Opportunities for German Hemp

Michael Karus¹ and Gero Leson²
¹ nova - Institute for Political and Ecological Innovation, Hürth/Cologne, Germany
² nova - Institute for Political and Ecological Innovation, Berkeley, California

If industrial hemp is to have a future in Germany or other Western countries, hemp-based product lines will have to be established on a relevant scale within the next five years. The emerging German hemp industry is now faced with the question which of the numerous potential products will have a realistic chance of successful introduction into German economy under technical, economic, and environmental criteria. This question has now been answered by the ‘Hemp Product Line Project’ (HPLP). At least 11 product lines based on hemp fibers, hurd, seeds/oil and cannabinoids are suitable for establishing the foundation of a sustainable German hemp industry by the year 2000. Investments and marketing activities should focus on their implementation.
Under the overall charge of the nova-Institute, 20 scientists from agricultural engineers to marketing psychologists, evaluated potential product lines from hemp. Following questions were included in the evaluation.

Nova’s partners in the project were the IAF Reutlingen (Institute for Applied Research), with a focus on fiber characteristics and processing, and the ifeu-Institut Heidelberg which carried out the environmental analysis for selected product lines. The project was funded by the Deutsche Bundesstiftung Umwelt (DBU), a large environmental foundation, the Badische Naturfaseraufbereitung (BaFa), TreuHanf Berlin and hanfnet Hannover.
While the project focused on conditions in Germany with respect to markets and price structure, its methodology and many of its conclusions are also applicable to other Western countries. Yet the economics of specific product lines may vary strongly as a function of subsidy levels and energy costs.

Approach
The project’s first phase involved compilation of groups of potential hemp based product lines and a brief analysis of their short- to medium-term feasibility. This produced a total of 11 favored product lines (see below). During the second phase, these lines were evaluated in more detail with respect to existing obstacles in technology and market access, short-term market potentials and strategies for implementation. Evaluation criteria and respective questions included:

Where available, HPLP utilized recent information from the literature. However, recognizing that much of the information relevant to the field has not been published, interviews with approximately 60 experts from research, development and practice in 6 countries were conducted. Their input gave HPLP its focus on “realistic” developments.

Major Results
The 11 favored product lines from hemp bast fiber, hurd, seeds, and cannabinoids with good opportunities for short-term im-plementation are summarized in Figure 1. Table 1 lists their respective short- to medium-term market potentials, respective farming demand and value of intermediate products. The list does not claim completeness. Some of the product lines that were not favored, such as commodity paper, may eventually have larger demands for hemp. The favored product lines are discussed in the following sections.

I. Bast Fiber Product Lines
        Hemp is the fiber plant with the highest yields in Europe. Its bast fiber is one of the strongest and most durable natural fibers. Recent tests at the IAF showed that tensile strength and e-module of heckled hemp fiber exceed those of all other tested natural fibers and fiber glass. Its elasticity (1.3%) is low compared to other natural fibers and comparable to fiber glass. Water sorption and wet strength are high. Even though final product quality depends also on processing technology and the “matrix” surrounding the fiber, these characteristics confirm that hemp fiber is technically suited for various industrial products.
        Utilization of the bast fiber requires decortication and subsequent processing. The two main approaches to the latter include the traditional long-fiber processing and the modern whole- or short-fiber technologies. Revitalization of the traditional long-fiber technology, currently the basis for most of the popular hemp textiles, is most unlikely in Germany for several reasons. Unlike flax, hemp fiber requires water retting for processing into a spinnable fiber. Field retting usually achieves only incomplete fiber separation. Water retting is, because of its labor intensity, high water consumption and waste water generation, economically and ecologically not feasible in Germany. Finally, long-fiber processing requires specialized harvesting, processing, spinning and weaving equipment. This exists in most Western countries only in marginal quantities. Costs for new equipment, produced by only a few manufacturers, are high. At the same time, existing production capacities in Eastern Europe and China are not fully utilized. This suggests that long-fiber textiles from hemp will continue to be produced in these countries for export.
        Under these considerations, short-fiber processing, which requires only field retting (typically 2-3 weeks), is suggested as a more feasible alternative. After field retting, fibers are further processed by either mechanical or physical-chemical methods.

A. Mechanically processed fibers, coarse to medium-fine
Mechanical short-fiber processing does not involve separation into high-quality paralleled long-fiber and tangled short-fiber (tow). Instead, bast and hurd are separated during decortication and the tangled bast fiber is cleaned, refined and shortened in subsequent mechanical steps. Since each refining step requires additional equipment and reduces the yield of the target fiber, the use of mechanical fiber processing is economically limited to the production of coarse and medium-fine fibers. Four of the product lines favored by HPLP are manufactured from such fibers.

