A New Cash Crop

March, 2009

Melvin and Momi Matsuda never intended for their oldest daughter to follow in their footsteps. In fact, they discouraged it. As far as they were concerned, they hadn’t sent Kylie to college so that she could come back to pull weeds and drive a tractor on the family farm. Farming is a tough business. Many local growers struggle to make a profit because of Hawaii’s high cost of land, water, electricity, supplies and shipping. The current economic downturn only adds to that pressure.

But a growing number of farmers are discovering they can maintain their core businesses by expanding into agricultural tourism — that is, inviting visitors onto their farms, creating a fun learning adventure and charging them for it. If successful, agtourism diversifies farmers’ incomes and keep their businesses viable, but it requires creative strategies that transcend traditional farming models. That’s where the next generation of farmers may have the most impact: by generating fresh ideas for a changing industry.

But it can be a tough row to hoe: Many farmers complain that state and local governments have dragged them through permitting hell and they have had to pay tens of thousands of dollars to try to establish an agtourism sideline.

In 2001, when Kylie graduated from the University of Hawaii with a degree in travel industry management, Melvin was convinced that farming could not provide the type of life that he hoped for his daughter. A third-generation farmer who co-owns Matsuda Fukuyama Farms with longtime friend Clyde Fukuyama, Melvin knows the increased challenges that today’s farmers face compared to when he started in the 1960s. Over the years, he’s endured the frustration of performing backbreaking work day in and day out only to have his prices undercut by larger, over-seas growers.

“My dad didn’t want me to come back to be another commodity farmer,” Kylie says. So, she took her father’s advice and found work elsewhere, dabbling in the hotel business and in sales for a few years. About four years ago, after numerous attempts to sidetrack Kylie, Melvin finally had an aha! moment. He realized the ag industry was shifting toward agtourism and that Kylie — with her college education, fresh perspective and 29-year-old energy — represented the future of agriculture in Hawaii. If he wanted to keep his business alive, Melvin knew it would take someone like Kylie to help sustain it. “That’s when I was able to finally stop begging for a job,” Kylie says, laughing. Today, she is the managing director of Kahuku Farms Inc., the company created to develop agtourism for Matsuda Fukuyama Farms.

However, it wasn’t long before Kylie realized that winning over her father would be just one of her many uphill battles. These days, she has bigger problems with the state and the city and county of Honolulu, trying to iron out lease issues and survive what she calls permitting hell.

“I never thought it would be this difficult to get our business up and running,” Kylie says with a sigh. “But, I’ve invested too much time and energy into this to turn back now. All I can do now is hope and pray.”


Don’t put all your papayas in one basket

In 1995, when Melvin and Clyde Fukuyama created Matsuda Fukuyama Farms, they worked about 80 acres. That has grown to more than 300 acres, which are leased from various landowners such as Campbell Estate, Dole Foods Inc., Kamehameha Schools and the state. Under their Kahuku Brand, Matsuda Fukuyama Farms sells papayas, mangoes, long eggplant, luau leaves and apple bananas. Fukuyama says business has been steady, but he suspects that’s about to change.

“Looking toward the future, we have to do more if we want to stay in business,” Fukuyama says. “[2009] is going to be very challenging for us, but that’s even more of a reason we need to start looking at other ways to diversify our income.” Since the ag industry is changing, Matsuda Fukuyama Farms needs to change with it. “We can’t just keep doing business the way we’ve done it all along and think everything will be OK,” he adds.

Ken Kamiya, president of Kamiya Gold Inc., has been growing papayas in Hawaii for over 35 years and understands the struggles of today’s farmers. He says three years ago, one ton of oil-based fertilizer sold for $600. Today, it’s more than $1,300.

“How can we survive with that kind of increase?” he asks. “That’s literally like throwing money on the ground!”

According to the most recent data from the National Agricul-tural Statistics Service, there are about 5,400 farms in Hawaii with a total workforce of about 10,200.

“That’s a lot of people who aren’t going to have jobs if us farmers can’t find a way to pay our bills and our people,” Kamiya adds. “Farming is already a high-risk profession. We have to deal with thieves, invasive species, high costs, unfavorable leases — and the thing that can be the most devastating: Mother Nature.”

Lorie Farrell, executive director of the Big Island Farm Bureau, says because of Hawaii’s high cost of production, growers must be creative to survive. But Farrell cautions that agtourism is not for every farmer and is certainly not a get-rich-quick technique. However, she adds, it can become part of a diversified revenue stream to help ensure the producer’s economic stability.

Lani Weigert, president of the Hawaii Agritourism Association and the co-owner/director of marketing for Alii Kula Lavender Farms in Maui, acknowledges that agtourism is growing, but that its value cannot be measured solely in dollars and cents.

