PIP COURTNEY, PRESENTER: Hemp is one of the oldest crops known to humankind.

And some historians believe the need for material to make ropes and sails for the Royal Navy was the real reason behind the establishment of Australia as a penal colony more than two centuries ago.

Now hemp is making a comeback of sorts, with licensed production in most states supplying growing markets in masonry, fibreglass replacements and textiles. But a push to legalise foods made from hemp seeds could be the key to Australia's hemp industry taking off.

ONSCREEN: The Hemp Comeback

SEAN MURPHY, REPORTER: At Ashford in the New England region of New South Wales they used to grow tobacco on the verdant plains of the Severn River but now farmers like Leon Minos are growing industrial hemp.

LEON MINOS, HEMP GROWER, PONDA: Traditionally my grandparents and parents grew tobacco here, and that was predominantly tobacco. And then the tobacco industry folded and yeah, we're just looking at another industry to get up and running and hopefully be good for the Ashford area.

SEAN MURPHY: With his wife Connie, they're growing about six hectares of hemp under licence, providing hurd for a growing market in masonry material for building.

CONNIE MINOS, HELP GROWER, PONDA: We really like the crop. It's something that's been a really interesting industry, I guess, for to us get involved in over the last three years. We've learnt a lot about it in that time and I guess we're always impressed with just how diverse the product can be, and it's something that we're hoping really does take off.

As far as the farming side of it goes, we find that because we've previously just grown lucerne here, that it's less time consuming, it uses a lot less water - so there's a lot of benefits for that side of it as well.

SEAN MURPHY: Even if it needs irrigation, hemp uses about a third of the water needed to grow lucerne and its low cost benefits extend well beyond water savings.

(Sean Murphy in front of tall fronded hemp crop)

This crop was planted about 90 days ago. It's about 4m tall and is ready for harvest now.

It's planted in beautiful alluvial soil and there used to be free range pigs running in this paddock. But other than that there have been no inputs at all - no fertiliser, no pesticides, no herbicides, no fungicides, not even irrigation, just sunshine and rain.

SEAN MURPHY: And the returns are attractive too. Industry advocates reckon a crop like this could fetch about $1,500 a tonne when its raw material is separated.

KLARA MAROSSEZKY, AUSTRALIAN HEMP MASONRY COMPANY: So the farmer is getting $500 for their hurd, $500 for their fines and then additionally they can get $500 for the short bast.

And the short bast is something that can be fed into the fibreglass industry very readily - so its major market is in Europe is in the automobile industry.

(Klara Marossezky starts hemp processing machine)

SEAN MURPHY: Klara Marossezky is a sustainability educator. She runs the Australian Hemp Masonry Company and has developed an award winning formula for converting hemp hurd into a carbon sequestering building material.

KLARA MAROSSEZKY: This is actually a carbon sink. So it's harvested carbon out of the air in the field, that's been chopped up and it's being put into this lime-based material and then locked up in that. So it's literally carbon locked into a wall.

SEAN MURPHY: Once the material sets it undergoes carbonisation or petrification and continues to soak up carbon.

KLARA MAROSSEZKY: When we talk about Australia not being ready for a low carbon future, we are actually ideally poised for a low carbon future. This is probably one of the most powerful resources that we have to us and one of the most powerful tools we have for addressing carbon.

And so we've got this equation. We've got you know, huge impact from just- If I only talk about the building sector, 40 per cent of our carbon footprint in Australia from building. If we replace that, that's something that's immediately being addressed.

SEAN MURPHY: This prototype building is at Mountain View near Nimbin in the Northern Rivers of New South Wales. It's cheap, easy to build and has high thermal qualities and energy efficiency.

LIZ JOHNSON (working on building): Just coming home and smelling the beginnings is great, makes you feel like you're doing something for Mother Nature.

SEAN MURPHY: Aboriginal community Elder Liz Johnson says it's a perfect fit for remote Aboriginal communities.

LIZ JOHNSON, ABORIGINAL ELDER: I've searched a long time for what I think is a culturally appropriate building material for Aboriginal people. Since the change of cultures in our country, Aboriginal people have been imposed upon so far as building is concerned. And traditionally we lived in healthy living conditions.