1. Specialty pulp for technical applications
Hemp fibers produce excellent specialty pulp which competes with pulp from cotton linters and abaca. Typical applications include electrolyte, filter, cigarette and currency papers. In France and Spain, still the two leading EU countries in hemp farming, 95% of the fiber is processed into specialty pulp and paper. While market volume for specialty pulp is limited, it fetches a high price. Based on price and quality, German hemp is able to compete in this market. In the commodity paper sector (printing, writing, packaging) hemp pulp will, because of its considerably higher price, not be competitive in the short term. However, development of more efficient pulping technologies and increasing costs of wood fibers are likely to create gradually growing niche markets, e.g. for ecologically motivated buyers of hemp paper.

Product Line	Intermediate Products (metric) tons/year	Farming Area ha/year	Market value of Intermediate Products Million DM/year
Bast Fiber
1. Specialty pulps for technical applications	~5,000 well decorticated fiber	~3,500	~4
2. Press-molded interior panels for automative applications	~4,000 mechanically processed coarse fiber	~2,500	~4.4
3. Geotextiles for erosion control etc.	~4,000 mechanically processed coarse/medium fiber	~3,000	~6
4. Needle-punched carpeting	~3,500 mechanically processed coarse/medium fiber	~2,500	~5.3
5. Textiles for clothing: cottonized hemp as a cotton substitute	~15,000 physically-chemically processed fine fiber	~13,000	~45
6. Mats for thermal insulation in construction	~10,000 physically-chemically processed fine fiber	~8,000	~30
Total of Bast Fiber Product Lines		~30,000	~95
Hurd
7. Animal bedding	~90,000	~30,000 combined production	~18
Seeds and Oil
8. Foods	~1,200 - 6,000 seeds or ~300 - 1,500 oil	10,000 (combined production) or 1,000 (seed production, only)	~5.2 - 25 50% seeds 50% seeds as oil
9. Natural cosmetics	included in 'Foods'
10. GLA for pharmaceutical and cosmetic industry	150 oil	500 - 1,000	~3.8
Cannabinoids
11. THC based drugs	0.33 THC	4	~131 (price of end product)

Table 1 suggests that the following technical non-woven product lines present a larger short-term market potential:

2. Press-molded interior panels for automotive applications
Fleeces and felts are the basis for press-molded parts which are used in a variety of automotive interior applications. Examples include door panels, hat racks and dash boards. The German automotive industry increasingly uses non-wovens from natural fibers, primarily flax, jute and sisal. Results from lab tests suggest that hemp fibers will be competitive with respect to quality and price. Consequently, trials are currently being conducted by several suppliers to the automotive industry.

3. Geotextiles for erosion control etc.
Geotextiles constitute a market which is currently dominated by synthetic fibers. However, the demand for products from natural, biodegradable fibers is increasing. These products decompose gradually after they have supported the establishment of deep-rooted plants, for example in slope protection projects. Geotextiles from hemp, alone or in blends with synthetic fibers, represent technically and economically attractive products.

4. Needle-punched carpeting
The market for carpets from natural fibers is currently dominated by expensive woven materials. Initial tests show that less costly needle-punched carpets can be manufactured from mechanically processed hemp fibers. This may allow expansion of the use of carpets from natural fibers into new markets, such as trade shows/events.

B. Physically-chemically processed fine fiber
The mechanical processing of hemp fibers into fine qualities is, as already mentioned, not economical. Thus, the production of fine hemp fibers requires the use of physical-chemical (p-c) methods. The technical feasibility of such hemp “cottonization” was demonstrated in Germany during World War II. More recent work at the IAF Reutlingen, where cottonization through a steam explosion process has been researched and developed for flax and hemp, now allows for close control of processing parameters and fiber quality.
The HPLP study favored two product lines made from this fiber:

5. Textiles for clothing: “cottonized” hemp as cotton substitute
R&D conducted at the IAF suggests that physically-chemically processed hemp fiber can be produced at a cost comparable to high quality imported cotton and rotor spun on existing or slightly modified equipment. The resulting woven and knitted materials, pure or in blends with cotton, show favorable wear and comfort characteristics. Thus, unlike for long-fiber textiles, this processing route would allow manufacturing of cost competitive textiles and open significant markets for hemp fiber.

