Hawaii’s 7 Agriculture Myths

April, 2005

It’s well known that the early Polynesians were incredible navigators, crossing the world’s largest ocean using only celestial and environmental elements as their guides. Less known is that they were also fantastic farmers, according to a 2004 research study in Science Journal. Scientists today marvel at how the early Hawaiians were able to develop and sustain extensive agricultural systems in hard-to-farm tropical environments, as well as establish vast agricultural complexes for sweet potatoes and other crops… Like their ancient forebearers, Hawaii’s farmers today continue to face a lack of public awareness about their work, the agriculture industry and even themselves. Part of the lack comes from the massive transformation Hawaii agriculture has been undergoing over the past decade-from raising mono-crop commodities, centered on sugar and pineapple, to diversified ag products that range from tomatoes, orchids and cattle to lavender, gourmet mushrooms and cage-raised fish.

“For ag to change, there’s a cultural issue that needs to be addressed that still sees the industry in the context of the plantation,” says David Cole, CEO of Maui Land & Pine Inc. (AMEX: MLP), the nation’s largest grower of pineapple. “It’s a stigma that colors how we view ag today.”

Myth No. 1: sugar and pineapple are dead.

“Well, the facts do not indicate that,” says Cole, with a wry chuckle, referring to pineapple’s top spot among the state’s top 10 ag commodities in 2003. Thanks to a 13 percent surge in the sale of fresh pineapples, its farm value rose to $102.8 million, up 2.2 percent over 2002’s $100.6 million. But Cole, who is overseeing MLP’s conversion of pine from processed commodity to specialty fresh food, is quick to point out that “there is no doubt that (pineapple) is an industry under stress.”

Overall production of pine in 2003 dipped 1.6 percent, from 320,000 to 315,000 tons, as sales of processed pineapple dropped 10 percent, from 203,000 to 183,000 tons. Major growers, MLP, Del Monte Fresh Produce Inc. and Dole Food Co. Inc., continue to decrease pine acreage. In 2003, pineapple was grown on 16,000 acres statewide, a 79 percent drop from its 76,700-acre peak in 1957, according to the Hawaii Agricultural Statistics Service (HASS).

Aggressive export marketing of the higher-value, fresh, extra-sweet pineapples, such as MLP’s exclusive Hawaiian Gold, has helped the industry sustain sales revenues despite lower overall production. In 2003, 228,315 tons of fresh pine were shipped out of Hawaii, a 16 percent increase over 2002’s 196,744 tons. New developments, such as using pine waste from harvesting and processing for livestock feed by a partnership of MLP, Maui Community College and the Maui Cattle Co., suggest the “King of Fruits” cannot be counted out yet.

With just two sugar companies left in the state, Gay & Robinson on Kauai and Hawaiian Commercial & Sugar (HC&S) on Maui, the sugar industry is also exploring new products and markets in the face of stiff competition from cheaper raw sugar from foreign countries. Hawaii’s sugar sales rose slightly in 2003 to $64.4 million from $64.3 million in 2002. This increase is the only two-year upward trend in revenues since 1998.

“Sugar prices have been stable to down for 20 years, so you need to keep finding additional revenues from existing products,” says Steve Holaday, who oversees 80 percent of the state’s sugar production as plantation manager of HC&S’ 37,000-acre central Maui plantation. Hawaii’s industry has been moving away from raw sugar production, one of three sugar plant products produced in the state (the other two are molasses and plant fiber). For HC&S, conversion from raw sugar to food grade sugar production, a high-margin market of consumer-ready sugar that’s growing 15 percent a year, now accounts for about 8 percent of HC&S’ sugar production, says Holaday.

The sugar plant also provides an efficient way to convert water and sunlight into biomass, a renewable source of energy. “And biomass is the basis for new directions for us,” Holaday says. HC&S already uses the plant fiber residue, called bagasse, to generate all of the plantation’s power requirements and about 8 percent of the power needs of Maui’s homes and businesses.

