Industrial Hemp

Mr PEDERICK (Hammond) (11:55): I move:

That this house—

(a) notes the state government approved the first cultivation licences for industrial hemp in April 2018;

(b) acknowledges that it is anticipated that within five years an expanding industrial hemp industry in South Australia could have a farmgate value of $3 million per year; and

(c) highlights the excellent work undertaken by SARDI, particularly through industrial hemp trial crops in the Riverland and South-East.

Industrial hemp is a versatile product with diverse applications from clothing to building products and food. Industrial hemp is a summer crop and the sowing of the inaugural crops is set to take place in late spring through to early summer.

On 14 April 2017, parliament passed a bill providing the power to make regulations to establish an industrial hemp licensing scheme. I want to acknowledge minister Ridgway from the other place, who did a lot of work in getting this legislation through. In South Australia, the Industrial Hemp Act 2017 and the associated regulatory framework, which allows the cultivation of industrial hemp and the processing and manufacture of industrial hemp products, came into effect on 12 November 2017.

The Industrial Hemp Act 2017 requires that industrial hemp must be grown from certified hemp seed and that the certified hemp seed must be sourced from hemp parent plants with a concentration of THC in leaves and flowering heads of not more than 0.5 per cent and must be accompanied with a certificate from an approved laboratory testing the parent plants. It provides no psychotropic effect from its consumption.

The Department of Primary Industries and Regions South Australia (PIRSA) is responsible for issuing licences to authorise the possession, cultivation, processing and supply of industrial hemp in South Australia. Under the regulatory framework growers, processors and suppliers will be required to be licensed. Licences will be issued by PIRSA in liaison with SA Police and SA Health. To support this new industry development, PIRSA has funded field trials of five varieties of industrial hemp.

These trials are managed by the South Australian Research and Development Institute in the Riverland and in the South-East to measure grain, fibre quality and yield. The trials aim to determine the crop's optimum sowing and growing period, assess different industrial hemp varieties and investigate the suitability of the Riverland and the South-East for hemp grain and fibre production. I think they are finding out what soil types are best as well and the amount of water needed and that kind of thing. Obviously, being a summer crop, it is reliant on high rainfall, and you have to be in the right area for that, but there is also the potential for irrigation under pivots and the like.

With regard to licence applications, the first industrial hemp crops are set to be sown in South Australia later this year following approval of the first cultivation licences. The Minister for Primary Industries and Regional Development, the Hon. Tim Whetstone, announced in April the issuing of the first industrial hemp cultivation licences. This was a significant milestone towards the establishment of an industrial hemp industry in the state. It is the establishment of an exciting new agricultural industry here in South Australia that will grow our economy, particularly in the regions.

Based on current predictions, it is anticipated that within five years an expanding industrial hemp industry in South Australia could have a farmgate value of $3 million a year. Under the regulatory framework, which is administered by PIRSA, potential industrial hemp growers, processors and suppliers will be required to meet certain conditions in order to be granted licences issued by the state government.

A licence can only be issued by PIRSA if the applicant and each associate of the applicant is deemed to be a fit and proper person by South Australia Police and the area of cultivation is greater than one hectare, so you have to be serious about growing it. Independent crop testing is conducted by authorised PIRSA inspectors to verify that the THC content of all industrial hemp crops meets legal requirements. Crops exceeding 1 per cent THC will no longer be industrial hemp and will potentially be referred for criminal investigation under the Controlled Substances Act 1984.

With regard to some of the market information about growing industrial hemp around the world, over 30 nations grow industrial hemp. The largest hemp seed-producing nations are France and China, and China and South Korea are the largest fibre producers. There are also substantial hemp industries in Canada and Europe. There has been significant global innovation, research and agronomy and the development of high-performance hemp products in the last 15 years. Canada's export of hemp products grew from about $10.4 million in 2010 to over $90 million in the 10 months to October 2015.

