Abstract

Over recent years, the balance (or lack of) between industrial development and environmental impacts has become a key issue on both national and international scale.

The Agricultural industry has traditionally been viewed in a different light to that of heavy duty manufacturing industries in that it is often purveyed to be working in harmony with the environment, harnessing our natural resources. However, it is becoming increasingly obvious that farming practices, if not managed correctly, may in fact result in a depletion of our natural resources. Europe has seen the Common Agricultural Policy attempting to maintain an inefficient industry by means of subsidisation and price support, leading to over production of food products and a large amount of resources being made economically redundant.

As environmental concerns grow, and the use and effects of harmful practices and chemicals becomes more and more apparent, I believe there is a need to examine the benefits of pushing for a more sustainable agricultural industry.

Chapter 1 - Introduction

Agriculture in the UK is currently undergoing a significant change in favour of environmental concerns. The pitfalls of the previous Common Agricultural Policy (CAP) and its heavy reliance on subsidisation as a means to protect a traditionally unstable market have been recognised, and the mood is changing in favour of policies seeking to harmonise activities with the environment.

Recent years have also seen a resurgence in interest in the agricultural properties of hemp, identifying potential benefits in terms of providing farmers with a commodity that has numerous output applications, as well as its preferential 'green' qualities in comparison to many alternative products currently being farmed today.

Hemp has been farmed for thousands of years across the globe, embraced by a variety of cultures, providing a vital natural resource with extensive and wide reaching uses. However, the use of this seemingly 'brilliant' natural resource has been stifled over the past century largely due to political influence and a misguided belief that hemp and the narcotic marijuana are one and the same thing.

As the potential benefits of hemp, both economic and environmental are becoming ever more documented, I believe there are is valid reason to investigate the potential of the hemp industry in terms of providing a sustainable agricultural industry as well as a more stable income base for farmers. The investigation will concentrate on the validity of hemp prohibition that ultimately led to the decline of the industry, the potential economic and environmental benefits that hemp offers and the extent to which such benefits could be integrated into global agriculture industries, in particular the UK.

Chapter 3 - UK Agriculture Industry

Agriculture has long been a highly debated policy problem within the EU, since the introduction of the Common Agriculture Policy (CAP) in 1957. The basis of CAP was to ensure European farmers with a relatively stable income in a market with notoriously unstable supply, due to the uncertainty of many factor inputs (such as weather) in the industry. The agricultural market for the member states was backed by a large price support mechanism, ensuring the sale of goods that were not necessarily internationally competitive. Farmers were also provided with financial incentives for increased intensification, leading to excess pressure on environmental resources and an increasingly monocrop farming culture. In the push for economies of scale from large-scale production, agricultural land has suffered a loss of bio-diversity as traditional landscapes have witnessed a loss of semi-natural habitats such as hedgerows. Loss of such vegetation may also lead to a reduction in fertility of the soil, as both crops and soil become more exposed to both wind erosion and surface run-off, resulting in a loss of nutrients. Increasing intensification has also lead to the increasing application of artificial chemicals in order to maintain yields, resulting in toxified groundwater levels and surface run-off polluting surrounding water supplies. The EU agriculture market is now infamous for high levels of overproduction and the resulting 'food mountains', which has lead to a 'set-a-side' policy, providing financial encouragement to farmers to enter into schemes requiring them to take land out of use for food production for a minimum of five years. In 1992 600,000 hectares of land were put to set aside and although in some cases cultivation of non-food crops was permitted, a great deal of agricultural land was not put to use, with the possibility of soil degradation should the land not be suitably maintained.

It wasn't until 1972 at the Stockholm conference, that the EU introduced a formal environmental policy after growing concerns of existing practices, introducing among other measures, the Polluter Pays Principle (PPP) requiring that financial compensation for pollution should be met by those at the root of the cause. The idea behind which was to internalize these pollution externalities, thus identifying the true cost of production. As environmental concerns become more apparent, so the pressure for changes in the CAP has increased, leading to reforms in 1992 (MacSharry reform) and 1997 (Fischler reform), seeking to bring the CAP into a more integrated policy combining both environmental and social issues with the existing economic problems.

At present, EU environmental policy, in regards to agriculture, focuses primarily on the implementation and monitoring of Agri-environmental Policy (AEP) schemes. AEP's were first introduced in the mid 1980's, before being formally introduced in May 1992 under Council Regulation (EEC) 2978/92 as one of three accompanying measure to the existing CAP (the others being the early retirement scheme - Reg 2079/92, and the forestry aid scheme - Reg 2080/92). AEP encourages agricultural extensification and the improvement of the efficiency of agricultural structures, in respect to market conditions. The policy tools used by the European Commission can be identified as economic incentives, regulatory requirements and information dissemination. It can be argued that economic incentives promoting intensification, introduced by the CAP, are at the root of the current environmental problem within agriculture. AEP's sought to utilise this policy tool as a reward for more sustainable farming activities, encouraging at least a maintenance of current practices if not direct positive changes.

Current mainstream policy towards AEP's is now in its eleventh year and there is a noticeable change in both attitudes and actions. Last December the UK saw the announcement for a £1.6 bn England Rural Development Program (ERDP), containing £300mn of new Exchequer funding, backed by the European Commission. The British Government aims to aid farmers in becoming more flexible, competitive and diverse whilst promoting more than ever their role in the protection of the environment. Numerous schemes will be introduced alongside the existing Countryside Stewardship, Environmentally Sensitive Areas and Organic Farming schemes.

Recent reforms in CAP have partly alleviated pressures on the environment brought about by subsidy lead intensification and overproduction, however, due to the nature of the policy there is a large amount of resources not being used to their potential.