6. Mats for thermal insulation in construction
The market for ecological insulation materials in Germany currently experiences growth rates exceeding those for insulation materials overall. Insulation mats from physically-chemically processed hemp demonstrate insulation characteristics comparable to those of mineral fibers while being cost competitive with other ecological insulation materials, such as cork and sheep wool.
Again, note that these two favored product lines do not represent the only technically feasible product lines from p-c fiber, nor do they have the largest long-term market potential. Yet, unlike for example, the sector of fiber reinforced plastics which holds a large potential for substitution of fiber glass, they represent cost competitive applications with already existing demand and limited need for R&D and modifications to production structures.

II. Product Lines from Hurds
Decortication of hemp stalks and subsequent cleaning and refining of the bast fiber produce significant amounts of shives (“hurds”). Their utilization in value-added products will significantly affect the overall economics of industrial hemp.

7. Hurd for animal bedding - from small pet to horse
This product line was in particular favored by the HPLP. Because of their high moisture sorptivity and ready compostability, hemp hurds are well suited for use as animal bedding. Other advantages include ease of handling and spreading, bright color, and suitability for horses allergic to straw. They are cost competitive with other established bedding materials, such as straw pellets and wood shavings. The large size of the market for horse bedding will usually allow for regional marketing.
Although the use of hemp hurd as a building and insulation material is often claimed to be promising, we did not favor this application. Compared to other renewable resources used in construction, hemp does generally not show any superior qualities. For example, its thermal insulation properties are poor compared to materials from cotton or recycled paper. Since other renewable materials for the construction sector typically wholesale at 100 DM/(metric) ton, hemp hurd would fetch similar prices. When sold for animal bedding, hurd fetches, following a dust removal process, typically 200-300 DM/ton.

III. Seeds and Oil
        Hemp seeds and oil are foods of high nutritional value. Because of their highly desirable amino acid and fatty acid spectra they may also find use in therapeutic applications. Hemp seeds contain all eight essential amino acids among several others, i.e. humans can produce all proteins essential for life from hemp seed protein. The seeds also contain vitamin some E and B-vitamins.
        Hemp seed oil contains an unusually high fraction (90% by weight) of unsaturated fatty acids. Of particular importance for human nutrition are the essential fatty acids (EFA) linoleic acid (50-70%) and a-linolenic acid (15-25%). Daily intake of 10-20 grams of hemp oil satisfy the human demand for EFA. In addition, hemp is one of the very few plants whose seed oil contains g-linolenic acid (GLA), typically 2-4%, although levels up to approximately 6% have been recorded. Various factors may inhibit the formation of GLA in humans, thus interfering with the production of prostaglandins and causing or aggravating a variety of illnesses, including neurodermatitis and rheumatic arthritis.
        HPLP favored three product lines based on hemp seeds and oil:

Since hemp seeds and oil are easily used in existing production processes, hemp seed and oil containing food products (snacks, baked goods, salad oil) and natural cosmetics are increasingly gaining popularity. Yet, growing world trade in hemp seeds makes the economics of hemp seed cultivation in Germany, except for organically grown seeds, questionable and will limit the extent of hemp farming exclusively for seeds.

11. THC-based therapeutic drugs
The last favored product line involves the use of THC (tetrahydro-cannabinol) contained in extracts of Cannabis flowers. There is growing evidence of THC’s therapeutic benefits in applications such as AIDS and chemotherapy (to prevent nausea, vomiting and anorexia), pain relief, glaucoma and asthma. THC-based prescription drugs are, or will soon be, registered in many countries. Although these dosage forms are currently manufactured using synthetic THC, this may also involve drugs on the basis of Cannabis-derived THC in the near future.
Because of the low THC content of the hemp varieties certified for use in the EU, the production of THC-based therapeutic drugs would likely involve drug varieties with a high THC content, grown under strictly controlled conditions. Considering the small area required for the production of significant quantities of THC (see Table 1) it will not benefit agriculture in Western countries and likely be conducted in-house by pharmaceutical firms.

Market Potential for German Hemp
All of the product lines discussed above and summarized in Table 1 have potential markets in Germany in which they can compete on the basis of both price and product quality. The estimated total market potential for German hemp in these product lines corresponds to a farming area of about 30,000 ha and a market value of the intermediate products (fibers, hurd, seeds and oil) of 120-140 million DM. These market volumes were estimated conservatively. For example, the use of insulation mats was assumed to be limited to the market for ecological insulation materials which accounts for 3% of the total market for insulation and is expected to expand to 6% in the medium-term. 40% of this market is supplied by cellulose based products. It was assumed that hemp will gain a market share of one third of the remaining 60%, corresponding to a farming area of 8,000 ha and a fiber demand of 10,000 tons/year.