Ethanol production is sugar’s new “sweet deal” with Maui Ethanol, one of four planned ethanol plants in the state, anticipated to use HC&S’ annual production of about 73,000 out of the state’s total of 90,000 tons of molasses to produce ethanol.

Myth No. 2: agriculture is one of the largest industry sectors in Hawaii.

“It is one of the smallest,” says Byron Gangnes, Hawaii Research Group Director of the University of Hawaii Economic Research Organization (UHERO), citing agriculture’s contribution of 1 percent to the state’s income and 2 percent to employment. “But that depends on where one draws the boundaries.” He points out that these figures do not include supporting sectors linked to farm activities, such as retail trade.

Gangnes agrees with agricultural economist PingSun Leung, professor of biosystems economics at the University of Hawaii’s College of Tropical Agriculture & Human Resources (CTAHR), who says that a 2003 UH study on selected Hawaii economic sectors found agriculture comparable in size to legal services.

Despite its size, ag is important to the state’s economy, says Gangnes. The emergence of ag-tourism, for example, has helped to expand and add higher value to the state’s mature tourism industry, while maintaining the green, open spaces that visitors expect in Hawaii.

“Agriculture runs in different cycles than tourism, acting as a counter-cyclical stabilizer and smoothing the path of our local economy,” Gangnes says. “Ag is also a rich and diverse sector, where not all the eggs are in the same basket.”

HAWAII AGRICULTURE BY THE NUMBERS

1 Rank of pineapple with $102,849,000 in sales

750 Total number of cattle operations in the state

7 Seed crop operations statewide

150,000 Total farm acreage on Kauai

10 Percent increase of aquaculture, the largest year-to-year growth from 2002.

260,000 Total farm acreage on Maui

56.5 Average age of principal farm operator

820,000 Total farm acreage on Big Island of Hawaii

187 Number of farms statewide reporting ag-tourism income, up 48 percent from 2000.

$386,157,000 Value of diversified agriculture statewide

600 Number of workers employed by member farms of the North Shore Agricultural Group (equivalent to former workforce of now defunct Waialua Sugar).

$553,406,000 Total farm-gate revenues statewide, highest value since 1990.

Within that diversity, entrepreneurial ag is alive and well, says Susan Matsushima, president of Alluvion Inc., Oahu’s largest nursery, and one of the founders of the North Shore Agricultural Group.

“Each of these people came here by choice to set up businesses,” says Matsushima of the owners of 40 ag-based enterprises on the North Shore that range from biotech companies, with highly educated technical staff, to smaller farms, which require the range of skills needed to run a small family business.

The latest agricultural census in 2002, conducted every five years, reflects that percolating optimism. From 1997, Hawaii farm sales rose about 7 percent, from $496 million to $533 million, while the national trend saw farm sales decrease by 1 percent over the same period.

Myth No. 3: ag lands formerly in sugar and pine are all being converted to urban use.

While there have been notable conversions, such as Mililani (developed from former Dole pineapple lands) and the second city of Kapolei (from former Ewa sugar lands), agriculture, with 1,932,429 acres, today still commands 47 percent of the state’s total land area, a percentage unchanged since 1987. Conservation accounts for 48 percent, urban for 4.7 percent and rural 0.3 percent. In fact, there have been no big spikes from ag to urban use going back to 1961, when the Land Use Commission was established, says Anthony Ching, executive officer of the State Land Use Commission.

According to the 2003 State of Hawaii Data Book, estimated acreage of land use districts from 1998 to 2002, based on the Hawaii State Land Use Commission’s classifications, reveals a loss of 1,561 acres of ag lands to urban use. However, sugar alone lost more than 20,000 acres in crop during that same period, from 67,600 acres in 1998 to 47,000 in 2002.

“We know some [former sugar and pine] ag lands have been converted to diversified ag and some are left fallow,” explains Matthew Loke, administrator of the state Department of Agriculture’s (DOA) agricultural development division. With 65.56 percent of ag-classified lands in pasture, some ag lands simply lack infrastructure, such as irrigation, for crops and uses other than grazing.