The latest Australian figures from 2012, with only 630 hectares planted, equate to $1.6 million in value. Hemp has been grown in the Eastern States and Western Australia for some time, with Tasmania having over 20 years' experience. I have been to Tasmania and seen not so much hemp crops but I have witnessed the poppy farming that goes on, obviously for legal pharmaceutical opium. There is quite strict compliance around that, obviously, and there are signs on fences warning that you should not be in there getting amongst the product. That will be very similar to the legislation around industrial hemp.

These compliance arrangements have been challenging. It has been challenging for people to meet the strict arrangements, and it has to be strict because you are dealing with a hemp product even though it has a low THC level. Growers first get excited about the opportunity to grow this product, but then they have to go through all the issues with the people involved in compliance, including the police. I have had discussions with people at all sorts of levels about not just industrial hemp but also medicinal cannabis. I have heard a lot of anecdotal stories. Some people say that medicinal cannabis is a great product, but it is highly regulated as, of course, it should be, and some say it is too hard to get to for the pain relief that they need.

There will be more work done in the future, but I believe, as far as medicinal cannabis goes, that there probably are opportunities into the future, as long as it is managed with the appropriate compliance. It is the same with industrial hemp as a fibre. It has been probably over 25 years since someone who lived not far from my place—a lady called Carolyn Graham, who now lives at Arthurton in Narungga—was involved in trying to get industrial hemp production going then. It is just a matter of time to break down the mindset that it is a hemp product, and it is a legal hemp product, but you have to manage the legalities, the perceptions and so on.

It certainly provides another opportunity for South Australian growers who produce. By the time it gets through to finished food, I think it is over $25 billion worth of product per annum in this state. You might say, 'In five years' time, we might only have a $3 million hemp crop,' but it is like everything: you have to go through the process. You have to see how it goes. If it does go alright, you have to sort out the agronomy and understand the climatic conditions, understand how much water is the optimum amount to be put on, obviously in an irrigated set-up, and what soil type. In this state, there is a whole range of soil types. You can go from non-wetting sand through to light loams, loamy ground and rocky ground.

I think in the first couple of years, after these initial trials, when we get to broader scale production of industrial hemp, we will certainly see where it shines. For a lot of people, it will be about seeing how it works on their different farms and the different set climate for their area. When I say 'the set climate', obviously the climate is not set, but it will have variabilities that will not be the same as perhaps 300 kilometres down the road.

I think there is lots of opportunity. Certainly, as a summer crop, it can be sown on top of another crop. To me, it appears that it needs a reasonable amount of water, so there will be opportunities in groundwater situations, whether it is places like the Mallee wells in my electorate or in other groundwater areas like MacKillop and further down into Mount Gambier. People could quite possibly, and probably will, use their River Murray allocation water; that would be quite suitable.

It comes down to the economics. If people work out that the economics for the crop are going to work, they will grow it; it is as simple as that. Certainly, under irrigation, it is a lot better than I am used to over my lifetime, which is dryland farming. The one thing you always want to manage is the water. If you know you can manage the water, you just have to manage the soil type, the date of sowing and fertiliser inputs.

That is something else that will need to be worked out over time: what is the best time to sow; whether it is too cold or too hot, obviously going into a summer crop situation; whether or not to use urea, liquid nitrogen additions or trace elements; and what are the best inputs to get the appropriate output? As with anything in farming, especially cropping, you can go hard and get burnt at the other end because you get a tight finish. Under irrigation, it will be a bit different, because you can manage that water, as long as you have the appropriate amount under licence.

I think there is a lot of potential here. It will be very strictly controlled, which I fully understand, but I think it gives South Australian farmers who have the opportunity to grow this spring/summer crop another option for profitability and will help augment the great agriculture sector that we have in this state. It is certainly something that will benefit the regions, but not just the regions; it will benefit the whole economy going into the future. Like most people say, 'If farmers are making money, they spend the money.' If you can make money out of a crop or your stock, that is exactly what will happen.

I wish the industry all the best. There will be some headaches and there will be some failures, but if you do not have a go you will not know. To people who are proposing to get into industrial hemp growing and supply, I say: go into it with open eyes, but I wish you all the luck into the future.