North Shore Cattle owner Calvin Lum got his start thanks to a federal grant. With the program ending, farmers say the state needs to tackle a variety of issues if agriculture is to succeed in the islands.


The new seeds of farming

Funding by crop

By Lyn Danninger

When state Senate President Robert Bunda said at the opening of the Legislature last week that the state must do more to support local agriculture, many in Hawaii's budding agriculture community were thrilled. But others figured it's about time.

As Bunda noted in his speech, agriculture represents a sizable industry, yet in the past "it has often been dismissed out-of-hand by skeptics."

Part of the problem for agriculture is that its contribution to the state's economy, at around 2 percent of gross state product, is small.

But because agriculture's value is measured at the wholesale level, multiplier effects have not been included, such as the processing of products and relationships with other industries and businesses that provide support and services.

Calvin Lum, owner of North Shore Cattle, said there is room in the market for more local farmers to raise beef.

Studies done in the past couple of years by the University of Hawaii's College of Tropical Agriculture and Human Resources indicate agriculture's contribution to the economy is far greater than it would appear and could be as much as 18 percent of GSP when multiplier effects are included.

The Legislature appropriated more than $26 million to aid farmers in the past couple of years, mostly for improvements to irrigation systems across the state. But it was a federal grant, known as the Rural Economic Transition Assistance-Hawaii, that started Hawaii's diversified agriculture renaissance and gave many would-be farmer-entrepreneurs in Hawaii the opportunity to show what they could do with some land.

The program provided grants to individuals and groups who wanted to create new agricultural businesses or expand existing ones. Many of the areas targeted by the grants were those where people had been displaced by the closure of sugar mills.

But now the federal program is winding up and all funds having been allocated.

Farmers, industry and state officials say a lot has been accomplished.

"We've gotten crops and produce we never thought through the (federal) program. I don't think some (farmers) could have gotten off without it. It provided a leg up," said Bill Paty, chairman of the program's oversight committee.

But they acknowledge more needs to be done to support the growing industry in areas such as allocating land and water resources, research and development and market and business development.

The federal grant began in 1993 with an allocation of just more than $900,000. Total grants given out over the life of the program amounted nearly $20 million, supporting more than 90 projects on four islands and encompassing 18,000 acres of former sugar land.

One of those who benefited directly from the federal grant is retired Oahu veterinarian Calvin Lum, owner of North Shore Cattle. Lum received $90,000 in 1997.

"The grant was mainly to help us kick start our operation," he said. Today Lum is raising about 500 head of cattle on 1,000 acres of pasture he leases from Dole Food Co. in Helemano.

The ranch raises cattle strictly for the local market.

"What we are trying to do is produce lean local beef. It's hormone- and antibiotic-free. We think we can produce a healthy piece of beef that tastes good," he said.

Lum's beef is now finding its way into local restaurants such as Alan Wong's Pineapple Room. While not sold in local supermarkets, beef can be ordered directly from the ranch online, Lum said.

Lum said he'd like to see more local beef producers. He believes there is no reason why more than 90 percent of Hawaii's beef should be imported.

"I'd like to see us take back more of the market share for local beef rather than eat boxed beef," he said.

Much of the day-to-day support for those like Lum came from the Hawaii Small Business Development Center, which helped administer the federal grants.

With the grants ending, programs director Bob Chase said he is now concentrating on helping those who received grants create value-added products. Given the size of most farms in Hawaii and the costs associated with shipping, niche markets are the answer, he says.

One grant recipient, Jim Reddekopp, president of Hawaiian Vanilla Co., found not only the right niche, but also a product with many value-added possibilities. Reddekopp started the company on the Big Island in 1998 and received a $110,000 federal grant to help him expand.

Reddekopp's vanilla beans sell for $9 a bean in local gourmet stores. But it is also turned into vanilla extract, which sells for $11 for a 4 oz bottle; Hawaiian vanilla bean ice cream; and beauty products. Reddekopp said he has plenty of other ideas in the pipeline for related products and activities. Value-added products are the only way to go, he said.

"We grow the only commercial vanilla beans in the U.S.," he said. "But the only way we can compete with the third world is to take our product and turn it into a value-added product."

Chase agrees. "Major markets and commodities would be difficult because of the volumes required, so it's support for value-added processing, concepts and development of those products that's needed," he said.

But there are lingering obstacles of land and water availability that only the state and large land owners can address. Unless long-term solutions to those problems are found, agriculture's growth and success will be limited, said the farmers and Chase.

In his speech to the legislature, Bunda made reference to those problems.

"We must resolve water disputes. We must encourage the large landowners, including the state, to put together agricultural land into long-term production and, conversely, discourage leaving productive land fallow," he said.

Bunda also called for aggressive marketing initiatives that could give farmers muscle to find new markets.

Lum said he is hopeful the renewed interest in agriculture may help resolve many of the farmers issues.

"I was really happy when Sen. Bunda spoke about helping us get long-term leases. It takes a load off when you've invested time, effort and money," said Lum.

Something as basic as a bank loan is not possible when it's difficult for many farmers to obtain a long-term lease on their land, Lum said.

"In order to get a loan you need to have some idea, a long-term vision of where you are going so you need a lease to coincide with that long-term vision," he said.

The small business development center's Chase agrees.

"The leases (many landowners) give are often week-to-week, month-to-month and every now and again a year. It's day-to-day in most cases," he said.

Chase said landowners need to be assured that should the lease arrangement not work out, they can get their land back easily and cheaply. That's not always the case, which explains why landowners may be reluctant to grant long-term leases, he said.

"I think things like the lease problem need to be looked at from all sides so both the landowner and the lessee are protected," he said. "If leases could be broken due to defined circumstances, that would give the person leasing longevity but at the same time protect the landowner if the lessee did not pay."

Sen. Lorraine Inouye (D, Hilo-Honokaa) who chairs the Senate Committee on Water, Land and Agriculture, said she hopes to address a variety of agriculture's long-standing problems this legislative session.

She likes the idea of making more state land available for lease to farmers and has introduced a bill to enlarge the state's Kahuku agricultural park.

"Hopefully, if there are people on short private leases we could get them onto the state agricultural park," she said.

Inouye also wants to appropriate money for completing a second phase of the Hawaii state drought plan, which has already received federal funding and could attract more.

"The plan identifies the needs and problems of all islands and where we should go from here. It's something farmers and ranchers wanted several years ago and would tie in with any future statewide irrigation system," she said.

The new chairwoman of the state Department of Agriculture, Sandra Lee Kunimoto, has set her sights on improvements and support for the industry.

Research and development, marketing, teaching farmers business and entrepreneurial skills, and continuing efforts to improve infrastructure will be on her agenda.

"We hope all the people of Hawaii can see the importance of agriculture and the importance of maintaining prime agricultural lands for agriculture," she said.


Federal funding

Amounts spent in federal Rural Economic Transition Assistance-Hawaii grants during the 1999 fiscal year:

Traditional crops
Dairy, livestock, feed $4,046,238

Banana $164,512

Coffee $841,998

Ginger $291,347

Honey $196,461

Papaya $1,088,540

Taro $828,823

Vegetables $1,329,668

Forestry $367,384

New Crops
Hybrid pineapple $245,667

Herbals $1,355,680

Asparagus $477,793

Cacao $592,720

Hearts of Palm $146,901

Vanilla $70,857

Melons $200,000

Bulb Onions $112,500

Dairy $320,970

Beef/pork $650,477

Feed $588,970

Processing $1,601,257

Source: Rural Economic Transition Assistance-Hawaii.

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