Chapter 2 - Agricultural Economics

The agriculture industry is renowned for the difficulty in predicting economic outputs due to the fact that the most influential input, namely the climate, is out of the hands of those involved in production. Although it is possible (via environmental and agricultural science) to predict potential yields in terms of both quality and quantity with reasonable probability, unforeseen weather conditions have resulted in an industry with notoriously unstable supply and incomes.

Climate aside, perhaps the two most influential factors regarding the agriculture industry are patterns of demand and advances in appropriate technology.

In terms of production, demand beyond that of an 'adequate' diet yields an individual with a declining marginal benefit. Low income individuals spend a relatively large proportion of income on food products in comparison to those on higher income levels, resulting in income elasticities of demand being relatively low. It therefore stands that in a country experiencing rising average income levels, there will be a less than proportionate increase in demand for food products, causing a less than proportionate increase in income for those involved in the agriculture industry. In countries with relatively stable high levels of average income, income elasticities of demand will be low if not negative, with any added expenditure on food products usually a sign of changing demand patterns in terms of convenience and quality rather than quantity.

Theoretically speaking, if the proportion of income saved by an individual remains constant whilst experiencing an increase in income level, the result would be a proportionate increase in expenditure equal to that of a proportionate increase in income. That is to say, income elasticity of expenditure will be equal to unity. Assuming relative prices of all products remain constant, the average income elasticity in terms of quantity demanded will also equal unity. However, the existence of low or negative income elasticities of demand for food products in more developed countries means they are less than unity, thus, in order for balance to occur, income elasticities of demand for non-agricultural products will be greater than unity. The result is that a rise in income levels leads to a disproportionate increase in demand for non-agricultural products in comparison to that of agricultural products.

The diagrams represent two markets, one for a 'typical' agricultural product and one for a 'typical' industrial product.

Over time, increases in output per head and average real incomes may be increased by an increase in the economy's stock of natural resources, as well as the development and application of more productively efficient technology.

The supply curves for both goods increase at the same rate as, unless there is some encouragement to do so, it is reasonable to assume that the proportionate quantity of new capital resources will be roughly equal for both agricultural and non-agricultural goods.

Coupled to this is that history has shown that development of technology in the agricultural sector can often have a profound effect on the supply of agricultural products.

Whilst output in the agricultural sector rises inline with the rest of the economy, the increase in demand for agricultural products brought about by an increase in real income will be lower than that that of non-agricultural products due to the lower income elasticity of demand.

The agricultural industry is known for the presence of short term price instability, yet this merely acts to hide the long term pattern of falling price levels as the market mechanism seeks to equate supply with demand.

Economic theory suggests that lower return on investment in agriculture and the fall of prices will lead to a redistribution of resources within the economy, resulting in a reduction of farm holdings as labour and capital are located in more prosperous sectors. However, agricultural resources, in terms of both specialised machinery and labour, are relatively immobile, therefore a small decrease in the price level does not result in an immediate adjustment of resources away from the agricultural sector. The result is that average farm incomes increase at a slower rate than elsewhere in the economy, an adjustment problem that may be highlighted when economic growth is rapid. Data concerning the UK agriculture industry outlines a reduction in national income in the agriculture industry with regards to percentage of GDP, as well as a reduction in numbers employed in the sector 1

The main problem of agriculture in developed countries therefore, is seen as the failure of the resource structure of the industry to adjust with sufficient rapidity in the face of the pressures brought about by improving technology and rising incomes2 As a result, governments are forced to become extensively involved in policies both to promote adjustment and to support agricultural prices.

The market for agricultural products can be approximated to that of theoretical perfect competition, whereby individual firms face perfectly price elastic demand for what is essentially a homogenous product, magnifying the need for cost effective, efficient means of production. Coupled with the availability of subsidies, the industry is becoming increasingly characterized by large scale, monocrop farms seeking profits via intensification.

Due to both the competitive and speculative nature (in regards to investment for future returns) of the industry, crop selections that maximise both production and market possibilities will provide higher potential profit levels, whilst minimising potential negative substitution effects caused by fluctuations in the price of other agricultural products.

1 see appendix

2 Ritson, Christopher 1977

Chapter 4 - Hemp: Introduction to the plant

Cannabis Sativa1 is the official Latin name of the hemp plant (hemp being the English term), derived from the Greek work kannabis, first listed by Dioscorides in 60AD, and is member of the distinct family Cannabaceae, included under the botanical order Urticales together with the hops plant. Hemp, an annual herbaceous plant, reaches heights of between 1 and 5 metres with a stalk diameter between 6 and 20 millimetres in diameter and dependent upon whether gown for fibre or herb, foliage may be restricted to the top or found in abundance along the stem of the plant. The composition of a dried hemp plant in terms of weight consists of 30 % leaves, 10% roots and 60% stalk, of which, 15-20 % is fibre, 78-81% is woody pulp (with 77-85% cellulose content) and 4% lignin, organic glue that binds the fibres giving the stem rigidity. The seeds of the hemp plant contain 30% (by volume) oil.

Hemp is a valuable source of bast (footnote) fibre, with particular characteristics that include strength and durability, as well as good resistance to rot and mildew. Extraction from the stalk takes place via a process know as decortication, providing two different strands of fibre, long and short, both with their individual properties. Long 'primary' fibres stretch the length of the stalk providing a stronger and more durable fibre than many other natural sources and are used in applications such as twine, cordage, textiles and paper. Short 'tow' fibres (secondary), shorter in length, yet retain many of the properties of long fibres, are extracted via the process of 'hackling' and uses include textiles, paper and building materials. Hemp stems are 80% hurd, a pulp byproduct after the fibre is removed from the plant, having a cellulose content of roughly 80%. Cellulose is a chain of glucose molecules formed via the process of photosynthesis required to build cell structure in the plant and is an important industrial input for the production of chemicals, plastics and fibres.

