Hawaii's sugar lobby to leave Washington

The change reflects how the dwindling industry has been split into two camps

By Russ Lynch

The Hawaii sugar industry's Washington, D.C., lobbying office will close at the end of this month after 98 years of representing what was once the state's biggest industry.

One reason is the costs that the dwindling industry is finding hard to cover, officials said on Wednesday. "It's a reflection of the dramatic drop in production," said John C. Roney, who heads the office as vice president and Washington representative of the Hawaii Agriculture Research Center, until recently known as the Hawaiian Sugar Planters' Association.

But there is another reason: Hawaii's sugar companies these days are pulling in separate directions. "It was part of the cost-cutting measures, but also there are differences within the industry and our representative in Washington was not really representing all segments of the industry," said Alan Kennett, the association's chairman and the general manager of Gay & Robinson Inc. on Kauai.

Hawaii's biggest grower, Alexander & Baldwin Inc., is also a big mainland refiner and is pushing for increased sugar imports and other changes to keep its costs down at its California & Hawaiian Sugar Co. refinery in Crockett, Calif., Kennett said.

The two remaining Hawaii growers, Amfac/JMB Hawaii Inc. and Gay & Robinson Inc., used to be part owners of C&H but no longer are and they oppose any move that might lower the price they get for their raw sugar, he said.

Kennett cited a price cap for raw sugar now being discussed in Congress.

"If that was passed, we don't think we would be able to stay in business," he said. His company also opposes sugar import increases if they push prices down, Kennett added.

On Wednesday, the U.S. Department of Agriculture said it would allow an additional 150,000 tons of foreign raw sugar to enter the U.S. market this year.

A&B said the department, which has increased this year's sugar import quota four times since November, is just doing its job.

Even after the increase, the industry projects that stocks of sugar on hand for use by the refiners will be low because some countries aren't able to fill their quota, according to a statement from A&B headquarters in Honolulu.

At its California refinery, C&H President David Koncelik made the same point and said a small drop on Wednesday in the New York raw sugar futures price for September delivery, to 22.5 cents a pound from 22.57 cents, shows the markets are saying, "Thank you, but it's not enough." "It's too little and it's too late," Koncelik said of the import increase.

Meanwhile Roney, who will lose his job along with the one other Washington staffer of the HARC office, said the normal effect of a quota increase would be some downward pressure on the raw sugar price. "And so that would generally be a negative for the cane grower," Roney said. "On the other hand, cane growers have it in their interest to see the refiners to which they sell their sugar remain viable."

Robert Heiserman, head of Amfac/JMB's agriculture operations, said increasing the import quota is the secretary of agriculture's right and the impact remains to be seen, since refineries now are operating at capacity anyway.

The proposed price cap is another matter. "All I can tell you is that a price cap on raw sugar would not be in our interest," he said.

Hawaii's sugar industry, which had a dozen plantations a decade ago, is down to four. Production, which was around a million tons a year for decades, slipped below a million in 1987 and is projected at 460,000 tons this year and 390,000 tons next year, Roney said.

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