Investors with a taste for risk are betting on a new product – the cannabis plant grown in the southwest province of Yunnan. It can produce the marijuana drug or hemp which is refined into oil, seed foods, wax, resin, paper and other products.
Yunnan accounts for half of global acreage of this hemp for industrial use. This year, 30,000 farmers will grow it on 800,000 mu (53,600 hectares) of land and the area under cultivation will grow in coming years.
The province has designated it as a priority crop for 2012-2105, with an investment of at least 2 billion yuan (US$320 million). The hemp is used in foods, pharmaceuticals, health products, daily items and high-technology goods.
Yang Kunlin, managing director of Yunnan Ruilinke Forestry Technology Co., said Dali city has set aside 5,022 mu (335 hectares) to grow hemp and created a committee to supervise the planning, development and the capital raising. “We are in the process of discussing the project with several investment companies,” he said.
The leading firm in the province is Yunnan Industrial Hemp Inc. which was founded in 2001 and is a wholly owned subsidiary of Yunnan Hanpu Health Products Co. Ltd.
According to its website, it is “the first professional industrial hemp enterprise and the only legal unit planting, processing and operating industrial hemp in China”.
In 2012, China produced 50,000 tons of cannabis sativa seeds, accounting for 38 per cent of global production. This industrial hemp contains less than 0.3 per cent of THC, a psychoactive compound; the plant used to make marijuana contains 5-15 per cent of THC.
In the first 11 months of 2013, China exported 591 tons of hemp yarn and 840,000 meters of woven hemp fabrics, mainly to East and Southeast Asian countries. It also exported a small amount of raw hemp to South Korea and Japan for scientific research. Yunnan Industrial Hemp has sold products to the United States, Canada, Europe and Australia.
It has been a long journey to get to this point.
Hemp or marijuana has been grown in Yunnan for centuries, especially by minority groups who regard it with special reverence. They have long used it for many purposes, including the weaving of clothes; garments made of it are considered essential for a proper wedding ceremony. These minorities did not use it as a drug, so the authorities did not limit the cultivation.
But this changed from the late 1980s. As China opened to mass tourism, western backpackers found that marijuana was available in the bars, restaurants and coffee shops of Dali, Lijiang and other cities in Yunnan. Dealers and traders obtained supplies and sold the drug to them.
This changed hemp from being an agricultural product into a criminal matter. The problem for the Yunnan government was how to balance two objectives – the traditional demand of farmers, especially in minority areas and the need to stop the supply of illegal substances.
In the early 1990s, scientists in France and Holland began to develop seeds of hemp with very low content of THC that could be used in industry. A team from the Yunnan Agricultural Research Institute followed suit and developed its own strains.
The first to receive a certificate from the central government was Yunnan Number One in 2001. This was followed by several others. The plants grow well in poor-quality land and do not need fertilizer. Yunnan Number One is China’s first and most widely planted industrial hemp.
The provincial government had discussions with the public security authorities over the ways to ensure that only low-content THC plants were grown. Regulations on this were published in January 2010, the first in China, which gave the green light to widespread production.
Under the regulations, the police must conduct detailed supervision of the growing, processing, transport and storage of the crop, to ensure that it is not used to make drugs. These inspections are most intense in September and October, the harvest time for the plants.
Yunnan leads the country in the production of industrial hemp. Other provinces have not passed comparable regulations which would allow farmers and companies to move into large-scale cultivation.
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