Cannabis Sativa has had a long history with misinterpretation and misunderstanding regarding it's numerous properties, none more so than the presence of delta 9 tetrahydrocannabinol (THC), a psychoactive property obtained through the drying and smoking of flowers and leaves from female plants. This study considers what has become know as Industrial hemp, which is bred to maximise fibre, seed and oil output, with a THC level between 0.05% and 1%. Cannabis Sativa, becoming known primarily as marijuana due to political influence, (see below) is cultivated primarily for its intoxicating properties, with THC levels between 3% and 20%.

Current mainstream policy towards AEP's is now in its eleventh year and there is a noticeable change in both attitudes and actions. Last December the UK saw the announcement for a £1.6 bn England Rural Development Program (ERDP), containing £300mn of new Exchequer funding, backed by the European Commission. The British Government aims to aid farmers in becoming more flexible, competitive and diverse whilst promoting more than ever their role in the protection of the environment. Numerous schemes will be introduced alongside the existing Countryside Stewardship, Environmentally Sensitive Areas and Organic Farming schemes.

Recent reforms in CAP have partly alleviated pressures on the environment brought about by subsidy lead intensification and overproduction, however, due to the nature of the policy there is a large amount of resources not being used to their potential.

1 Cannabis Sativa was the name given by Dioscorides, Roman Emperor Nero's surgeon

Chapter 4 - Hemp: Global History - Early use, prohibition and resurgence

Genesis 1:12 - "I have given you all the seed baring plants and herbs to use"

The use and history of cannabis hemp stems thousands of years across a number of continents, cultures and religions, and is credited with being the first known plant used for cultivation. Approximately 10 000 years ago hemp industries began in China and Eurasia, seeking to use hemp fibre for the production of textiles, with the earliest record of human industry being a sample of hemp fabric dating 8000 BC, found at Catal Huyuk, in Turkey. Since then, numerous cultures and civilisations such as Egyptians, Babylonians, Persians, Greeks and Romans, have recorded the use of hemp, primarily in the extraction of fibre for textiles and it's medicinal qualities.

Throughout the ages hemp cultivation spread across mainland Europe and was taken over to the America's by the Spanish, becoming an important naval resource in the form of canvas sails and rope (hemp being more resistant to rot and salt water than other fibres) during the 18th and 19th centuries.

Chapter 4 - Hemp: Politics of Prohibition  

'It would be wryly interesting if, in human history, the cultivation of 'marijuana' lead generally to the invention of agriculture and thereby to civilisation' (Carl Sagan)

In order to analyse the commercial potential of hemp, it is necessary to consider and question political influences of supply and demand in the market place, most notably in the USA, that lead to the prohibition of Cannabis Sativa and consequently, to the decline of the existing industry.

Chapter 4 - Hemp: Politics of Prohibition - USA

Hemp cultivation had long been a part of both American and global agriculture patterns, at times vigorously promoted due to the acceptance of it's properties. The early 1900's witnessed the dawn of the struggle for a multi billion dollar market, petroleum and wood in one corner, with the natural resource of hemp in the other.

Unfortunately, the potential economic and environmental benefits that hemp could provide to a wide number of industries, was to be undermined by a few powerful individuals in the oligarchy dominated by the DuPont petrochemical company, backed along the way by a number of influential political figures such as Andrew Mellon2.

During the late 20's, the U.S Federal Government placed much of the textile production for the domestic economy in the hands of it's chief munitions maker, DuPont (herer). Over the period 1926 - 1937, research into the structure of natural fibres by Harvard chemist Wallace Carothers , backed by an open ended research grant from DuPont, witnessed the development of the man made fibre Nylon.

The early 1900's also saw the development of technology with the potential to make hemp production more efficient and competitive with respect to existing paper-pulp technologies, receiving a number of complementary written articles3.

Over the same period, a number of American politicians were becoming increasingly aware of the social use of cannabis, primarily among immigrants and Mexican nationals. Thanks largely to a "yellow journalism"4 campaign lead by William Randolph Hearst, who's newspaper chain stretched across the nation, the American public were being increasingly aware of 'Marijuana' a new narcotic, sweeping the nation with the potential to drive Mexican's and Negro's criminally insane5. Coincidentally, Hearst's company was a major consumer of cheap tree-pulp that had replaced hemp paper in the late 19th century as well as a major logger and producer of DuPont's chemical drenched, tree-pulp paper. (Conrad) Despite a number of scientific reports claiming the opposite, the American government, lead by a determined Harry J Anslinger6,head of the Federal Bureau of Narcotics, continued the propaganda war against marijuana. Fuelled by infamous publications and media presentations such as 'Reefer Madness' and harnessing the power behind the underlying racial tensions of middle America, it wasn't long before a nation, previously quite ignorant of the existence, let alone the properties of 'marijuana', were convinced it was an evil narcotic.

1937 finally saw the introduction of the marijuana tax bill, effectively outlawing the production of cannabis hemp, the same year DuPont patented Nylon.

