As the world seeks sustainable and renewable sources to replace products derived from fossil fuels, there is an opportunity for Nelson Mandela Bay to be the trailblazers of the “green gold” industrial hemp production value chain.
In his State of the Nation address earlier this year, President Cyril Ramaphosa stated that South Africa aims to lead globally in commercial production of hemp and cannabis for industrial and medicinal uses. Government policy is now moving to support regulated, large-scale production and exports, and facilitate private sector investment.
It is estimated that the hemp and cannabis industry in South Africa already employs about 90 000 people, mostly in rural areas and mostly informally. Unlocking broader industrial and commercial uses of hemp can grow these numbers exponentially, with associated socio-economic impact on neglected areas.
Hemp is valued as a hardy, high-yielding crop, and its high value for industrial purposes lies in the strength, length and durability of the fibres from its stem, and the absorbent qualities of the cellulose-rich inner stalk (the “hurd”).
Processed hemp fibre and hurd are sustainable alternatives to fossil fuels and plastics in applications including biodegradable plastics and textiles, construction materials, packaging, hemp seed oils, and biomass for energy generation and oil/fuel spill clean-ups.
The relevance of locally-grown and processed hemp for Nelson Mandela Bay applies particularly in its potential to replace plastics in locally-manufactured automotive components like roof and boot liners, sound-deadening and insulation materials, and battery casings that are supplied to multinational vehicle manufacturers. These components not only have the potential to be utilised locally, but also to be exported for use at assembly operations in other markets around the globe.
These export-driven operations produce vehicles for a range of global markets with requirements to demonstrate reduced carbon footprint of manufacturing and increased levels of components from sustainable sources.
However, previous attempts to stimulate industrial hemp production in South Africa have failed due to producers not being able to meet the consistency in both quality and volumes required in the value chain of processing plants, industrial off-takers (eg, a manufacturer of boot liners) and end users (eg, the vehicle manufacturer).
The Nelson Mandela Bay Business Chamber’s Local Economy Reinvention Think Tank has formulated an innovative solution – a proposal for an industrial hemp value chain that starts from the end point of industry requirements and works back from there into how to establish and support farms able to consistently deliver to these.
Our recently published white paper on an industrial hemp value chain is the product of extensive stakeholder consultation – with the hemp growing sector, hemp processors, providers of seeds and technical expertise, accredited training providers in hemp cultivation, relevant government departments, local manufacturers who could potentially use the hemp fibre to produce more sustainable auto components, and their vehicle manufacturing customers.
Most importantly, a number of these prospective end users have signed in-principle off-take agreements – a key success factor for investor confidence.
Considering the high unemployment in the Eastern Cape and the need to stimulate rural development, the proposal has development of small-scale farmers and SMEs at its core.
They will be the drivers on the growing side, supported by ongoing training and mentorship in farming and business, an end-to-end quality management system, and partnerships that we are establishing with co-operatives and development agencies.
The project is currently preparing an initial trial and training phase to commence with 10 farmers on a 10ha training farm, to be followed by a pilot phase with 10 co-operatives operating 10ha of land each. Thereafter, the white paper sets out a scaling-up plan.
In terms of processing, the existing cottonising and non-wovens plant in the Coega district will handle the fibre processing needs of the first phase of production, but investments to accommodate larger volumes will be required as the project scales up.
Farming of industrial-quality hemp has environmental and regenerative agriculture benefits including reduced water consumption (requiring 1/5 of the water needed by cotton), lower pesticide and fertiliser use, improved soil health, and efficient carbon sequestration.
The latter opens opportunities for carbon credit trading, which provides farmers with an additional revenue stream, and corporates with the option of trading enterprise and supplier development (ESD) investment for carbon credits.
Publication of this concept proposal stems from the brief to the Think Tank – to generate innovative, out-of-the-box ideas to diversify and future-proof our local economy. The Think Tank does the groundwork of assessing the feasibility and logistics of implementing these concepts, for consideration by entrepreneurs, investors, green venture capitalists, and government.
Identified projects must be scalable and self-sustaining, able to stand up as viable business cases.
Thus, the hemp value chain proposal presents a detailed pre-feasibility case, with an operating model, scalability plan, socio-economic impact assessment, financial analysis of investment requirements and revenue projections, and risk assessment and mitigation measures.
With its focus on empowering small-scale farmers and communities, sustainability in both agriculture and manufacturing, and development of manufacturing-oriented industrial value chains, the project is a highly suitable for enterprise and supplier development (ESD) funding with measurable outcomes.
The model ticks a number of boxes for inclusive socio-economic development and sustainable value creation.
It links our anchor sectors of agriculture and manufacturing in an integrated value chain; and strengthens the economic connection between the Bay’s rural hinterland and urban industry.
The plan is designed for scalability and centred on empowering SMEs to establish sustainable, job-creating businesses with growth prospects, connecting them to large businesses in the global automotive supply chain.
Critically, commercialisation of hemp production is supported by national government policy, including legislative and regulatory reform in progress and grants to stimulate agro-processing investment. The National Cannabis Master Plan is streamlining laws, licensing, and cultivation, while new regulations are paving the way for commercial trade and exports.
This all adds up to a viable, exciting opportunity knocking at the door of Nelson Mandela Bay.
We just need to open the door.
Kelvin Naidoo is Manufacturing and Technical Director of Auto-X, President of the Nelson Mandela Bay Business Chamber and Lead of the Chamber’s Local Economy Reinvention Think Tank.