According to Ching, ag land use is currently in limbo. Last year’s protests by Oahu farmers and ranchers over skyrocketing taxes due to a tax law change on ag lands (since revised by the City Council) revealed some of the pressures on these landowners and tenant farmers to remain committed to agriculture in the face of potentially more lucrative development possibilities. Dedicating lands for long-term agricultural use remains a major issue across all counties.

Myth No. 4: we must continue to import more food than we can grow.

Last September, the same week that Foremost Dairies-Hawaii, one of the state’s last two commercial milk processors, announced it was shutting down, Oahu’s main processor of locally grown chicken, Pacific Poultry, announced that it would only process cheaper Mainland imported birds, forcing the closure of the island’s last two chicken farms. With estimates that we import between 80 percent and 90 percent of the food we consume, these moves raised concerns about the ability of Hawaii’s ag industry to compete against cheaper imports from the Mainland and abroad and Hawaii’s vulnerability to food shortages.

MLP’s Cole believes the problem is a disconnect between our local ag capacity and our production of food for local consumption. Veteran Oahu farmer and president of HPC Foods, the state’s largest poi manufacturer, Ernest Tottori agrees.

“You need just three things for farming: land, water and financing,” says Tottori, whose taro farm is part of Oahu’s North Shore Agricultural Group. “We have all three here, but we need the will to do it.” Alluvion’s Matsushima says Hawaii’s ag industry should be supplying at least 60 percent of the state’s needs.

Recent developments in diversified ag show potential in that direction, with 5,500 farms statewide today compared to 3,700 in 1954. Hawaii’s climate is suitable for year-round cultivation and, as a result, about 40 percent of fresh vegetables consumed in the state are now home grown. More than 40 crops are commercially grown in the Islands, compared to only 28 kinds of fruits and vegetables in 1954. In 2002, about 84 percent of the tomatoes consumed in the state were produced by local farmers, compared to just 26 percent in 1992. Similarly, local consumption of Island-grown bananas rose to 70 percent in 2002, from 45 percent in 1992; and local watermelon rose to 84 percent in 2002, from 67 percent a decade earlier.

Myth No. 5: hawaii’s agricultural exports are declining.

“Our [ag] export market is actually stabilizing,” says Loke, following years of erosion, with the decline of commodity sugar and pineapple as Hawaii’s key products for export. Steady growth of diversified agriculture and record-high levels for certain export commodities last year suggest Hawaii’s ag exports are doing their share of selling to the world, with promising potential for the future. In 2003, Hawaii’s seed industry posted record-highs of $50.47 million in farm value with 6.4 million pounds shipped out of state. The shipments represented about 97 percent of all seed stock grown in the state, with the remaining 3 percent kept back for grow-out or observation purposes, says HASS statistician Steve Gunn. In aquaculture, an estimated 60 percent, or about $16.6 million, of the industry’s record-high $27.7 million in farm sales in 2003 came from export sales, according to Dean Toda, DOA marketing specialist for aquaculture. For some of the state’s aquaculture products, such as abalone, shrimp broodstock and ornamentals, exports can account for as high as 90 percent of sales.

Hawaii Top 10 Agriculture Commodities
COMMODITY
2002 RANK
2003 RANK
2002 FARM SALES
2003 FARM SALES
TREND 1998 – 2003*
Pineapples
1
1
$100.6M
$102.8M
*&
Sugar Cane
2
2
$64.3M
$64.4M
#
Seed Crops
3
3
$48.1M
$50.5M
@
Macadamia Nuts
4
4
$30.2M
$32.3M
*&
Coffee
5
5
$23.3M
$24.1M
*&
Milk
6
6
$22.5M
$21.4M
#
Cattle
7
7
$18.3M
$17.2M
*&
Papayas
8
8
$11.9M
$13.1M
#
Algae
9
9
$10.5M
$11.8M
@
Tomatoes
10
10
$9.6M
$10.1M
@
* THE FIVE-YEAR TREND REPRESENTS THE AVERAGE OF FARM SALES FROM 1998-2000 COMPARED TO THE AVERAGE FROM 2001-2003 USING A MARGIN OF +/- 5 PERCENT.

