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State assumes
control of Kauai
papaya plant

A downturn in the industry
creates financial woes for the
operator of the $2 million facility

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By Anthony Sommer
Star-Bulletin

LIHUE -- The state Agriculture Department has taken over Kauai's financially troubled papaya disinfestation treatment plant in an effort to place a tourniquet on the island's hemorrhaging papaya industry.

The University of Hawaii Board of Regents voted last week to rent its Koloa Packing Co. to the Agricultural Development Corp., an arm of the Hawaii Agriculture Department, which would try to find a new operator.

The $2 million plant, built near Lihue Airport by the U.S. Commerce Department, was opened only three years ago.

(Ironically, it is right next door a a $2.2 million recycling center also built by the U.S. Commerce Department. The facility, intended to be operated by Kauai County, has been vacant since it was completed two years ago).

The papaya treatment plant was turned over to the UH -- which holds the patent on the high-temperature process used to kill fruit flies and other pests -- and leased to Kauai farmer Bill Jessup for $3,000 a month.

Jessup has not been able to pay the rent since July and now owes the university $21,000, according to UH records.

In turn, Jessup said he has not been paid for 75 percent of the fruit he has processed for local papaya growers over the past year because their farms are shut down. The plant has only two farms still using its services.

"All of a sudden, everything collapsed," said Mark Andrews of UH's Office of Technology Transfer, Koloa Packing Co.'s landlord.

Andrews said the university will continue to own the plant and the land under it. It is hoping the Agriculture Department will have the marketing savvy to turn Kauai's papaya industry around.

Jessup said his records show the monthly amount of papayas brought to him for treatment dropped to 30,000 pounds last month from 150,000 pounds a year earlier. The facility was optimistically designed to treat up to 12 million pounds per month.

Jessup, whose lease is up in April, said he does not want to see the plant padlocked and is hoping the Agriculture Department takes it over and finds a new operator. In the interim, he has agreed to continue running it and pay the university a rent of one cent per pound of fruit processed.

Analysts say a combination of factors hit the Kauai papaya growers at the same time:

Kauai's papaya crop, which accounted for 8 percent of the state's 2000 papaya crop, is almost exclusively the Sunrise variety, a specialty fruit with red flesh. Most mainland customers prefer papayas with yellow flesh, according to Bill Spitz, Kauai County agricultural economy expert.

Brazil has flooded the specialty market with Sunrise papayas resulting in drastically reduced prices paid to Kauai farmers.

And, while Kauai's papayas must be treated to remove insects, Brazil does not host the Mediterranean fruit fly and is allowed to ship untreated fruit to the United States as long as it has not ripened in the fields.

The result: the farm price paid for Hawaii papayas dropped to 20 cents a pound in December, less than half what it was a year before.

In general, Hawaii's share of the U.S. papaya market has dwindled even as the fruit has become increasingly trendy to mainland customers.

"In 1990, Hawaii had 75 percent of the small U.S. market. Today it has 25 percent of a U.S. market that is at least twice as big," Spitz said.

The Big Island's papaya crop has had a strong resurgence in the past couple of years after it was nearly wiped out by ring spot virus, which does not occur on Kauai.

The virus-prone papaya variety grown on the Big Island was called Solo. A genetically altered variety of Sunrise, called Rainbow, was developed at the University of Hawaii. It is immune from the ring spot virus.

In addition, Big Island papayas are treated by radiation, which mainland U.S. Department of Agriculture inspectors prefer.

Big Island papaya farms are larger and produce a more reliable supply to wholesalers than those on Kauai, making them very tough competition. The Big Island produced 68 percent of the state's papayas in 2000.

Kauai papaya growers are looking to Japan as a possible new market. Papayas are popular on Japan, which imports some from the Big Island -- although the papayas must not be irradiated or genetically engineered.

The problem is that under current agreements Japan will only accept fruit approved by a Japanese government inspector and the only one in Hawaii is on the Big Island.

And, Japanese regulations call for disinfestation by steam heat rather than dry heat used by the UH-owned facility on Kauai. A conversion of the equipment on Kauai would be required.