Last dairy on Oahu closes

Feed prices have jumped by nearly a third in the past year

Oahu's dairy industry is all tapped out.

After 12 years of operation, Waianae's Pacific Dairy will shut down milking operations by Feb. 15. It is currently in the process of selling or slaughtering its herd of 300 cows.

The closure is yet another blow to Hawaii's dairy industry, which has seen three milk producers shut down in the past year, the most recent being Kamuela Dairy on the Big Island. Clover Leaf Dairy in Upolu and Island Dairy in Ookala on the Big Island are the last two dairies in Hawaii.

Chin Lee, a dairy extension specialist at the University of Hawaii, said if the state wants to keep production, it should d buy up additional lands to provide for agricultural use, such as grazing, to help farmers cut costs.

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Oahu is out of fresh milk.

The island's last dairy has started shipping and slaughtering more than 300 cows as part of its efforts to close down operations by Feb. 15. It marks the end of several years of financial struggle for Waianae's Pacific Dairy, which operated for 12 years.

The closure is yet another blow to Hawaii's dairy industry, which has seen three milk producers shut down in the past year, the most recent being Kamuela Dairy on the Big Island. Last year's milk production through November was 33.2 million pounds a drop of 37 percent from 2006, according to the State Department of Agriculture.

"We can't afford to feed the cows anymore because all the feed comes in from the mainland," said Pacific Dairy manager Monique Van Der Stroom. "Feed prices have gone way, way up in the last couple of months."

Clover Leaf Dairy in Upolu and Island Dairy in Ookala still produce milk, most of which stays on the Big Island, said Edward Boteilho, president of the Hawaii Fresh Milk Industry and Clover Leaf Dairy.

"Right now it is unbelievable," he said. "We have never seen such high transportation costs, and the feed prices have gone up tremendously because a lot of the corn is going into ethanol."

Clover Leaf saw costs jump by a third this year, putting the dairy, which milks 600 cows on 1,033 acres of state-owned land, into the red for the first time in its 46 years of operation. It lost more than a quarter million dollars last year due to rising prices of feed, shipping, utilities and medical benefits for its 15 employees. The price of a container of grain has gone up from $7,000 to $10,000 this past year, Boteilho said. He orders four a month.

"The only thing we can do is cut down on our forages and try to produce locally," he said. "That's the only thing that can help us cut expenses."

The state imports roughly 80 percent of its fresh milk, Jeri Kahana, commodities branch manager for the state Department of Agriculture, said in August. That's up from 55 percent three years ago.

Pacific Dairy, which produced up to 10,000 gallons a day with a full herd of 1,300 cattle two years ago, now only produces 1,400 gallons a day with 300 cows and six employees. It planned to shut down this summer, but stayed open in hopes that new state subsidies for feed costs would help it make ends meet.

"It's very difficult for us to find our own acreage and find the land that we need to dedicate to grow our cattle and local milk," Van Der Stroom said. "There are lands available, it's just very difficult to obtain them. Had we been able to take these cows and do rotational grazing, we would be able to survive."

She declined to provide specific financial information, but said the last several years have been "difficult."

Legislation that took effect July 1 sets aside $3 million each year through 2009 to subsidize feed costs for dairy and poultry farms. Oahu and Big Island dairies got some relief in the past year with milk price increases to $31.50 and $29.50 per 100 pounds respectively, but Boteilho said he will continue to lobby the legislature this year for further increases.

The production cost per 100 pounds of milk year ago was $24, Van Der Stroom said. Now it's closer to $36. All these costs could translate into price hikes, Boteilho said.

"All they have to do is get rid of two more dairies and they will have a complete monopoly," he said of mainland dairies. "If you think prices are high, just wait."

Chin Lee, a dairy extension specialist at the University of Hawaii, said the state needs to buy up additional lands to provide for agricultural use, such as grazing, to help farmers cut costs. Both Clover Leaf and Island are operating on state land, he said.

"The whole issue of sustainability comes into play," Lee said. "Each day we do not do something about it, we become more vulnerable in terms of our dependency."