Human Consumption of Hemp Seed: Prospects for Australian Production
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Human consumption of hemp seed: prospects for Australian production Fiona Crawford, Beth Deards, Brian Moir and Neil Thompson Research by the Australian Bureau of Agricultural and Resource Economics and Sciences Report for client prepared for Food Standards Australia New Zealand October 2012 © Commonwealth of Australia 2012 Ownership of intellectual property rights Unless otherwise noted, copyright (and any other intellectual property rights, if any) in this publication is owned by the Commonwealth of Australia (referred to as the Commonwealth). Creative Commons licence All material in this publication is licensed under a Creative Commons Attribution 3.0 Australia Licence, save for content supplied by third parties, logos and the Commonwealth Coat of Arms. Creative Commons Attribution 3.0 Australia Licence is a standard form licence agreement that allows you to copy, distribute, transmit and adapt this publication provided you attribute the work. A summary of the licence terms is available from creativecommons.org/licenses/by/3.0/au/deed.en. The full licence terms are available from creativecommons.org/licenses/by/3.0/au/legalcode. This publication (and any material sourced from it) should be attributed as Crawford, F, Deards, B, Moir, B & Thompson, N 2012, Human consumption of hemp seed: prospects for Australian production, ABARES report to client prepared for FSANZ, Canberra, October CC BY 3.0. Cataloguing data Crawford, F, Deards, B, Moir, B & Thompson, N 2012, Human consumption of hemp seed: prospects for consumption and production, ABARES report to client prepared for FSANZ, Canberra, October. ABARES project 43384 Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) Postal address GPO Box 1563 Canberra ACT 2601 Switchboard +61 2 6272 2010| Facsimile +61 2 6272 2001 Email [email protected] Web daff.gov.au/abares Inquiries regarding the licence and any use of this document should be sent to [email protected]. The Australian Government acting through the Department of Agriculture, Fisheries and Forestry represented by the Australian Bureau of Agricultural and Resource Economics and Sciences, has exercised due care and skill in the preparation and compilation of the information and data in this publication. Notwithstanding, the Department of Agriculture, Fisheries and Forestry, ABARES, its employees and advisers disclaim all liability, including liability for negligence, for any loss, damage, injury, expense or cost incurred by any person as a result of accessing, using or relying upon any of the information or data in this publication to the maximum extent permitted by law. Human consumption of hemp seed ABARES Contents Summary ............................................................................................................................................................ 1 1 Introduction .......................................................................................................................................... 2 2 The Australian hemp industry ....................................................................................................... 4 Prices, costs and gross margins ..................................................................................................... 4 Australian production and consumption of hemp seed ....................................................... 5 Hemp seed processing in Australia .............................................................................................. 6 3 World markets for hemp products ............................................................................................... 7 Canada ..................................................................................................................................................... 7 The United States ................................................................................................................................ 9 Other niche markets—quinoa and chia ................................................................................... 10 4 Australian and New Zealand supply and demand response to legalising hemp seed for human consumption ......................................................................................... 12 Australia ............................................................................................................................................... 12 New Zealand ....................................................................................................................................... 13 5 Conclusion ........................................................................................................................................... 14 References ...................................................................................................................................................... 15 Tables Table 1 Australian hemp seed production, by state ......................................................................... 4 Table 2 Indicative gross margins for hemp seed production at various yield, price and cost assumptions ............................................................................................................. 5 Table 3 Gross margin calculations for other crops: New South Wales ...................................... 5 Table 4 Production and domestic use of hemp seed in Australia, 2011 ................................... 6 Table 5 Canadian hemp seed prices ........................................................................................................ 9 Figures Figure 1 Hemp seed processing and products .................................................................................... 2 Figure 2 World hemp seed production .................................................................................................. 7 Figure 3 Hemp planted area, Canada ...................................................................................................... 8 Figure 4 Canadian exports of hemp seed and seed products ........................................................ 9 Figure 5 United States imports of hemp seed and seed products ............................................ 10 iii Human consumption of hemp seed ABARES Summary Food Standards Australia New Zealand commissioned ABARES to advise on the likely change in price and quantity of hemp seed produced and sold in Australia and New Zealand that might result from legalising use of hemp seed for human consumption. Production of hemp seed is currently legal, under licence, in most Australian states. In 2011, the area planted to hemp was an estimated 185.5 hectares. Assuming an average yield of 0.5 tonnes per hectare, Australian production of seed is estimated at around 93 tonnes in that year. An additional 35 tonnes were imported into Australia from Canada, meaning an estimated 128 tonnes (5.7 grams per person) were used in Australia in 2011 for purposes such as body care products, pet food and possibly some livestock feed. Legalisation of hemp seed for human consumption in Australia and New Zealand would be expected to lead to increased demand, providing a stimulus for increased production. However, the magnitude of these effects may be small. Very limited data are available on consumption of hemp seed. To estimate the possible human consumption of hemp seed in Australia, two alternative assumptions, based on experience in the United States, were used. The first approach was to assume consumption in the United States of 3.8 grams per person is all for human consumption, and that human consumption in Australia would reach the same level, in addition to other uses. In the second approach, it was estimated that hemp seed use in the United States grew by 20 per cent between 2006 and 2011, and this same growth rate was applied to the present level of use in Australia. On this basis, hemp seed use in Australia and New Zealand might grow from around 155 tonnes (5.7 grams per person) at present to somewhere between 250 tonnes (9.5 grams per person) and 380 tonnes (14 grams per person) per year over five years as a result of legalisation for human consumption. However, any price increase that resulted from increased demand would dampen the demand for hemp seed for existing applications. Additionally, as hemp seed use per person in the United States (3.8 grams) and Europe (2 grams) remains well below the use levels being suggested for Australia and New Zealand, there is a risk that these levels may be overestimates. The potential for increased production of hemp seed depends on the returns from producing it compared with the returns from other crops. If prices remain high and yields can be increased to reach the levels claimed possible, the returns from producing hemp seed could be higher than for many other crops, and the increased demand could be met from increased domestic production. Under these assumptions, up to an additional 190 tonnes might be produced which, at $3500 per tonne, would bring an estimated gross revenue of $665 000 to Australian hemp seed producers. However, if yields remain around present levels, and if world prices return to those seen between 2008 and 2010, Australian farmers may have little incentive to produce any hemp seed. It is possible that most, if not all, of the estimated increase in demand resulting from legalisation would be met from imports, especially if prices proved less favourable or yields proved lower than expected. 1 Human consumption of hemp seed ABARES