Two Industrial Hemp Processing Plants Planned for Novosibirsk Region
The company “AgroU” is set to build two large industrial hemp processing plants in the Novosibirsk region. The facilities are scheduled to be operational by 2023 and will be located in the Toguchinsky and Iskitimsky districts. AgroU plans to invest 5.1 billion rubles in the project and expects to recoup the investment within six years. The plants are expected to reach full capacity by 2025, producing hemp fiber and hurds, with most of the output intended for export to China and the European Union.
20,000 Hectares to Be Sown with Industrial Hemp
AgroU intends to purchase raw materials from local farmers cultivating crops within 100 kilometers of the plants. Yuri Belov, the company’s investment director, hopes to persuade farmers to start growing industrial hemp. According to Belov, hemp can be used as a cover crop—planted during fallow periods to help restore soil before the main crop rotation.
The plants will have a combined annual production capacity of up to 66,400 tons. To supply the factories, farmers will need to sow 20,000 hectares with industrial hemp. In 2020, the total area of industrial hemp fields in Russia was 10,500 hectares. Thus, AgroU’s project alone could nearly double the country’s hemp cultivation area. Belov estimates that farmers could earn 25,000 rubles per hectare, resulting in an annual revenue of 500 million rubles for local growers.
Challenges of the Russian Market
Ilya Zharsky, managing partner of the Veta expert group, explained why AgroU plans to export its hemp products. He cited Russian legislation and law enforcement practices as the main reasons. For example, police have initiated criminal cases for “drug propaganda” against entrepreneurs selling legal industrial hemp products, often due to images of hemp leaves on packaging, which authorities claim encourage drug use.
Zharsky is concerned that the new plants could face excessive inspections and that Russian hemp products may struggle to compete with cheaper Chinese alternatives. He also noted that companies entering the hemp industry often encounter difficulties even during the construction phase. For instance, Smart Hemp LLC and Nizhny Novgorod Hemp Fibers promised to launch hemp processing plants in Ivanovo and Nizhny Novgorod regions in 2020 and 2021, but for unknown reasons, the openings were postponed to 2022.
Stigma and Legal Risks Remain
Ordinary Russians also face the stigma associated with hemp. The most recent incident occurred on November 29, when a resident of the Novgorod region was fined 4,000 rubles for having an image of a hemp leaf on a phone case. Experts concluded that the image “motivates certain groups to use drugs.”