18
Paper from Dutch hemp?
Hayo M. G. van der Werf
International Hemp Association, Postbus 75007, 1070 AA Amsterdam, The Netherlands
From January 1990 until
December 1993, a total of 12 research institutes in the Netherlands spent Dfl 17 million
(US $9 million) on a hemp research programme. The objective of this programme was to
establish whether fibre hemp can be of economic interest to farmers and to the pulp and
paper industry in the Netherlands. The major research disciplines within the
programme were: plant breeding, crop physiology, plant pathology, harvest and storage
technology, pulp technology, and economics and market research. This research
yielded a large amount of factual information, which was recently summarized in two
reports in Dutch (Bakker et al. 1993, Van Berlo 1993).
Several researchers who were involved in the
Hemp Research Programme will contribute papers on the results they obtained in their field
to this and following issues of this Journal. One of the major results of the
programme: a business concept, outlining the required specifications for a viable
hemp-paper business to be set up in the Netherlands, is summarized in this article (Van
Berlo 1993).
The business concept
Pulp markets
Market research has
shown that both high-value and low-value markets are relevant for fibre hemp grown in the
Netherlands. High-value pulp markets consist of applications in Light-Weight Coated
paper (LWC), sanitary papers and tissues, and 'fluff', which is used in the production of
diapers. In the Netherlands, the size of each of these three markets is about 10,000
ton/year. Low-value pulp markets consist of applications in the production of
massive and corrugated cardboard. In the Netherlands, the market for hemp pulp for
cardboard production is about 160,000 ton/year. Pulp quality specifications, such as
whiteness and purity, are lower for low-value markets than for high-value markets.
The high-value market is the eventual major
objective, but initially pulp will be made for the low-value cardboard market, because it
does not require top quality specifications. Pulp technology will be gradually
optimised, and pulp production for high-value markets will then be possible. First
the LWC market will be approached, and finally the sanitary paper, tissue and fluff
markets. The low-value market will continue to be served, as the high-value market
probably can not absorb all the pulp produced. Initially, when pulp is produced for
low-value markets only, a market price of Dfl 600/ton of pulp is expected. After
several years, when pulp will be produced for both high- and low-value markets, a price of
Dfl 1,000/ton is possible.
Hemp production
A hemp-growers
cooperative should be set up by arable farmers in the north-east of the Netherlands.
In the first year, the members of this cooperative will grow 2,500 hectares (1
hectare or ha = 2.47 acres) of fibre hemp. Over a period of 6 to 7 years, this area
will expand to 11,000 ha and the cooperative will consist of a total of 1,000 to 1,100
farmers. In the crop rotation, hemp will replace cereals. Initially a yield of
10 ton/ha of stem dry matter is expected. After 5 years, improved cultivars will be
available and an average stem yield of 12 ton/ha is expected. Initially farmers will
get Dfl 130/ton of stem dry matter, this price will increase to Dfl 180/ton as pulp
production is geared more to high-value pulp markets. In addition, the European
Union (EU) supplies a Dfl 1,700/ha subsidy to hemp growers. The crop is harvested in
September by contractors who will use modified silage maize harvesters. The crop is
ensiled on the farm and sodium hydroxide is added to the chopped stems for preservation.
Provided the EU maintains its Dfl 1,700/ha
subsidy, and if a an average yield of 12 ton/ha at a price of Dfl 180/ton is obtained five
years after the start of the project, the farmer's gross margin (financial yield minus
direct costs) will be Dfl 2,343/ha. This is more than the gross margin of wheat and
less than that of potato.
Pulp production
The pulp factory
will be set up stepwise. It will start at a production capacity of 20,000 ton/year
of pulp. Ensiled hemp will be brought from the farms to the factory and separated
into bark and core using a flotation system. Both fractions will be pulped using
chemo-mechanical pulp technology. The resulting pulp will meet the requirements of
the low-value market. At this scale, pulp technology and waste water treatment
technology will be further optimised.
The size of the factory will then be increased
to 40,000 and finally to 90,000 ton/year by adding parallel chemo-mechanical pulp lines.
As the pulping process will be more sophisticated, pulps for the high-value markets
will be produced. A total investment of Dfl 127 million would be required for a pulp
factory producing 90,000 ton/year for both high- and low-value markets.
Financing
In order to be
economically feasible, the pulp factory should reach a capacity of at least 40,000
ton/year. This would require an investment of Dfl 57 million. Three sources
could contribute to this investment:
a) Shares. Shares are owned by the
hemp growers (Dfl 500/ha), other farmer cooperatives, banks and paper factories.
Shares should finance 50 % of the total investment.
b) Subsidies. Subsidies from
several sources should supply 25 % of the total investment.
c) Low-interest loans. These should
be supplied by national and regional governments, and make up the remaining 25 % of the
total investment.
Based on this financial structure and on the
other assumptions outlined above, the shares would yield a return on investment of 16 %
with a pay back time of 4.8 years.
Feasibility of the business concept
A committee, consisting of representatives of farmers, the paper industry, farmers cooperatives and of the provincial and national government, was asked to give its advice on the business plan. This committee concluded that some of the assumptions the business plan relies on are uncertain, which make it impossible to decide on its feasibility. The committee recommends further research to resolve the uncertainties. This research should include setting up a pilot plant producing 1,000-5,000 ton/year of pulp, and growing the hemp required to supply the pilot plant. The pilot plant would allow improvement of the pulp technology and a better estimate of the costs involved. This additional research would take about 2 years and cost Dfl 8-10 million. Currently, funding for this pilot research is being solicited from the paper industry and the national and provincial governments.
References