import viable hemp seed into Canada. His seed of choice, FIN 314, has a reputation as something of a hemp superstar. A fast-growing oilseed variety bred in Finland by researcher Jace Callaway, FIN 314 grows from seed-to-seed in 90 days, and is a source of superior edible oil. A short plant, growing 4′ tall, it can be harvested using conventional machinery. Clearly, an excellent variety for Canada’s start-up hemp industry.

In the Prairies, optimal sowing was in early May. However, Health Canada was on a different timetable. Campbell was frustrated by the red-tape needed to import the seed, and the time that was lost in the process.

“We had to find an ‘authorized importer’,” he says. “No one even knew what that was at the time.” Information requested from Health Canada was routinely delayed for up to three days. The process dragged on for six long weeks.

Finally, the seed was made available for Campbell and his customers in mid-June. Then some heavy rains came, delaying an already late planting. It was a wash out for a year, and because of this, growers from Northern Ontario to British Columbia will not be planting their hemp this year.

Turning away thousands

Seed supply and licensing issues have dogged Canadian hemp researchers in the past, and the new regulations allowing for commercial hemp haven’t changed that. Despite verbal assurances in March that the time between application and license would only take a few weeks, this has not been the case. Health Canada has never granted a license earlier than mid-May since they began issuing them in 1994. They are holding to their institutional pattern.

Nevertheless, the ground has been broken. An estimated 5000 acres of hemp have been planted in Canada this year, and about 150 farmers received licenses in time for planting. Health Canada has not reported the number of applicants they turned down this year, but it is likely many hundreds, possibly thousands.

Tight seed supply

Cultivation licenses are not the only problem faced by would-be hemp farmers. Acquiring viable seed was a difficult task for this year’s planting. All seeds must be imported under license, and because of increasing demand, prices are higher than in previous years.

The farmers who are set-up with seed are mostly those with production contracts for larger hemp agri-businesses, or those with connections to the Canadian hemp researchers who have been importing seed for a few years already.

The types of seed are also tightly controlled. While the International Hemp Association counts over 400 strains in St. Petersburg’s Vavilov Research Institute (the world’s largest hemp seed bank), only 44 varieties are registered for international trade.

Canadians are limited to sourcing seed from countries that have seed standards compatible with Canada’s own rules. These strains, with a 0.3% THC ceiling, must be registered or be on track to be registered with the OECD, the international trade body. This criteria currently ensures that all seeds originate in Europe.

Seeds of all kinds are valuable property. Seed and plant breeders retain rights, and pass on costs to their customers. Certified seed must originate from the supplier, meaning that farmers will have to return to their source year after year.

Canada is not alone in tightly controlling hemp seed supply. Some countries have set up national institutes, that effectively, operate as monopolies. Poland’s Institute of Natural Fibres and the GATE Institute in Hungary have exclusive seed production rights in their respective countries; France, one of the largest international exporters, has another system of tight control.

Kenex’s 2000 acres

Kenex of Pain Court Ontario, is Canada’s latest hemp agribusiness, and has about 50 farmers under contract to cultivate 2000 acres this year. They received their cultivation licenses on May 21, reportedly the first to be received. Kenex is also one of Canada’s largest seed sellers, distributing nine varieties, sourced from France, Romania, Italy and Hungary.

The company, who started hemp research in 1995, has been negotiating long term European contacts. Securing quantities of seed is an involved process that can take a few years, says Kenex spokesperson Gay Meyers.

“Some of these countries are pioneers of hemp, and are very protective of their background,” says Meyers. “At first, they were skeptical. Now that we are on our fourth year of importing seed, there is a better relationship.”

Following the money

There’s a a mark-up too. In 1995, according to Agriculture Canada’s Gordon Reichert, certified seed could be brought into Canada for approximately $2700 a tonne. According to other 1995-1996 estimates (supplied on www.hemp-cyberfarm.com), European seeds are priced in the range of $2.50-$3.50 US a kilo. Kenex is currently offering seeds for resale at prices ranging from $7.25-$8.50cdn a kilogram, averaging towards the low end. Meyers declined to state the prices paid for the seed.

Hemp seed prices are high with good reason, according to David Marcus of Toronto’s Natural Hemphasis. “Not only are the transportation prices very high, making up over half the cost of the seed, but certified seed demands a substantial premium, because of current low world supply and continuously increasing demand.”

What is Canada’s hemp-seed industry worth? As seeding rates vary, it is difficult to estimate with accuracy the total amount of seed sowed in Canada’s hemp fields. Most of Canada’s industrial hemp crop is being grown for seed, or for dual use. For seed production, a farmer must plant 10-24 kilos of seed per hectare.

Conservatively estimating 16 kilos of seed per hectare, bought at $7.50 a kilo, it will cost a farmer $120 to sow his hectare of hemp. (A farmer growing hemp for fibre-only requires much more seed, about 70-80 kilograms per hectare. Only Hempline of Tillsonberg, Ontario is growing for fibre, 850 acres worth.)

By these figures, Canada’s 5000 acres (roughly, 2200-2300 hectares) requires at least 36 tonnes of seed, representing a domestic value of a quarter of a million dollars. By these figures, Kenex’s seed sales to its contracted farmers alone represents a gross of over $100,000. If Canada’s hemp industry takes off, and the crop reaches the magic number of one million acres in 5-10 years, the value of the seed business will reach into the hundreds of millions of dollars. Follow the money, this is big business.

Domestic seed supply

Because of advance ordering for 1999, Kenex claims that seed prices are expected to fall, so next year’s growers can expect to pay 10-15% less. Some of 1998’s seed is still available; however year-old seed is typically 80% viable, and fresh supply is a better option.

Clearly, a domestic supply is needed to make up any seed gap. With the hemp regulations, Health Canada has also instituted seed and plant breeding regulations that will begin to produce Canadian-adapted cultivars. Licenses are required (of course), as well as membership in the Canadian Seed Grower’s Association.

This year, between 100-200 acres in western Canada are devoted to seed multiplication. R&D Hemp in Saskatchewan has set up a full breeding nursery, while Manitoba Agriculture has also recently granted $60,000 in “seed money” to Consolidated Growers and Processors, who have planted 850 acres in Western Canada this year. Much of this grant will help fund seed research and development.

Creating Canadian-bred seeds is fundamental to the development of the industry. A secure domestic supply will also bring seed prices down to be more in line with mainstream crops. Many of the European strains being imported were grown in latitudes below the 49th parallel, and will have to be adapted to meet Canadian conditions and to raise yields and quality. Years of research have accumulated valuable data, but Canada needs the experience of growing on a commercial scale.

How long must we wait?

How long will the wait be for Canadian-bred strains to supplant the imports? Three? Five? Ten years? The longer it takes, the longer Canada will be reliant on costly imported seed..

For his part, Terramax’s Campbell hopes that Health Canada gets their act together. “Health Canada needs to meet the needs and expectations of Canadians. It has handicapped the industry.”

Campbell says he is hopeful that things will improve next year, but doesn’t know if it will. Otherwise, for as long as Health Canada hangs on to the hemp portfolio, farmers will have to watch being outflanked by Ottawa.

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