Isle coffee industry faces ongoing problems

KAILUA-KONA » Kona coffee farmers and processors are determined to protect their industry, despite a couple of issues that keep percolating.

Following a good year, two bills failed in the Legislature, and a new processing partnership still has not found widespread acceptance.

"We had a good season. The price was steady and the farmers did well," said Roger Kaiwi, general manager of Captain Cook Coffee Co. "Farmers had better-than-average crops, and the quality was good."

Kaiwi, whose company represents more than 300 farmers, said he is encouraged by the stability he has seen in the industry over the last couple of years, even though there are still several ongoing worries.

One concern involves a proposed coffee and macadamia nut processing and distribution center at Kona Airport.

PLK Air Services Group LLC secured a $25 million special-purpose revenue bond for the project last year, but confusion over the bond terms remains.

While most in the industry are not opposed to competition, some question the fairness of the state government seemingly favoring one business.

PLK partner Al Kam said the project is on track, although he declined to reveal a time line or details of the business plan.

"The bond is guaranteed by PLK, is not tax-exempt and has no state subsidies," Kam said. "The state is simply the vehicle for us to go to the bond underwriters."

Kam, with partners Robert Lindsey and Frederick Parr, plans to package and sell only pure Kona coffee.

"We stand for 100 percent Kona coffee," Kam said.

Kam also sees interest in Kona coffee growing.

"I like the trend of more acreage this year than last," he said. "It gives us great hope that even more people will want to put more trees in the ground. Any movement in the upward direction is good."

That appears to be one area of consensus: growing the Kona name and supporting the coffee farmers through tougher laws.

The longtime debate centers on the "truth in labeling" law, which currently allows the Kona name to be used only when the product contains at least 10 percent Kona coffee.

The two failed bills would have increased that amount to 50 percent or 75 percent Kona coffee.

During a quick visit last week to a local coffee farm, Lt. Gov. James "Duke" Aiona said the lack of agreement in the industry helped kill the bills this year, but he does not see the issue becoming a political one.

At that meeting, several farmers called for a comprehensive market study to determine the effects of any changes to the truth-in-labeling law.

"There are so many unknown factors," Kaiwi said. "We need that impact report before we consider anything."

David Bateman, Kona Coffee Council board member, said the group wants the strictest truth-in-labeling law possible.

"We would much rather see 100 percent, but we realize the reality," Bateman said. "We really need to analyze the financial impacts of the increased percentages."

Such a change, Bateman said, would affect everybody, from farmers and millers to retailers.

Bateman said he is working with the Hawaii Coffee Association to secure up to $250,000 to conduct the study before next year's legislative session.

"By then we'd like to have industry consensus," he said. "Something we can rally behind as a group and say, 'We can all live with this.'"

But a federal labeling law is the only way to protect farmers and consumers, said Deepa Alban, of Kona Joe Coffee.

"We need the same rules in all 50 states," she said. "People who visit here will feel ripped off. They'll say Hawaii prices are too high. Prices in their grocery stores might be lower, but it's not Kona coffee. It leaves the whole rest of the nation laughing at us."

Kam agrees a federal standard is needed.

"The industry should be pursuing federal protection for the Kona name," he said. "The state law has no teeth outside the shores of Hawaii."