And all my life I've built houses out of different things. I've lived in different houses, and I've seen the health of Aboriginal people deteriorate with the houses that are built specially for public housing.

So I'm hoping that with our venture into the hemp housing, that we will be able to influence regional governments and eventually the Federal Government with a prototype of this sort of house.

(Close up of hemp crop)

SEAN MURPHY: Hemp is one of the oldest and most versatile crops in existence and was the world's most ubiquitous textile fibre before the invention of the cotton gin in the American South in the 19th century.

It's still grown for fabric making but until now, the process of separating the bast fibre from the stem has been expensive and burdened by archaic technology.

ADRIAN CLARKE, TEXTILE AND COMPOSITE INDUSTRIES: You cannot do anything with hemp until you have separated the hurd from the fibre. The fibre is in the bark on the outside. The hurd is the woody pith in the middle.

(Extract from Textile and Composite Industries corporate video showing a decortication machine at work and the resulting fibre)

SEAN MURPHY: Victorian inventor Adrian Clarke is working on a decortication machine which can process hemp in a field.

It produces material that can be adapted to existing cotton spinning technology and Mr Clarke says its potential is revolutionary.

ADRIAN CLARKE: Our method theoretically, you could cut it today and be spinning it tomorrow - and we recover over 90 per cent of the fibre. But we do it in a way that will spin in cotton machinery.

They're making advances with cotton spinning machinery every day. Billions of dollars gets spent on improving the cotton spinning - so we link into the most modern technology out of the oldest technology. We bring more fibre per hectare and we bring a better fibre.

And it's not stained, it can be spun and dyed just like cotton. And most of the goods you will see around in the hemp shops is actually a blend of cotton and hemp, so it gets the benefit of both.

(Extract from BBC TV show on hemp)

VOICEOVER: This particular machine is just a prototype but its Australian inventor thinks it could revolutionise textile production throughout the world.

REPORTER: It will be a drivable machine?

ADRIAN CLARKE: It will be a drivable machine that harvests and what comes out the back will be ready to go straight into a cotton system.

(End of extract)

SEAN MURPHY: The BBC showed interest in Adrian Clarke's invention after he moved to England 12 years ago when licensed hemp production was stopped in Victoria.

Now that it's resumed, he's returned to Australia with a refined device that can fit onto a tractor.

ADRIAN CLARKE: We have developed a decorticator that is very small and very efficient, and it was actually designed to go inside a harvester so that the harvester immediately feeds it into the decorticator and separates the fibre from the hurd as it's going through.

SEAN MURPHY: He's now seeking investors but says the biggest boost to Australia's fledgling hemp industry would be to follow the lead of countries like Britain, Canada and the United States and legalise hemp food.

(Montage of hemp products)

ADRIAN CLARKE: To deny Australians the right to eat these very healthy foods and use the oil is just quite ridiculous. I can go into Sainsburys or Tesco in London and buy hemp spaghetti, hemp salad dressing, hemp ice cream, hemp soaps.

The foods are just there. Hemp breads, it's all just there. And you can't buy it here. You can't consume it here.

SEAN MURPHY: Food Standards Australia and New Zealand has recently recommended that hemp seed foods be made legal in Australia and this is now being considered by a ministerial council.

It comes a decade after a similar recommendation was rejected.

SEAN MURPHY: Food Standards Australia and New Zealand found there would be no public health and safety concerns with hemp as a food product.

New Zealand accepted the advice but the Howard Government rejected it. It said legalising hemp as a food would send mixed messages about drug abuse and it would be difficult for law enforcement agencies to police.

Now police agencies across Australia are objecting on the grounds that hemp food could corrupt roadside drug testing. And the New South Wales Government says it might also encourage cannabis consumption, which is already the highest in the world.

ANDREW KAVASILAS, HEMP GROWER: They talk about undermining efforts made to eradicate cannabis, it will send the wrong messages to people about the safe use of cannabis.

But those arguments aren't getting anywhere overseas. Overseas we're looking at markets that are just expanding tenfold.

(In front of hemp fields)

You could smoke an ounce of this and still walk home- still drive home, yeah! (laughs)

SEAN MURPHY: Andrew Kavasilas is one of 34 licensed hemp growers in New South Wales. He is specialising in hemp seed production.

