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ISSUE 6Cultivating a Strong EconomyBryan VerpoortIs Cannabis an economic cure for all ills? Much has been said in the recent State of the Nation Address about job creation and the economic benefit of Cannabis, but is it an economic panacea? Job Creation Potentially thousands of direct jobs can be created through the enablement of licensed Hemp Growers for hemp flower, oils and fibres, however, without government actively assisting in creating a local market for local-content and localized production, this may yet prove to be another pipe dream.
Cannabis legislation needs to be clear and government departments aligned to enable rural, small and commercial farming of CBD hemp cultivars.
South Africa can take a leaf out of the Zimbabwe tobacco farmers book, where seeds are carefully managed, distributed and accounted for. Farmers need to be aware of the importance of selecting the right cultivars the first time round, which are genetically designed to achieve a particular grow outcome aimed at specific local off-take markets (such as the motor manufacturing industry).
While the motor manufacturing and clothing industry may require specific high-end product on a consistent basis, Hempcrete would require a much lower specification. The Economics of Cultivation Through the redistribution of land over the past 20 years there are lots of small and subsistence farmers with access to land who are able to farm hemp – Right? Wrong!
In most instances, these farmers don’t have access to the title deeds and therefore have no legal means of using returned farmland to generate income through collateralization of their land assets. This is a common problem across many provinces where the rightful landowners have no legal title over the property.
No investor is going to lend money to a landowner without that landowner providing proof of title. So, the only money would come from grants and development funds which tend to have their own political agendas.
So once again, the potential rural farmer will be squeezed out – not by the commercial farmers but by their own government failing to provide the enabling mechanisms and/or capital inputs – land and labour are in abundance but machinery and working capital are virtually non-existent. Avoiding Past Mistakes Hopefully we will learn from past mistakes …
There is a tremendous goodwill within the Cannabis industry which is willing to share knowledge and uplift its industry participants. At Berkley Risk we always say “it is in our interests that you do well” – If we can help clients or individuals to become established, we will benefit in the longer term by having a customer who is able to afford insurance for their business, thereby securing their livelihood for unforeseen events beyond their control. Collaboration is Key In a modern business environment, everyone collaborates. Quite simply – the whole is greater than the sum of its parts.
Berkley Risk has been working collaboratively with growers, financiers, input providers, clubs and social media platforms over the past two years to share best practices and identify industry pitfalls.
In some instances, would-be investors have decided not to invest after being able to make more informed decisions regarding capital, regulatory requirements, lead times to market and the difficulty of building a business for specific off-takes. In such cases they have saved a lot of money by not investing.
So, communication is vital – our advice is to try to avoid noise and unsubstantiated marketing hype. Rather align with industry players that already have a track record and some previous success. Beware, there is equal danger aligning with talkers and schemers – do your own reference checks. As the saying goes; “if you are going to fail – fail quickly”. Speak to as many knowledgeable people as possible but always be ethical and remember to give back to an industry sector that is prepared to help you grow and succeed. Berkley provides Insurance and Consultancy services to licensed Cannabis growers in South Africa, Lesotho, and Zimbabwe.