Research and development by munitions manufacturer DuPont lead to the use of cellulose in the production of smokeless powder, of which DuPont supplied 40% of powder used to Allied forces in world war one. Further developments by DuPont's ammonia department lead the development of cellophane, nylon and dacron, before the introduction of more complex structures such as nitrocellulose lacquers and neoprene synthetic rubber. Such vast technical advances coupled with favourable government intervention provided DuPont the basis from which to diversify into a number of industries such as plastic's, paints, fertilisers and other agricultural chemicals (ironic considering DuPont helped stifle a hemp industry requiring few artificial fertilisers).

DuPont already had the structure for the supply of coal tar and petroleum based chemicals, and it wasn't long before production was centralised and controlled from the input of raw materials through to the patented end product. The textile industry swiftly moved from one of sustainable use of natural resources to one characterised by large scale factory production and the use of hazardous chemicals and coolants. Between 1924 and 1984 over half the cars on American roads were produced by General Motors, whose automobiles ran on tetraethyl leaded fuel7, the basis of which were chemicals manufactured by DuPont. Coupled with the production of such products as plastics, rubber and paints, DuPont had effectively commandeered the chain of supply within the domestic automobile industry.

Considering the way in which a number of powerful, key individuals in both the financial and political world had such a vested interest in the success and application of petrochemicals, with particular interest in the future of DuPont, it is not unreasonable to question the basis of cannabis prohibition. Thus the question has since been raised: "Was the enactment of cannabis hemp prohibition under the contrived name marijuana, a colossal bureaucratic blunder - or was it actually a high level criminal conspiracy to violate antitrust laws"8. Either way, it seems that that the failure of the hemp industry to thrive was due the manipulation, rather than lack, of demand.

2 Andrew Mellon was head of The Mellon bank of Pittsburgh, Pennsylvania, a major financial investor in oil, becoming owner of Gulf Oil Corporation and became Treasury Secretary, appointed under President Warren G Harding, where he remained until 1932

3 see appendix

4 Bias reports on Cuba by the paper had influenced the Spanish American War leading to the term "yellow journalism"

5 see appendix

6 Anslinger was the former assistant Commissioner for Alcohol Prohibition, and was appointed to this position in 1931. The position was held in the Treasury Department, head of which was Andrew Mellon, Anslinger's Uncle-in-law.

7 see appendix

8 Herer

Chapter 4 - Hemp: Politics of Prohibition - United Kingdom

As with a wide number countries, the use of hemp is well documented in the history of the UK.

During the late 1960's early 1970's cannabis became entangled in the politics of the Opiate wars and was subsequently classified as a restricted plant under the 1971 Misuse of Drugs Act, stifling an already struggling industry.

After entering the EC in 1992/3 the UK Government, faced with a growing number of disgruntled farmers, harmonised legislation with that of the EC, providing the opportunity for licensed production. Currently, the UK is the only country within the EU that requires farmers to obtain a licence to grow hemp. The previous licence system requiring individual growers to be individually licensed was changed at the start of 2002, when the Home Office introduced an 'umbrella' licence covering all grower sat a minimal cost of £87, to be held by the processor. Each grower has to complete an application form as well as provide an OS map of the area to be planted, both to be held by the processor. Each farmer holds a copy of both the application form and the umbrella license as Home Office approval, and must inform local police of proceedings.

The varieties of seeds which farmers are licensed to grow is based on an approved list of seeds outlined under EU regulation 1164/89, all of which have a low tetrahydrocannabinol (THC) level9. Since 1993 there has been relatively slow yet steady progress in the UK hemp industry. Hemcore is currently the UK's leading company, set up in 1993 by Harlow Agricultural Merchants (HAM) after obtaining a license for what proved to be successful research in 1992.

At present the majority of UK hemp is supplied to Germany, where an expanding hemp industry supplies 25% of all natural fibres used in the German car industry for insulation and mouldings, with both Mercedes and BMW utilising hemp fibres.

It appears, at present, that there is a distinct lack of statistical evidence concerning the actual size of the increasing European hemp market. However, Dr Michael Karus of the European Industrial Hemp Association estimates the European hemp fibre market to be in the regions of £90 million in 2001, of which approximately 80% is used in pulp and paper industries in France, with the remaining 20% used in both the Austrian and German car industries.UK company Bodyshop, renowned for the promotion of environmentally friendly products and business practices, has been developing and retailing cosmetic products that utilise French hemp seed since 1998, purchasing £60,000 worth of hemp seed in 1999.

9 Carmagnola, CS, Delta-Llosa, Delta-405, Epsilon-68, Fedora-19, Fedrina-74, Felina-34, Ferimon, Fibranova, Fibrimon-24, Fibrimon-56, Futura-77, Santhica-23

Chapter 5 -  Economics of hemp - Economic & Environmental Benefits

Diversification

"Capital employed in agriculture sets in motion more productive labour than that put in manufactures, and thus adds more real wealth to a country"

(Adam Smith - in The Hemp Industry in Kentucky, Brent Moore, 1905)

Without doubt the key characteristic of cannabis hemp in terms of economic benefit to the producer is the fact that this one plant has an output of three raw materials in fibre, pulp and seed, resulting in the evolution of three rather distinct types1. Hemp strains are so easy to cross-fertilise that it is more difficult to keep distinct types separate than in crops with self-pollinated flowers2.  This attribute provides the cultivator the opportunity to select seeds from parent plants with traits specific to their needs, allowing the development of an appropriate strain which, when planted in isolation, will provide the producer with a yield of specified characteristics.

Hemp as an agricultural crop is beneficial in that it is a raw material for non-food products, allowing the use of both marginal and set aside land whilst not contributing to the existing problem (in the EU) of overproduction. In 1992 600,000 hectares of land were under the set-a-side scheme, the equivalent area of hemp would have provided a yield of over 6 million tonnes of biomass and 120,000 tonnes of fibre. Although seeds (and oil) are demanded for their nutritional value, they fall under a different market to that of traditionally farmed food crops such as wheat and barley. The result is a maximisation of available land and resources, without excess supply to an individual market, which ultimately, would lead to a fall in both prices and incomes.