Economy - Farming
The present high EU subsidy for hemp of 1,510 DM/ha provides a good foundation for a German hemp industry. Assuming current subsidy levels, seed varieties and technology, and a farm-gate price of 140 DM per ton of dry stalks, hemp yields a gross profit (subsidy plus revenues minus variable costs) of 1,400-1,500 DM/ha. This is comparable to gross profits for winter wheat, barley and maize.
The HPLP’s economic evaluations also suggest that hemp will not require such high subsidies in the long term. Following its establishment under current economic conditions, i.e. assuming an operational processing industry, a subsidy of 800-1,000 DM/ha will be required to make hemp farming profitable for German farmers. Optimization of varieties, and harvesting and processing technologies would allow hemp to be farmed profitably at a subsidy level of 700 DM/ha, typical for other crops in the EU.

Economy - Intermediate Products
Mechanically processed hemp fibers, depending on their fineness and hurd content, are currently offered at prices ranging from 0.70-2.00 DM/kg, i.e. lower than those for comparable flax fibers. In applications where low-cost coarse to medium-fine fibers of high tensile strength are needed, hemp will be the first choice among European-grown fiber plants because of its high yield and ecological advantages. Production of fine fibers for textiles and thermal insulation requires physical-chemical processing, resulting in a fiber price of typically 3 DM/kg, quite cost competitive with cotton. Hemp seeds grown organically in Germany will, under current conditions, wholesale for typically 2 DM/kg.

Ecobalancing
A preliminary ecological comparison of selected hemp products with conventional products suggests several ecologically relevant parameters where hemp provides distinct advantages. They include a lower ecotoxicity, due to the strongly reduced need for pesticides and herbicides, and lower emissions of SO₂ from diesel fuel used during farming. Yet, most parameters vary strongly with the characteristics of the final product and the specifics of the production process. For example, the contribution of hemp long-fiber textiles to emissions of CO₂ (greenhouse effect) depends strongly on the efficiency of the fiber processing and spinning equipment and the expected life of the textile. This sensitivity prevents universal conclusions on the ecological superiority of hemp.
However, the analysis shows that hemp, because of its low maintenance requirements, is very suitable for organic farming and offers reconciliation of renewable resources and ecology, something which most industrial crops have failed to achieve.

Hemp Image and Marketing
The modern image of hemp involves three major components. They include the diversity of products from a single plant and the complete utilization of both the plant and its products (recyclability). While these two components are permanent in nature, they are currently complemented by a third component, i.e. the ambiguity of drug-Cannabis in public opinion. This component is likely to lose importance in the long-term.
The decentralized, material-efficient mode of production also offers hemp processing operations an opportunity for creating a network under a common logo which would also certify compliance with quality standards. Thus a hemp-related “net identity” may be created as an alternative to centralized structures of production, which would improve market opportunities for hemp products and allow participating companies to benefit from the hemp image in a more focused way.

Political and Economic Framework
The rate and extent of the establishment of hemp-based product lines also depends on a political and economic framework for development and introduction of ecological product lines and those based on renewable resources. Much of the latter is typically performed by small and medium-size firms with a higher degree of integration into regional economic structures. Thus, any measures in support of such firms will also support the development of a hemp industry and their products.

Political Decisions at the EU Level
Whether fiber plants in the EU should be used for apparel and technical textiles or whether these should be manufactured entirely from imported fiber is ultimately a political decision. Should the EU create the necessary framework for a textile industry based on domestic fibers, hemp will, because of its fiber characteristics and high yields likely dominate other European fiber plants in the technical textile sector.

Summary
In summary, the HPLP verified that industrial hemp actually has a future in the German or other Western economies. Its major conclusions are:

The creation of a suitable political-economic framework would accelerate this process. The emerging German hemp industry was off to a good start in 1996. For its further development it will be crucial that:

The complete study The Hemp Product Line Project (490 pages, 109 tables, 64 figures) and a 42-page summary version, both published in German, can be purchased from the nova-Institut, Hürth/Cologne, Fax: +49-2233-978368, for DM 200 and DM 14 (incl. postage), respectively. Also refer to the review on page 69 of this issue of the JIHA.

Figure 2. Historical trends in cumulative hemp acreage in relevant countries in the EU. During the last decades hemp was grown almost exclusively in France. The first “hemp newcomer” was Spain in 1986, followed by the UK in 1993, and the Netherlands, Austria and Germany in 1996. Total acreage increased from 2,762 ha in 1989 by a factor of five to 14,173 in 1996. Despite a reduced EU subsidy, a further increase to almost 20,00 ha is expected for 1997. Currently, about 95% of the bast fiber is processed to specialty pulp. It is expected that a variety of new product lines will be established within the next few years (refer to text). Source: nova-Institut 1997, based on EU statistics.