Hinode riceThe California cooperative that grows and markets one of Hawaii's favorite brands of rice, Hinode, has gone out of business, unable to pay $11 million of debt or the wages for its remaining employees.
The California co-op that
makes one of Hawaii's most
popular brands goes
out of business
By Russ Lynch
Photo by Craig T. Kojima
Industry sources say the popular brand likely will be picked up by some other business but for now, the future is uncertain.
Rice Growers Association, based in Sacramento, closed its doors Friday, according to an article in the Sacramento Bee.
The cooperative's telephones were working today but only connected with an answering system and calls were not returned.
The co-op was founded in the 1920s to sell rice grown by Northern California farmers and grew to dominate the industry.
The Hinode brand was originated in Hawaii by Alister Macdonald, who came to the isles in 1941 to administer a $35 million emergency food-supply fund, stayed and founded his own food wholesale business, Macdonald & Porter Inc., after the war.
Macdonald, 89, said today that he built the product by moving groceries away from bringing in their own 100-pound bags, which they used to open and pack into smaller bags. He started with the smaller groceries, selling them pre-packed five- and 10-bound bags bearing the Hinode brand.
"We made it the biggest brand. At one time we had 67 percent of the rice business," in the islands, Macdonald said. Other wholesalers lost out to the brand by maintaining "rice will always be sold in 100-pound bags," he said.
Consumers should not be overly concerned about the cooperative's demise, said Brian Christensen, a spokesman for Fleming Companies Inc., which now distributes the brand in Hawaii. "There's a lot of rice out there," he said.
Hinode used to be the No. 1 brand in the islands but Diamond G probably has surpassed it, Christensen said. His company received a Hinode shipment last week.
The co-op at one time had some 1,600 farmer members and mills and drying facilities throughout the Sacramento Valley, according to the Sacramento Bee. Its product was the Calrose variety of rice, a medium-grained variety. The co-op's membership fell over the years to only about 120 farmers, and sales, which peaked at around $300 million, dropped to $15 million in 1999, the newspaper reported.
RGA had a lucrative arrangement to sell rice to South Korea through a New Jersey broker but the deal fell through in the 1980s amid allegations that Korean officials had enriched themselves by selling rice at excessive prices, according to the Sacramento Bee report. Ultimately that Korean government toppled, partly because of the rice controversy, and new leaders abruptly slammed the door on rice imports.
"Literally overnight, RGA lost 40 percent to 50 percent of its export business and never recovered," Bill Ludwig, the co-op's president and CEO, told the newspaper. Sales of its packaged Hinode rice to Hawaii stores was one of its last remaining businesses. Ludwig told the Bee that the brand name might be sold.
Other industry sources said that the assets of RGA have been turned over to its big creditors, John Hancock Insurance Co. and Wells Fargo Bank.
Honolulu marketing consultant Will Page, who has promoted the Diamond G brand in Hawaii, said Hinode was by far the leader in Hawaii until new brands began to emerge in the 1980s.
Diamond G and several other well-known brands of Calrose rice are produced by Farmers Rice Cooperative, also based in the Sacramento area, Page said.