“The bottom line is: Ag is food,” Weigert says. “If we want to continue to eat fresh fruits and vegetables that are grown in Hawaii and preserve our rich agricultural history, we have to make a concerted effort to support ag in Hawaii.”

Weigert says the recent scares about tainted food have made people increasingly interested in where their food comes from. “[Agtourism] also gives visitors a unique Hawaii experience that goes beyond the sun and surf,” she adds.

Fukuyama says the most important thing for farmers to con-sider is whether they have the right person to host tours. Weigert couldn’t agree more.

“This is a niche market,” she explains. “A lot of the farmers, they don’t have the personality or disposition for it. They don’t always want to be happy and pleasant while people are coming through the property. They just want to grow their produce and go home, but a lot of their college-graduate sons and daughters, they understand the whole marketing concept. So then they become the face of the brand — like Kylie did. It ensures the legacy of the family farm.”

Jim Reddekopp, founder of Hawaiian Vanilla Co., located in Paauilo on the Big Island, is one of those growers committed to educating the community about agriculture in Hawaii. Over the years, his tours have become so popular that he estimates 25 percent of his company’s revenues are from tours. But, he says, the real money is made after the tour is over: Hawaiian Vanilla makes the other 75 percent of its income from the sale of its value-added products, such as Hawaiian vanilla extract and home fragrance.

In response to customer demand, Reddekopp’s wife, Tracy, helped develop more than 45 different vanilla products that are now sold in the farm’s 200-square-foot gift shop and gallery. The company hosts about 200 visitors a week, offering educational tours, vanilla tastings and meals prepared on-site, featuring Tracy’s recipes and served by the couple’s five children.

Weigert has had similar success at Alii Kula Lavender Farms, which began giving tours in 2002. With literally no money to invest in agtourism, Weigert tapped one of the most influential groups around: senior citizens.

“We went to all the senior citizen centers on the island and we invited them to come up, charging them an admission that was subsidized by the County of Maui,” she says.

By word of mouth alone, Weigert says, Alii Kula went from hosting 300 kupuna the first year to more than 3,000 the second. Then they began reaching out to students, private group tours and others. Today, the farm is cranking, offering five tours a day, seven days a week. At $12 each, Weigert says tours represent 12 percent of Alii Kula’s overall revenue. And, similar to Hawaiian Vanilla’s experiences, 83 percent of Alii Kula’s income is sales of value-added products — everything from organic lavender honey body scrub to lavender dark chocolate candy bars.

Sandra Lee Kunimoto, chairperson of the Hawaii Board of Agriculture, says visitors have identified with the Islands’ premium agricultural products, such as pineapple, sugar, macadamia nuts and coffee, for decades. She adds that both tourists and residents can benefit from agtourism.

“Knowing where their food is grown and getting to know the farmers who grow the food gives people a greater appreciation of agriculture,” Kunimoto says. Kylie says one of her missions is to show kids how and where bananas are actually grown. “So many kids think bananas magically appear at Costco,” she says. “I want everyone to experience what fresh, juicy papayas and mangoes taste like when they come straight from the fields. It’s sad that so many people will never know what that’s like since almost everything is either shipped in or shipped out prior to consumption.”

Citing the success of agtourism elsewhere — Napa Valley, for instance — Weigert says the potential for agtourism in Hawaii is tremendous.

“Look at all the strawberry farms and pick-your-own orchards all over the Mainland that are attracting big business,” she says. “People love this stuff. This industry could be huge!”

But no matter what, Weigert says, the goal is not for farmers to completely turn their businesses into tourist stops. “Our mission is to keep agriculture the top priority,” she explains. “This state was blessed with great ag lands and they should be used to promote just that — ag.”

A long row to hoe

While agtourism is growing in popularity, it is not a new concept here. Dole Plantation, Parker Ranch and the old Meadow Gold Farm in Waimanalo sprang up decades ago — but, they have one thing in common: they’re large-scale businesses. Agtourism is unfamiliar territory for smaller farms, Weigert says. Kylie suspects that’s one reason she’s been stuck in lease talks with the state for almost three years and why it was so difficult for her to get the necessary permits from the county.

“Part of the reason this has been so complicated is because the land that we want to do our agtourism on is owned by the state,” Kylie explains. “Not only that, but it’s part of a state ag park, and they have very strict guidelines about what is permitted on this land.”

Kunimoto, of the Hawaii Board of Agriculture, says the rules for state agricultural parks are stricter and more regulated than they are for private ag lands because the purpose of the parks is to provide affordable land for bonafide farming. However, the rules do allow for small-scale retail operations, again provided certain conditions are met. Additionally, each county has its own rules regulating agribusiness, under which agtourism usually falls.

