CropLogic (ASX:CLI), which provides technology able to help increase yields of a range of agricultural products, reckons it could reap as much as $64 million in revenue selling hemp products.

The company told investors this morning that it had selected three different hemp seed varieties at its trial hemp farm in Oregon, and is now beginning to plant them ahead of growing season.

  • Scroll down for the ASX’s other food and ag moves today >>>

CropLogic has spent the past six months dipping its toes into the world of cannabis. It sought advice from American cannabis groups in November on whether it could make some money dabbling in hemp and by March had received approval to grow the stuff as well as signed a lease for a trial farm in the US state that has grown so much weed it doesn’t know what to do with it all.

Industrial hemp contains low levels of tetrahydrocannabinol (THC), the psychoactive element of cannabis and slightly higher levels of cannabidiol (CDB). It was legalised in mid-December when the US government passed the 2018 Farm Bill.

James Cooper-Jones, CropLogic chief, told Stockhead the company is hoping to yield between 800,000 and 1.1 million pounds of hemp by the end of harvest in October, which it says could result in significant riches.

“Hemp biomass is graded by contained CBD percentage point. Accordingly, the industry standard is buyers of hemp biomass will pay a dollar amount per CBD percentage point,” the company explained in its announcement.

If CropLogic can yield at least 10 per cent CBD — and it says the three strains it will test in the coming months are all capable of producing more than that — then sales could hit as much as $64 million, based on an estimated hemp price of US$4 per percentage point of CBD content and a 1.1 million pound yield.

Compared with revenue in the 2018 financial year, that would be a 2,991 per cent improvement, if everything goes right.

The next steps are planting the seeds, growing them, watching them flower, getting them compliance tested and then harvesting and selling them.

Jason Peterson, “hemp specialist” at CropLogic’s subsidiary LogicalCropping, said he was very hopeful of it working.

“Central Oregon’s climate, soil types and clean environment presents an ideal growing environment to produce premium high quality CBD producing hemp biomass,” he said.

“We have selected genetics that are designed to capitalise on this growing environment. Coupled with CropLogic’s agronomy and agtech expertise, to optimise our biomass production and grade this year.”

CLI shares got a 9 per cent boost to a high of 3.8c.


 

In other ASX food and agriculture news this morning

Synlait Milk (ASX:SM1) gets served. The big cap dairy company has been hit with a cease and desist letter regarding its land in Pokeno, New Zealand, pushing shares down 4 per cent to $9.12. It bought the land in February to build a nutritional powder manufacturing site and won a case in the High Court to remove historic covenants which it says “may hinder Synlait’s intention to develop the site if left in place”.

But that was overturned in the Court of Appeal in May and now the “beneficiary of the covenant” has sent Synlait a cease and desist notice. “We believe a practical solution is attainable,” Synlait CEO Leon Clement said.
 
Angel Seafood (ASX:AS1) answers questions from the ASX. The bourse wanted to know what the seafood company was doing about its cash burn — Angel Seafood had just $141,000 in the bank at the end of March and estimated to spend $1.7 million in the June quarter — and the company replied that was due to poor oyster sales.

“AS1 does not expect to continue to have negative operating cash flows,” it replied, “and will generate cash from oyster sales following the recommencement of the sales season in early April 2019.”

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