Ease of growth

In comparison to many agricultural crops, hemp is highly resistant and adaptable to a number of climates and geographical conditions, making it an ideal crop for marginal farmlands, devoid of adequate nutrition for sustaining alternative crops. This factor has both national and international implications in that hemp production is not restricted to specialist geographical areas, reducing the industries susceptibility to price fluctuations brought about by unforeseen climatic variations, offering suppliers long-term cost / income stability.

Less developed countries are often located in regions providing (at least to some extent) extremes in weather conditions, such as aridity, and the availability of a crop such as hemp could provide communities with the basis from which to develop a sustainable agricultural industry.

The plant also requires relatively few nutrients in order to thrive, reducing the level of negative externalities brought about by other agricultural activities that require high levels of artificial fertiliser, insecticides and herbicides. Between 1994 and 1996 the area devoted to growing arable crops in the UK increased 6%, whilst the area of all arable land treated with pesticides increased by 18% (69 % of which accounted for by herbicides and desiccants that use sulphuric acid).

The roots of the plant are extremely penetrative, with the central taproot burrowing 12 inches deep in just 30 days. A system of finer lateral roots disperse themselves through the subsurface soil at a depth of 7-8 inches, providing aeration, neutralisation of acidity and soil stability. Research has shown that due to the rapid growth rate and high biomass productivity, the density of the vegetation leaves little room for weeds to thrive and has in fact been found to be a beneficial rotation crop in reducing weeds for subsequent crop plantation. The organic fallout of leaves over it's life cycle, coupled to mulch left by decomposing roots and vegetation have also proved to be a potent natural fertiliser for the follow on crop. Members of the National Farmers Union (NFU) stated that the very nature and characteristics of the hemp plant make it ideal for cleaning up the soil as part of a rotation, it's long roots help condition the soil when it has been damaged by other crops, and also serves to break up hand packed earth.

The ease of growth with regards to both the geographical durability and non-reliance on artificial agricultural chemicals, provides the cultivator with relatively low production and average costs, whilst enjoying the profits such a high yield crop delivers.

1 Page 136 conrad, dewey

2 (conrad p136)

Chapter 5 -  Economics of hemp - Potential Markets

The ability for the cultivator to be able to separate three raw materials from the plant, coupled with developments with regards to the application of cellulose, provide great potential for supply to a number of markets, primarily that of plastics, energy, paper, textiles and food. It can be seen that the application of hemp to such markets provides a number of possible environmental benefits in comparison to existing materials used in the respective industries.

Chapter 5 -  Economics of hemp - Plastics and Building Materials

The work and research into properties of natural fibres by DuPont, has lead to the invention of synthetic materials such as plastic and an increased importance placed on cellulose, at 77% content, the building block for such structures. Celluloid is the earliest known plastic, formed from cotton cellulose in the 1880's, with later developments leading to the production of cellophane, cellulose acetate and cellulose nitrate1.

In today's society, plastic products of one form or another are rarely more than an arms length away, with plastics made into computer disks, plant pots, toys, electrical appliances, telephones, piping, cellophane tape and so forth. It has been estimated that some 13,000 new cellulose products have found their way onto the market since 1938. The majority of plastic products on the market are petroleum based, yet plastics with a cellulose base from plant carbohydrates have all the same characteristics as those formed from hydrocarbons of fossil fuels.

1 Cellulose acetate is used for such applications as artificial silk Cellulose Nitrate and is used in the manufacture of such products as Rayon and varnishes.

Chapter 5 -  Economics of hemp - Energy

A number of studies have estimated that energy costs account for approximately 80% of the expense of living for every individual, validated by the fact that 82% of the total value of all issues traded on world stock exchanges are directly related to energy producers (Exxon, Shell Oil etc), transporters, (pipeline, shipping and delivery companies) refineries and retail sales (agina Exxon, Shell etc).

At present, the majority of the world's energy supplies stem from the burning of fossil fuels, a major source of sulphur and carbon dioxide in the atmosphere, accountable for around 80% of the worlds soil and airborne pathogens. The burning of such fossil fuels is considered by many scientists to be a primary cause of the so called 'green house ' effect, although there are those who yet remain to be convinced.

In order for a truly sustainable economy, the development and application of renewable energy resources is of utmost importance. Whilst traditional forms such as wind, hydro and solar power have global acceptance in terms of potential, such methods are limited to regional applications due to specific natural requirements and relatively expensive technology. Biomass refers to all biologically produced matter, and can be transformed into usable fuels (biofuels) via the thermochemical process of pyrolysis, applying high temperatures to organic matter with little or no air. "The process can be adjusted to favour charcoal, pyrolitic oil, gas or methanol production with a 95.5 percent fuel-to-feed efficiency" (Lynn Osbourne, Biomass expert). The 'hemp car', developed by Henry J Ford in the 1930's was set to run on ethanol fuel, before prohibitionists actions lead to the banning of alcohol.

Hemp is the most productive biomass crop in the world, with some 10 tons per acre produced in approximately four months, providing an abundant raw material from which to produce energy via a number of methods. In comparison to potential alternative biomass crops such as sugar cane, hemp has a relatively low moisture content, thus reducing the energy used in pre-pyrolysis drying process.

