Statement of The European Industrial Hemp Association (EIHA) 2007-01-23

www.eiha.org

In the recent proposal for „common organisation of agriculture markets and on specific provisions for certain agriculture products“ it is written, that flax long fibre processors should receive an increased processing aid of 200 €/ton and the short fibres processors should no longer receive a processing aid at all.

Unfair competition flax - hemp

Firstly this will lead to unfair competition between the flax industry, which mainly produce high value long fibre for export to China and as low value by-product short fibre, and the young hemp industry, which only produce technical short fibre (see figure).

Competition to exotic fibres

Secondly and more important it really endangers the European Hemp Industry. This is because many of the final technical applications of short fibre Hemp are in direct competition to exotic, tropical fibres like jute sisal. Over recent years the EU produced Hemp Fibres have been at the same price level as the imports of jute, kenaf and sisal: 0,50 - 0,60 €/kg for fibres non-wovens and composites, depending on quality and amount.

Without processing aid . . .

Without the 0,09 €/kg processing aid EU Hemp fibres will be more expensive than imported jute, kenaf, and sisal and Hemp will significantly lose its market share. In addition short fibre flax will be cheaper, because the producer can cross subsidise his flax short fibres with the profit from the long flax fibre sold to China and their increased processing aid. So again hemp fibres will lose markets.

Hemp: Full value added chain in the EU

Whereas the European Flax Industry is extremely dependent on the exports to China, the hemp industry is a closed economic cycle. Hemp is grown and processed in the EU: Hemp fibre is processed to speciality paper, insulation material and natural fibre reinforced / composites in the EU. Only the final products like speciality papers or (door panels in) cars are exported. The whole value adding takes place in Europe and in fact many steps are conducted in a regional context.

WTO and FAO realized this situation and their criticism of the natural fibres aid in the EU is only focused on the support of flax fibre exports to China and other non-EU countries.

In addition toHemp fibre the shives (woody core of the Hemp plant) are all processed in the EU to animal bedding, particle boards and building materials - again a closed economic cycle kept within the EU. Hemp for building can offer the Construction Industry a dramatic reduction in Carbon emissions when compared to conventional materials.

Increasing demand for technical short fibres

Most importantly, in our opinion the demand for technical short fibres from fibre plants in applications like composites (replacing plastics, synthetic and glass fibres) or insulation (replacing mineral and glass fibres) is increasing in the EU and indeed worldwide. Hemp fibres fit very well to the technical demand of these industries and the prices are - with the processing aid - competitive to jute, kenaf and sisal fibres. Over the next five or ten years with increasing prices for the exotic fibres EU processed hemp fibre could become more and more competitive. Therefore after five or ten years the processing aid may no longer be as important as it is today due to increased market share and the ability to raise prices.

Hemp and environment

We can also highlight the other good properties of hemp cultivation in respect to the environment. Hemp needs no pesticides or herbicides, in fact no agrochemicals whatsoever are used on this crop. Hemp also leaves the soil in excellent condition for the following crop. Growers have reported their best cereal yields with Hemp in rotation.

The next years

To stay alive over this period, the hemp industries need the continuation of the existing aid of 90 €/t and a fairer competition with flax. If we cannot realise this we fear that the EU natural fibre industry will be, over the next years, just a raw material export industry to China. Raw processing will only take place in France, Belgium and the Netherlands.

We must point out that there is a huge potential for new technical short fibre applications! The hemp industry is still a very young and small industry, finding their place in competition with with established flax, jute and sisal businesses.

Single aid could be the solution

We are fully behind and agree with the analysis of Ernst & Young concerning the state of the flax and hemp industry in the EU („Evaluation of the Common Market Organization for Flax and Hemp, Paris, Sept 2005“). This was a recent report commissioned by Brussels. We also support the proposal Ernst & Young developed: One single aid for all natural fibres processed in the EU - the same aid for long and short fibres of flax and hemp. In our opinion this would lead to a fair competition between hemp and flax and also both industries could live with this aid, if the level of the single aid is not too low. (The flax industry will then receive a single aid for their long and short fibre).

Please note the young hemp industry’s potential for a sustainable economy and rural development by just modifying the recent proposal without increasing the amount of the aid budget.

 John Hobson, Hemcore Ltd. (United Kingdom) and President of EIHA
 Cesare Tofani, Ex-Managing Director of Fibranova (Italy) and first depty of EIHA
 Bernd Frank, Badische Naturfaseraufbereitung GmbH (Germany) and second Deputy of EIHA
 Michael Carus, nova-Institut (Germany) and Managing Director of EIHA

The statement is also supported by the following companies and associations

 CELESA (Spain), EIHA-member
 Deutscher Naturfaserverband (DNV) (Germany), EIHA-member
 Fibranova (Italy), EIHA-member
 GreenGran B.V. (Netherlands), EIHA-member
 HempFlax Netherlands B.V. (Netherlands), EIHA-member
 HempFlax Duitsland g.m.b.h.(Germany), EIHA-member
 Hempro International e. K. (Germany), EIHA-member
 NAFGO GmbH (Germany), EIHA-member
 PerfectPlant (Estonia)
 ValBiom, University Gembloux (Belgium)

Individuals

 Boris Sanas (Slovakia), „Why not Hemp?“ / SEZ, EIHA-member
 François Desanlis, Hemp farmer (France), EIHA-member
 Marcel Toonen, Plant breeder (Netherlands), EIHA-member