Drought hurts
mac-nut outlook

Mauna Loa Macadamia Partners
warns of lean '98

By Russ Lynch
Star-Bulletin

Mauna Loa Macadamia Partners L.P. had a 55.6 percent drop in fourth-quarter income and warned that the current drought on the Big Island Island could significantly reduce macadamia nut production this year.

For all of 1997 Mauna Loa reported a profit five times that of 1996 because of a big tax break related to its partnership status.

In the quarter ending Dec. 31, however, Mauna Loa reported a profit of $1.2 million, or 16 cents a share, down from the year-earlier quarter's net of $2.7 million, or 35 cents a share. (Mauna Loa's shares are technically Class A partnership units.)

Fourth-quarter revenues of $6.8 million were down 1.4 percent from $6.9 million in the 1996 final quarter.

Mauna Loa, the world's largest grower of macadamia nuts, farms more than 4,000 acres on the Big Island, where it says yields are the highest in the world.

The partnership said its total nut production for 1997, 20.3 million pounds, was down 8 percent from the 1996 record harvest of 22.1 million pounds. The average price for the raw unprocessed nuts in 1997 was 59.7 cents a pound, down 1.2 percent from 59.77 cents in 1996.

"Currently the island of Hawaii is experiencing a severe drought. Experts attribute this condition to the effects of the El Nino weather pattern," Mauna Loa said.

The National Weather Service says normal weather may not return to the island until April or May. "While it is impossible to predict at this time, the effects of this drought condition could significantly reduce the 1998 production volumes," Mauna Loa said.

Meanwhile, the company had a 400.2 percent profit increase for the full year 1997, reporting a net of $15.6 million, or $2.06 a share, compared with a net of $3 million, or 40 cents a share, reported for 1996. Revenues of $12.1 million last year were down 8.3 percent from $13.2 million in 1996.

The huge jump in net profit was due to a $13.8 million reduction in deferred tax liability due to Mauna Loa's adoption of a permanent extension of its partnership tax status, which was allowed by 1997 federal tax legislation.

In December, Mauna Loa entered into a merger agreement with C. Brewer Homes Inc. in which the whole business will be a partnership called Hawaii Land & Farming Co. with resulting tax benefits.

Both were once subsidiaries of C. Brewer & Co., one of Hawaii's original sugar companies, which is now mostly in diversified agriculture and farm products but is the managing partner of the nut business.