The use of biomass energy provides a more balanced carbon dioxide - oxygen cycle in our environment. Where as the use of fossil fuels adds carbon dioxide emissions to the atmosphere from a source that has taken thousands of years to develop, biomass energy provides annual vegetation that in effect absorbs as much carbon dioxide during its growth as it will disperse during the energy conversion process. A recent report by the FCDA, Europe, provided evidence of the benefits hemp can offer as the most economical source of biomass energy available. The FCDA concluded that via the process of pyrolysis, hemp biomass is able to deliver 5000 - 8000 BTU's per pound in weight, calculating that a mere 6% of US agricultural land, if turned over to the production of hemp, could provide enough biomass to supply the current demand for gasoline, oil and diesel.

The report states: "The Cannabis Biomass Energy Equation (CBEE) demonstrates for the first time on record that fuel-energy sourced from the renewable, pollution free resource of flora in the form of Cannabis Sativa, achieves uniquely economical replacement of fuels, and has always been so. There has not been this century, a single ecologically-pertinent fact, theory or postulation embodying practicable potentials as beneficial to the planet and the well being of its people as those of the CBEE, given practical application in the CBRPF (Cannabis Biomass Resource and Pyrolysis Functions) ; this formulation resolves Mankind's most crucial predicament in macroeconomics and Ecology to have arisen since the incipience of The Industrial Revolution"

A recent 'leak' of a government energy white paper outlined concerns of Britain's increasing reliance on imported fuel, siting that 'Britain will become a net importer of gas within the next three years and of oil by 2010, leaving the country "vulnerable" to price increases and "interruptions to supply caused by …… political instability or conflict". (FT) The paper outlined plans for 10% of UK electricity supplies to come from renewable energy resources by 2010. The issue of biofuels was touched on in the recent budget outline whereby the Chancellor announced that bioethanol fuels (on sale as of 1st January 2005) would carry a tax rate of 20p less than sulphur-free petrol. Mr Brown hopes the decision will create a demand for the new "green petrol" and encourage its commercial development2 (Independent). Bioethanol, currently made from sugar wheat and barley will make up a mere 5% of the fuel, mixed with low sulphur fuels, providing added octane levels with reduced emissions.

Political developments such as these highlight the growing importance of cleaner, 'greener' fuels, which, when combined with the unique properties of the hemp plant, show the broadening potential and need for commercial applications of hemp in the UK. The use of hemp crops will provide the opportunity for a decentralisation within the energy industry, reducing the effects of price fluctuations and dependence on foreign supplies and the subsequent impacts that are often felt throughout the economy. Whilst there is no denying the importance of economies of scale, smaller scale production provides sustainable energy and employment for local communities coupled with a more balanced carbon dioxide cycle in the local ecosystem. It can also be argued that widespread application of such energy sources may in fact reduce political (and military) pressures between nations with large oil holdings and those who wish to be in control of them.

2 The Independent, Thursday 10 April 2003.

Chapter 5 -  Economics of hemp - Paper

The problems regarding deforestation and global warming have been documented and highly debated for a number of years regarding both source of inputs and process of production.

Inputs

Paper can be made from virtually any fibrous plant, with the use of fibre hemp dating back over 2000 years, primarily produced from rags containing hemp fibres. Hemp pulp production is now believed to be around 120 000 tonnes per year (FAO 1991), providing a mere 0.05% of world pulp production with no significant production of pure hemp paper, in comparison wood has become the dominant source in recent years supplying approximately 93% of world paper. Hemp has superior productivity than timber in terms of biomass, providing three or four times as much cellulose pulp per acre than wood.1992 figures show that £4 billion worth of tree pulp is imported into the UK every year leaving a trade deficit of £2.3 billion. (The History of Hemp, Derek Bielby), a problem that could at least be partly addressed by increased hemp production in the UK.

Forests are a vital habitat in our global ecosystem, providing bountiful habitats for a wide range of both plant and animal species. Although paper production in Europe utilizes trees specifically grown for the industry, many areas, especially in less developed countries, witness the continued destruction of valuable wooded areas. It is often assumed the land will be rich and fertile for agricultural purposes due to the success of the previous ecosystem. However, areas of deforestation rapidly lose nutrients through soil erosion and degradation due to the lack of vegetation, and crops are often unsuited to soil types.

Process

The paper industry is documented for the chemicals used in the pulping process of materials and the subsequent environmental impacts on the surrounding area. Sulphur based chemicals are required in order to separate fibres from lignin, the natural glue found in plant life that holds the fibrous structure together, resulting in sulfur acid wastes and dioxin runoff causing water pollution and eutrophication. These environmental impacts provided scientists, most notably Dewey and Merrill (USDA) the impetus to research alternative agricultural inputs for the paper industry, of which hemp appeared to be the ideal candidate. Hemp, rich in cellulose, has a comparatively low lignin content of approximately 4- 7%, in comparison to 20% found in wood, resulting in a pulping process with little or no need for harmful chemical additives.

Tests have proven hemp paper to be superior to chemically treated tree-pulp paper, providing added durability and tear resistance, as well as high quality printing paper after being recycled seven times, in comparison to three times in the case of tree-pulp.

Disadvantages

Despite the obvious advantages offered by hemp in the paper making process, it must be highlighted that there are a number of concerns regarding the economic efficiency of production. The use of trees in the paper making process does provide a constant year round supply of raw materials, where as the annual cultivation of the hemp plant is restricted by it's life cycle. As a result there may be additional problems and costs resulting from handling, preservation and storage in order to provide a constant supply of raw hemp to the processing mills.