He says there's no THC in hemp seeds and he believes fair trade laws will eventually open the hemp food market up in Australia.

ANDREW KAVASILAS: They probably won't get up this time. I think what will happen is something like what happened in the US and Canada, where there will be a trade issue, there will probably be a court case, and the truth in fact will come out about the nutritional benefits of hemp seed and the government will have no option but to facilitate the introduction of hemp seed food in Australia.

(Andrew Kavasilas opening a sac and showing hemp seeds)

That's the seed, Stewart.

STEWART LARSSON, MARA SEEDS: What sort of germinations do you look at?

ANDREW KAVASILAS: Eighty per cent, 90 per cent plus, generally. Sometimes fresh enough, it will go 100 per cent.

SEAN MURPHY: Stewart Larsson is Australia's biggest organic soy bean producer, processing about 7,000 tonnes a year.

At his new stockfeed and biochar facility at Mallanganee in the Northern Rivers of New South Wales, Mr Larsson has been working with local hemp growers. He believes there's huge potential for broadacre hemp seed production, if the Government legalises hemp foods.

STEWART LARSSON: We can't take it any further until basically that happens. I mean, we can do the trial areas and the growing of the crop and even the methodology of how we do that. But we need that tick for it to happen.

If we look at what the world says we're going to have a food shortage in years to come.

I mean, it's a crop we can grow well here, it appears, and it's suited to this environment as well. And I guess our interest is in taking it to a commercial crop, in that using standard equipment that we're using now in growing soy and also to be a rotation with soy - in soy being a nitrogen crop and the end level for growing food grade hemp is certainly a plus.

SEAN MURPHY: Even on a small scale like this, the economics of hemp seed are impressive. Andrew Kavasilas says a one hectare crop will yield about 1.5 tonnes of seed worth up to $6,000.

ANDREW KAVASILAS: Well, that's what keeps my enthusiasm up, because it is a high potential plant. As a broad acre crop, it integrates well into what farmers are doing anyway.

And when you're growing a crop that in effect can produce oil at the same quality as fish oil, in terms of its omega ratios, yeah, why wouldn't you be going for it?

I think what happens, is people haven't got a grasp of the full facts, and politically I don't think there's any votes for any politician to say that our kids should be eating hemp foods.

SEAN MURPHY: At Ashford, Connie Minos is hoping to integrate her fat lamb production with hemp growing but under her current licence conditions this is forbidden.

CONNIE MINOS: We're personally interested in being able to use it as fodder for stock because we grow lucerne and hemp here. Hemp being so high in protein, we're interested in being able to combine the two and make pellets and chaff available for the stock. And we believe that they'll do very well on that, the fat lambs we've got at the moment.

We're really keen to try that but we can't do that until the Government basically approves the use of hemp as a human consumption, which has been approved in many other parts around the world.

SEAN MURPHY: Hemp growers are strictly monitored and their crops are tested regularly to ensure they have low THC levels but growers say there's an imbalance between compliance and technical advice and support.

ANDREW KAVASILAS: For instance in New South Wales the hemp issue is being handled by Invasive Species Department of the New South Wales Department of Primary Industries.

That's a department that's in the business of eradicating plants not fostering an industry to catch on to what the rest of the world is doing.

In compliance and regulation, yeah, they'll be out there, they'll be testing your plants, they'll tell you what you can't do - but in terms of any support to make representations to the minister, it's just not there.

SEAN MURPHY: The New South Wales Government says it's planning a round table meeting with the hemp industry's major players in the coming months to formulate a strategic plant.

Leon Minos says it's the kind of support that could create a thriving local industry and see Ashford prosper again as it did during the heyday of the tobacco industry.

LEON MINOS: Obviously we need to promote it in the area and get the community on board and allow the farmers to be able to have enough crops and that growing to cater for the market. And eventually get a processing plant of some sort in Ashford so we can create some employment for the future, and for the town, and sort of turn things around.

We've lost a lot of industry, lost the coal mine and the power station, tobacco industry - so it's basically a retirement village. Old people are good but we need some young people too.

And we'll need to be able to keep them around if they have the will to stay.