Uttarakhand is the first state in India to legalize industrial hemp to develop a regulated legislative framework to allow cultivation, production, and marketing of industrial hemp for giving a boost to the agro-economy of the Indian Himalayan zone.
With the growing market for hemp products, the question of economic viability for the farmers of Uttarakhand and revenue generation for the state economy has to be addressed at the initial stage of the first phase of cultivation. The main concerns, based on the past experiences of Canada & the USA, are the potential socio-economic impact of this controversial crop and whether any expected profitability would compensate for the additional monitoring costs. Uttarakhand hemp industry could fully develop as a commercial enterprise if the hemp crop could provide economic benefits and jobs during growing hemp market opportunities. There are thousands of potential products of Hemp such as clothing, cosmetics, paper, food, biofuels, feed, construction material, insulation, animal beddings, car molding to name a few.
In Uttarakhand, Hemp has a history as old as Himalayan civilization’s existence, where it was used for household usage, food, and medicine. Legalizing the production and marketing of industrial hemp has initiated a debate among national and state lawmakers addressing this commercial crop. The Central Board of Excise and Customs is the governing authority for inspecting and giving permission for the production of Industrial Hemp with the condition of THC lower than 0.3%. The cultivation and production of hemp fall under the state list, therefore, the creation of entrepreneurial activities in the hemp industry comes under state government purview. Presently, the Uttarakhand government has permitted the use of seed and fiber only prohibiting the use of flower, leaf, and stem of industrial hemp, which constitutes a major plant production. Additionally, the biggest obstacle for the cultivation of industrial hemp and the production of raw material for hemp industries is – land acquisition. The dark side of cannabis (with high psychoactive THC levels) and deterrent rules have created a social stigma amongst the public and the government, which has resulted in obstructions in the growth of this industry. Land reforms are necessary to lay a foundation for the futuristic Hemp industry. The existing long and tiresome paperwork for permits of industrial hemp cultivation has also made farmers and landowners unenthusiastic and dispirited towards this plant. The government should take strong steps to confirm prompt and timely licenses to inspire farmers to take industrial hemp cultivation on a big scale. This will generate more employment opportunities for the youth of Uttarakhand. Hemp could be a major answer to the question of migration from rural villages to urban cities for employment opportunities. The need of the hour is to prepare the new version of the prevailing Hemp policies to pave a path for skilled entrepreneurs of Uttarakhand.
Despite Uttarakhand’s traditional history with the crop, the success of the Uttarakhand Industrial Hemp industry is ultimately dependent upon its profitability for the farmers, processors, and manufacturers compared to other crop options.
China’s Past Example: Though there are lots of conviction around the immense possibility of Hemp there are many experiences in the past which would help us better understand the way forward for the maximum utilization keeping in consideration the law of demand and supply. In the late 1980s and early 1990s, China’s dumping of hemp seed on the world market has substantiated that increased production would lower international prices. During that period the Hemp seed prices saw a phenomenal decline of 43% !!
To carry forward on the right note, we need a precise understanding of Hemp production profitability in Uttarakhand !!
The direct profit potential of industrial hemp is the most important component of a farmer weighing its economic viability. Many aspects of risks for industrial hemp in Uttarakhand are yet to be determined. Production risk from fluctuating yield is yet unknown. Price volatility for fiber and seeds might be considerable. In this case, policy risk is especially uncertain because of the possibility of changing legal conditions.
Knowing the effects of Hemp on yields of other crops in rotation as well as the competition of resources is important.
Consequently, net profits are highly speculative for the Indian hemp market given unknown market and non-established infrastructure and cost of compliance. Prices and yields are difficult to predict leading to wide ranges in costs and returns.
To establish Uttarakhand as the hub of industrial Hemp in India there are a lot of remaining unknowns and unanswered questions for further analysis and production research such as;
- Does Uttarakhand have a competitive advantage in terms of growing seasons and soils to generate higher yield, and/or better-quality hemp?
- What would enable Uttarakhand to become a competitive cost producer compared to other states and countries?
- Will Uttarakhand draw processors and other vital infrastructure?
- What hemp products hold the most opportunity for Uttarakhand’s acres/jobs?
- What about opportunities for certified seeds?
- Will consumers pay more for the products made from industrial hemp-based on alleged environmental benefits & uniqueness/novelty of hemp products?
- Will the existing hemp policy be structured to create a transparent and simple framework to assist farmers, producers, processors for full utilization of Hemp opportunity in Uttarakhand?
- Will the crop insurance market arise for industrial hemp in Uttarakhand and would it be subsidized?
To answer all the above questions and to lay the right foundation of the policy framework for Hemp, the administrative authority ie. Excise department should involve leading Indian organizations that are pivoting the hemp cultivation projects across states and strongly lobbying the hemp industry. They should be recommended by the government also as standard consultancy firms for entrepreneurs aiming to enter this multi-million industry.
For centuries, Hemp has been at the epicenter of Indian civilization as a way of life. This is the right time to bring back this super-crop into the mainstream business activity for reaping the immense economic benefits for India. Along with nations like the US, Canada, and China, Indian entrepreneurs must come forward and enter the blooming International hemp industry, Approx. 58 % of the Indian population thrives on agriculture for livelihood, Hemp would do wonders if it could become a major part of Indian Agriculture.
About Author: This article has been written by Hemant Nav Kumar, President UTF. U-Turn Foundation has been advocating the inclusion of leading Uttarakhand based state organization, that is accelerating the hemp industry, in the policy-making & implementation of the hemp cultivation projects across the state. It would a great value-addition to the Uttarakhand Hemp Industry.