Weigert says it’s not uncommon for farmers to spend $30,000 to $50,000 to obtain permits. “It’s not the permit itself that costs that much money, it’s paying for all of the consulting services,” she says. “Heck, you would think we were trying to launch space shuttles with all the experts the city and county wants you to call!”

Hawaiian Vanilla Co.’s Reddekopp says he experienced similar permitting challenges on the Big Island — and he owns the land. “I felt as if we were opening the Hapuna Prince Hotel,” he says of all the red tape he ran into.

While he does call it a wonderful learning experience, he estimates it cost him $30,000 in legal fees, lost revenue and “a lot of stress,” he says. However, Reddekopp admits the process did reap benefits.

“We were able to educate our decision makers about the importance of agtourism in Hawaii,” he explains. “I truly believe in its future and that’s why we did it.” During this same time, Hawaii County passed Bill 148, making it the first county in the state to recognize agtourism as a separate industry with its own set of regulations.

Robert Banister, assistant chief for the city and county of Honolulu’s Department of Planning and Permitting (DPP), says for Honolulu County, agtourism is usually covered under the land use ordinance’s agribusiness or outdoor recreation sections.

Banister says as far he knows, since 2002, when the land-use ordinance regulating agribusiness was passed by the City Council, only a handful of applications related to agribusiness have come through the DPP.

Dr. Wayne Nishijima, associate dean for extension at the University of Hawaii’s College of Tropical Agriculture and Human Resources, says, “The issue is that county ordinances on what kinds of activities are allowed on land zoned [for] agriculture vary widely.” Nishijima says that, in the past, there have been bitter lawsuits between neighbors concerning agtourism. “If the agtourism activity is low key and innocuous, there usually isn’t a problem. However, if tour buses make regular stops and travel on small, private roads, that raises some real problems.”

Banister says the best thing farmers can do is submit fully completed applications so the department can determine exactly what kind of project is being planned, and if all safety and accessibility issues are being addressed. Right now, he really doesn’t see a compelling reason for Honolulu to follow in the Big Island’s footsteps and pass a separate ordinance that covers agtourism. As for the process being too tedious, Banister assures that whenever the DPP receives permit applications, it will provide specific information to applicants on how to proceed, if for some reason their requests are incomplete or rejected. “We wouldn’t just say, ‘Go away. We don’t know what’s happening at all.’ We don’t take that position at all.”

Still, farmers like Ken Kamiya, of Kamiya Gold, would like to see the state and counties make the permitting process easier for farmers. “We talk about preserving ag, but they put so many roadblocks up for us,” Kamiya says. “It seems like they’re trying to put their urban rules and processes on us and we’re just small country farmers. Something’s not right here.” Kamiya makes it clear that farmers are not looking for handouts or special treatment, but “some of these requirements are making it so impossible for us to stay in business.”

Kamiya wonders: If local farmers cannot find ways to sustain themselves, what would happen to Hawaii’s agriculture industry?

“That’s a good question,” says Weigert. “I hope we don’t ever have to find out the answer.”

For now, Kylie will continue to be patient as she waits to see if the state will allow her to proceed with Kahuku Farms’ agtourism business. “It’s kind of sad, because we’re real farmers and we’re trying to do the right thing. I’m just hopeful that 2009 will be our year.”

Despite her frustration, Kylie says it’ll all have been worth it in the end if she can help other farmers navigate the process, the same way Alii Kula’s Weigert has helped her every step of the way.

“I don’t care what we have to go through, all that matters is that we keep the ag industry alive,” she says. “It’s what my dad wants and it’s what I want.”

Helping farms branch out

In 2006, 112 farms statewide reported agtourism-related income, but that number has likely grown since then, especially on the Neighbor Islands.

More than half of those farms are in Hawaii County. The Big Island Farm Bureau’s Lorie Farrell says the increased interest in agtourism spurred the creation of Hawaii AgVentures about five years ago. The project helps local farmers branch into agtourism, offering farm reviews, training and on-site inspections. “We basically help them get their farms up to standard and then help market them and schedule the visits,” says Farrell. Hawaii AgVentures is a project of the Big Island Farm Bureau, which pays farms to host group tours. Its network currently consists of 71 farms statewide, ranging from small family coffee farms to the Parker Ranch.

Farrell says between July 2007 and September 2008, Hawaii AgVentures booked agricultural tours for about 6,500 visitors — most from the Main-land — plus 105 group tours. However, “Agtourism is not Knott’s Berry Farm,” Farrell points out. “Our mission is to promote true Hawaii producers, not folks trying to come in here, plant one coffee tree and then sell a whole container full of mugs and souvenirs that were manufactured in China.”

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