Last year’s dramatic successes in eradicating the fruit fly, a collaborative effort between UH researchers and small farmers under the Hawaii Fruit-Fly Area-Wide Pest Management suppression program, may help jumpstart Hawaii’s export market. Far more crops could be grown year-round, with the pesky insects no longer destroying nearly 25 percent of any crop. And eliminating the danger of exporting fruit fly larvae could ease the restrictive quarantine requirements for exporting Hawaii’s ag products to the Mainland and abroad.

“We have the ability to grow and even export, but unless the food-safety issue is addressed, there are limitations,” says Matsushima, Hawaii’s appointee to the USDA’s Fruit and Vegetable Advisory Group, who believes food safety needs to be addressed at the farm level.

Myth No. 6: agriculture is a low-paying and low-tech industry.

According to a July 2004 survey by the HASS, the average pay to Hawaii’s agricultural hired workers was $11.46 an hour, and $9.90 an hour for field and livestock workers. That’s a lot better than the state’s minimum wage of $6.25. It is comparable to other workers, such as retail sales, averaging $10.26; data entry clerks, $10.89; bank tellers, $9.99; and childcare workers $8.05.

It’s noteworthy that generally higher paid unionized farm workers in sugar and pineapple accounted for only 28 percent of Hawaii’s 7,400 agricultural hired workers during the 2004 survey period. The majority, 5,350 farm workers, was employed in diversified ag. Even small farms, employing one to nine workers, paid an average of $11.21 per hour for all hired workers and an average of $9.05 for field and livestock workers.

“Every industry has low-paying and low-tech jobs. What we see now [in diversified ag] is a range of jobs, from PhDs in biotech to entry-level workers,” says Alluvion’s Matsushima. Her son Chad left his career as an architect and joined the family business as vice president of operations for the Oahu nursery in 2000.

Some diversified ag sectors, such as aquaculture, require trained professionals. Kona Bay Marine Resources, a world leader in producing shrimp broodstock, is looking to hire two PhDs to join its staff, where a bachelor’s in marine sciences is the minimum, says president Brian Goldstein. Goldstein, came to aquaculture after more than 15 years of experience in high-tech company startups and raising venture capital in Silicon Valley.

Computer know-how has also become a must in today’s agriculture industry. For Hawaii farms making $100,000 or more annually, 80 percent use computers for farm business, compared to 55 percent nationwide, and 90 percent report Internet access, compared to just 58 percent nationally.

Myth No. 7: the average hawaii farmer is a local-born asian male over 65 years old.

If you are 56.5 years old, of Caucasian ancestry, farm a family- or individually owned farm of 241 acres, and have been farming for 10 years or more, you are the typical Hawaii farmer, according to the 2002 Census of Agriculture. The mid-’50s average age of the principal Hawaii farm operator has remained unchanged since 1992. Asian farmers, including local-born and immigrant Southeast Asian farmers, mostly from Laos, were the largest ethnic group until the 2002 Census.

The big surprise is the growth in women as principal operators of Hawaii’s farms. While men still outnumber women four-to-one as farm heads in the state, women farmers have increased 32.5 percent, while men have declined 4.4 percent over the decade from 1992 to 2002. This mirrors the national trend, with women running one out of every 10 farms.

The times they are a-changing in Hawaii’s agriculture industry. Like the early Hawaiians whose farming skills, until recently, have been overshadowed by their navigating ones, Hawaii’s farmers today are emerging from under the shadow of Hawaii’s historical legacy of the former agricultural “kings”-sugar and pineapple. As old myths about agriculture in Hawaii fade and new realities come to light, look for more exciting changes ahead for Hawaii agriculture.

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