Chapter 5 -  Economics of hemp - Textiles

The predominant natural fibre in the textile industry is cotton, meeting approximately 50% of world textile demand, although the term 'natural' serves to hide numerous environmentally damaging effects that cotton production causes. Cotton is grown on a mere 3% of the worlds agricultural land, requiring warm climates and high moisture levels, provided via natural humidity or more often irrigation channels. The difficulty of cultivation is highlighted further by the fact production uses 11-15% of the world's pesticides (over 275 million pounds used annually in the US) and 7.5% of world's artificial fertilisers. As a result, a number of ecological disasters such as the Aswan Valley, Ethiopia and the Aral sea, Uzbekistan, have been largely attributed to cotton cultivation in surrounding areas3. The modern textile industry has relied heavily on man made fibres (MMF) since the development and patenting of Nylon by DuPont over the 1920's and 30's USA.

Despite the obvious negative environmental externalities that occur due to the production of such fibres as cotton and Nylon, there is no doubting that there are applications under which these MMF's and natural fibres can offer specific beneficial characteristics. However, disregarding these 'special cases', there is a clear market opening for hemp to provide a superior, 'greener' textile fabric from which to produce a myriad of products. An acre of land will produce about 1000 pounds ( ???? grams ) of primary hemp fibre, about two or three times more fibre than cotton or flax, the latter of which is quite similar to hemp and serves all the same industrial purposes. (Brent Moore). The primary fibres of the hemp plant stretch the length of the stem, in comparison to the 1 to 2 centimetre fibres in cotton, providing a more durable fibre that also has insulative qualities and improved UV protection.

Through both research and experience it has been shown that hemp is comparatively stronger and more durable than a number of its natural competitors such as cotton and flax.

3  refer to appendix

Chapter 5 -  Economics of hemp - Food & Nutrition  

"Hemp seed has been used as a traditional source of nutrition by numerous cultures for thousands of years and increasing research in recent years has outlined the nutritional properties of hemp seed and the subsequent hemp oil (30% of seed content) that can be extracted from the plant. Hemp seed is from the 'achene' family of fruits and coupled to it's beneficial properties of cleansing and moisturising the skin, is a rich source (approximately 80% of oil volume) of Essential Fatty Acids (EFA's)4. These EFA's cannot be produced by humans internally, are vital for the structure and functions of tissues in the body and are found in 'biochemically optimal' proportions for the human diet in hemp seed oil5. The seed also contains 25% protein, more digestible than that of soy protein, resulting in relatively small qualities providing an adult with daily nutritional requirements.

As stated by Michael van Straten, author of 'Super Foods for Children, " It's really exciting to see the wheel coming full circle. For thousands of years hemp has been a source of health giving benefits and now thanks to the most modern scientific research we see yet again that the old wives knew best. Hemp oil will make a major contribution particularly in the relief of distressing skin conditions such as eczema."

4  Omega 3 alpha linolenic, Omega 6 lioleic and Gamma Linolenic acid (GLA)

5 the optimal being a ratio of 2:5:1 of the respective components.

Chapter 5 -  Economics of hemp - Medicinal

Historically, hemp has gained a reputation as somewhat of a healing herb and renewed interest and research has opened the way for the applications of beneficial properties of hemp in more natural medicines. Recovered texts from a variety of locations including China, Egypt, Africa, Portugal and Mexico, have recommended cannabis for a variety of ailments such as difficult childbirth, menstrual cramps, rheumatism, fevers, dysentery and insomnia to name but a few. Technological advances and research in recent years lead to the identification of a receptor in the human brain uniquely suited for THC, leading to further research into "the development of (synthetic) drugs that possess marijuana's positive medicinal effects without it's negative effects"6. Negative effects are regarded as the feeling of intoxication and disorientation as well as impaired perception and memory loss.

6  Lewis Judd, director of National Institute of Mental Health

Chapter 6 -  Conclusions

In today's society it is no longer possible to consider economic activities simply in terms of profits and efficiency, rather business practices must be analysed from a wider perspective considering economic, social and environmental consequences. The text has outlined what can only be described as a highly questionable, if not illegal force behind the prohibition of cannabis hemp in the US, which ultimately lead to the decline of the hemp industry in a number of countries. Such political influence has undermined the attributes of hemp that make it a truly versatile and important good, in terms of both economic and environmental benefits, disregarding the market forces of supply and demand.

UK Agriculture Industry

In terms of the UK agriculture industry, perhaps the greatest benefit an increase in hemp production will bring is crop with the versatility to help stabilise notoriously unstable incomes. Coupled with the ability to 'breed' seeds in order to specify required characteristics, farmers will be provided, in effect, with increased 'mobility' of stock, minimising substitution effects brought about by price fluctuations with the power to redirect inputs for production in different markets. Areas of marginal or set-a-side land, previously underutilized, would benefit from hemp as a monocrop, rejuvenating soils whilst providing significant biomass for process to non-food products.

The fact that hemp has the ability to adapt and thrive in a variety of geographical locations provides the opportunity to reduce reliance on centralised industries, previously restricted by the location of raw material inputs, most notably in the energy sector. Local production will offer the surrounding community employment with the reduced risk of price fluctuations caused by 'macro' economic factors, with obvious environmental benefits. The cultivation of a crop requiring so little agricultural chemicals, coupled with increasingly strict environmental measures in AEP's would lead to a reduction in the level of both air and water pollution.

Research has shown that hemp cultivation can take place annually as a monocrop or as part of a balanced rotation with other agricultural products, however there is some argument that the latter option would prove more productive. It would therefore seem beneficial to the industry if the intensity of hemp cultivation, if promoted, were dependent upon location.

