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A Natural Way To Grow Profits

Hawaii's organic farmers generate about $15 million in annual revenues

In the red-dirt hills of West Maui, rows of pineapples planted precisely 11 inches apart march around the posh Kapalua Resort. The fields belong to Maui Land & Pineapple Co. Inc. (ASE:MLP), an old-school kamaaina company that has lately been up to lots of new tricks. Facing increasing competition from Asian growers in the canned pineapple market, ML&P is quickly shifting its operations to sell more fresh, whole pineapple and fresh, cut pineapple to Mainlanders eager to eat Hawaii’s yellow gold.

Pick of the crop: Scott Meidell supervises the diversified agriculture division of Maui Land & Pineapple. He has a successful business around growing and selling organic fruits and vegetables.

For that same reason, the yellow spray trucks used to dispense pesticides are steering clear of an increasing number of acres on ML&P’s plantation. Since 1997, the company has steadily built a business growing and selling organic pineapples. ML&P won’t reveal how much money they gross from the venture, but the company sells these beauties on the West Coast, where they fetch 50 percent to 100 percent more than conventional pineapples at high-end retail stores. “The wholesale price we receive is higher than conventionally grown pineapples,” says Wes Nohara, ML&P’s plantation manager.

Yellow gold, indeed, and a clear illustration that organic food production in Hawaii is no longer just for subsistence growers and family farmers. Aileen O’hora-Weir, of the Hawaii Organic Farmers Association (HOFA), says more and more of the companies undergoing HOFA’s certification process are big farmers. Lion Coffee and Meadow Gold Dairies are two other firms that have approached HOFA about certification.

Hawaii came to the organic fields a bit late. While national growth of organic food sales has run at about 20 percent since 1990, the sector in Hawaii did not really begin to take off until five years ago. Today, Hawaii farmers generate approximately $15 million in annual revenues. That’s only 3 percent of Hawaii’s $511 million agricultural sector and a tiny fraction of the $10 billion in North American organic food sales in 2001, according to the Worldwatch Institute.

But it’s a fast-growing niche that will become increasingly valuable to the Islands in the near future, as high-value crops drive growth in Hawaii. “We can grow spices, herbs and nutraceuticals that can’t be grown anywhere on the Mainland,” O’hora-Weir says. Many of those niche products, such as coffee and pineapple, sell to upper-income buyers, who are not as price-sensitive.

More than 70 farms, the majority located on the Big Island and Maui, have HOFA certification. A small number have certifications from other federally approved organic certifiers. HOFA’s member ranks are rising at about a 20 percent annual clip. That matches growth in the national market, where sales of organic products have increased at a 20 percent rate since the 1990s and dramatically outstripped the single-digit growth of traditional food products.

Pick of the crop: Daniel Ko runs two small farms in Palolo Valley and Waimanalo. He also has a successful business around growing and selling organic fruits and vegetables.

Hawaii’s organic farmers, large and small, are benefiting from that boom. Take the case of Daniel Ko. He farms organic bananas, greens and papayas on 18 acres on Oahu in Palolo Valley and Waimanalo. A small family farmer, Ko has quadrupled his gross product sales to $70,000 since going organic seven years ago. While Ko is hardly a rich farmer, the switch allowed him to sustain his chosen profession and still feed his family. “It’s a lifestyle issue. I like living on the farm, doing this kind of work,” he says.

O’hora-Weir says some small organic farmers are doing very well. Savvy growers on the Big Island are grossing $100,000, farming three acres by nurturing lucrative relationships with local chefs, such as Alan Wong and Roy Yamaguchi, as well as gourmet food markets, such as R. Fields, Kokua and Down to Earth. These growers also manage to tap into the growing organic food sections at the large chains around the Islands.

That’s not to say organic farming is a piece of cake. The organic certification process, through which a farm changes its methods to eliminate use of artificial pesticides and other forbidden chemicals – is particularly trying in Hawaii, where bugs munch just about everything and the lack of winter lets them run wild.

Other products can break the bank. Take, for example, expensive organic potions used to kill insects, and organic fertilizer, which is needed to rejuvenate depleted soils. No surprise, then, that only 30 percent of the farms that enter certification make it through the two- or three-year process. “Organic pineapple is truly a challenge to our ability to farm, due to the limited amount of certified organic agricultural inputs available to grow our crops,” Nohara says. For ML&P and others, however, the opportunity of organic farming looks bright. Says O’hora-Weir: “The market is demanding organic foods and there are so many things we can grow that they can’t.”

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