It must be noted that recent changes in EU agricultural policy and subsequent policies implemented by the UK government are extremely promising in terms pushing the industry in a more sustainable direction. Much praise has to go to the 'hempsters' that have fought long and hard for the right to grow hemp, with subsequent research leading to increased interest and production in the UK, all be it minimal.

Global

The environmental advantages that hemp holds over a number of alternative products, such as cotton and tree-pulp, in terms of both inputs and process, have been clearly outlined. Whilst the benefits to an individual nation are clear to see, the full potential of hemp as an economic resource will not be fully appreciated until it has been integrated into agricultural industries throughout the world.

Appendix

SOURCES:

1950: OEEC (1956). Employment is calculated as the percentage of the total active population. National income is calculated as the percentage of Gross Domestic Product at factor cost.

1973: European Commission, Agricultural Situation in the Community (1975). Employment is calculated as the percentage of total employment. National income is calculated as the percentage of Gross National Product at factor cost.

1997: European Commission, Agricultural Situation in the European Union (1998). Employment is calculated as the percentage of employed civilian population. National income is calculated as the percentage of Gross Domestic Product at factor cost.

Appendix -  Aral Sea, Uzbekistan

"The Aral Sea, Uzbekistan, is a stark example of the negative environmental effects that cotton production can have on the surrounding area with the presence of cotton fields since 1960, helping the CIS become the UK's second largest cotton supplier. Due to the nature of cotton, cultivation has required the diversion of two central Asian rivers, the Amur Dar'ya and the Syr Dar'ya, in order to provide sufficient irrigation to the fields of Uzbekistan, resulting in a significant fall in levels of runoff to the Aral sea. Since 1960, the water level of the Aral has fallen 16 metres, the coastline retreated some 50 to 100 kilometres (resulting in an increase in temperature of 1.5 C) with total surface area of the lake decreased by almost 50%.

The quality of the surrounding delta and floodplains has consequently fallen, exposing the soil to wind erosion, leading in many places to loss of wildlife, desertification and salinization. This loss of farmland, coupled with increased levels of water pollution due to widespread use of agricultural chemicals in the area, has lead to increased health problems for the local community due to lack of food (fish species has fallen from 24 to 4, whilst animal species has fallen from 173 to 38) and polluted drinking water (accountable for 80% of disease in the area). Health implications include local epidemics, increased rates of cancer, liver and kidney disease, birth defects, with an infant mortality rate of 46 per 1000.

The introduction of cotton production has lead the Aral sea, once the fourth largest body of freshwater in the world, to become a toxic and infertile wasteland.

Appendix -  Nicaragua

Nicaragua experienced it's peak in cotton production in 1977/78, with fields covering some 436,000 hectares. However, increasingly heavy use of toxic insecticides lead to the reduction in 'beneficial' insects and an increased resistance for the harmful insects that remained. By the late 1980's, pesticides accounted for approximately 50% of production costs, leading to widespread pollution of the surrounding area and numerous serious health problems for the local communities.

A UN study estimated that at the peak of cotton production the social and environmental costs to the are to be in the region of $200 million, in comparison to an income of $141 million. Such agricultural practices cannot be sustained and by 1990 production had fallen to only 35,000 hectares, leaving behind numerous environmental and social scars.

Appendix -  Henry J Ford

After extensive research Henry J Ford manufactured a prototype plastic car, made from a 70% combination of natural cellulose fibres from hemp, wheat straw and sisal Bound with 30% resin binder.

The 'natural' components meant the car was two thirds the weight of a regular car, providing a more fuel efficient vehicle.

Appendix -  'Marijuana', the 'evil narcotic'

Whether through genuine misguidance or tactical manipulation, Hearst's newspaper articles introduced cannabis hemp under a new term to the American public. The term 'marijuana' is thought to stem from mariguango, the Portuguese term for intoxicant, and was claimed by Hearst to be a narcotic. In medical terminology, a 'narcotic' substance will lead to a state of narcosis with the possibility of death, such as opiates or 'dope'. Cannabis Sativa or 'marijuana' is not such a substance, undermining it's legal ruling, and yet was often referred to as 'dope', resulting in false comparisons with the opiates.

It is interesting to note that Mexican troops, under the leadership of Pancho Villa, had seized control of roughly 800,000 acres of Mexican timberland owned by Hearst. Throughout the 'anti-narcotic' campaign, Mexicans and 'Negroes' were victimised with a torrent of allegations claiming marijuana caused them to act with violence and disrespect toward the white man, rape white women and listen to anti-white "voodoo-satanic" music, jazz.(herer) The campaign acted as a smokescreen behind which hemp and it's commercial potential were effectively replaced with marijuana and it's 'negative' effects. In a time where segregation and racial tensions were deep and widespread, it also provided a catalyst for the persecution and imprisonment of many millions of Negro and Mexican citizens.

Appendix -  Bibliography

Books

Ritson, Christopher; Agricultural Economics - Principles and Policy;

Granada Publishing Limited 1977; Ch 1, 2, 3, 4

Brownlee, Nick ; This is Cannabis; Sanctuary Publishing Limited 2002

Conrad, Chris ; Hemp - Lifeline to the future; Creative Xpressions Publications 1994

Herer, Jack ; The Emperor Wears no Clothes

Publications

Roekel (jr), Gertjan van ; Hemp Pulp and Paper production

Agrotechnology, Wageningen, Netherlands Clement, Barrie

The Independent, Thursday 10th April 2003 Newman, Cathy

Financial Times, February 22/23 2003

Websites

http://www.naihc.org

http://www.hempfood.com

http://www.globalhemp.com

http://www.ccguige.org.uk