Bananas, Company News

Big Changes at the Farm

There are some big changes around here that we’d like to tell you about. The following is a press release we just sent out:

Mauna Kea Banana Company Ends Banana Production

Pepe‘ekeo, Big Island, Hawai‘i – April 4, 2008 – After more than 30 years in the banana business, Mauna Kea Banana Company—which started out as Kea‘au Bananas—has announced it is closing down its banana operation.

The company will, however, continue to produce its Hamakua Springs Country Farms brand of hydroponic vegetables.

“We’ve had to make some hard decisions due to rising costs,” says President Richard Ha. “Everything has gone up, especially fertilizer.”

“The major thing on my mind right now is our workers,” he says. Nine workers are being let go immediately, and another 20 will see their jobs end in a few months when the final banana harvest is completed.

“To the extent we have other jobs available that they are suited for,” he says, “we will try to transfer them so they can stay at the farm. We are also talking to other banana growers to see if they have openings, and I am talking to the Department of Labor to see if they can help.”

“You know, we’re always trying to see where we need to be five and 10 years down the road,” he says, “and always concerned about the greater good. It’s painful, of course, but for the benefit of the larger amount of people, this is the way we need to do it.”

He plans to lease the former banana land to area farmers. “Part of our overall plan is to become more diversified in food products,” he says. “We anticipate supplying the local community, and the more different stuff we/they grow the better we can serve the community.”

He emphasizes they want to work with farmers who live in or near Pepe‘ekeo and can walk or travel a very short distance to work, so their travel costs are minimal as energy costs continue to rise. “We definitely want to be community-based,” he says. They can also help farmers market their products, though that is optional.

Farmers interested in leasing land can call Farm Manager Kimo Pa at 960-1058. “They’ll need to come and sit down with us and tell us their plans,” says Ha, “and we’ll see if it fits into our program. They will need to fit into our criteria of sustainability.”

Mauna Kea Banana Company is also expanding its hydroponics operation, which operates under the brand name Hamakua Springs Country Farms. Ha says they are in the process of adding 20 new planting houses for tomatoes and other produce. Hamakua Springs produces tomatoes, lettuce, cucumbers, green onions and other hydroponically grown vegetables, which are sold to Hawai‘i supermarkets and restaurants.

He explains that, by necessity, the company is adapting to the changing environment. “That is what is driving us, and it has to do with rising energy prices,” he says. Among other changes, they are currently in the process of developing hydroelectric power at the farm. “People that don’t adapt, well, others will replace them who will adapt. If we don’t change, we will be history.”

“I worry about our workers,” he says. “It’s the major thing on my mind. The only consolation is that the economy is still good. Jobs are available right now. If we waited too long, they’d go into a jobless market and that would be even worse.”

A founding member of the Hawaii Seal of Quality program, the award-winning Mauna Kea Banana Company (formerly Kea‘au Bananas) has been in business on the Big Island for more than 30 years. Through its Hamakua Springs Country Farms brand, the farm produces hydroponic tomatoes, lettuce, cucumbers, watercress, onions and more for Hawai‘i supermarkets and top hotels and restaurants. Mauna Kea Banana Company was the first banana farm in the world to be certified “Eco-OK” by the Rainforest Alliance. The farm was also one of six national finalists for the Patrick Madden award, a sustainable farming commendation given by the U.S. Department of Agriculture.

Community, Where We Live

Merrie Monarch Week 2008

I love Merrie Monarch week in Hilo.

Hilo absolutely shines every year during Merrie Monarch week, which started Sunday. Hula dancers and hula fans

descend upon this town from the other islands, from other states and even from other countries, for our annual, huge, week-long celebration of hula.

During Merrie Monarch week every year, when there are so many more Hawaiian people than usual around town, I feel like I can squint my eyes and almost see what it was like here a couple hundred years ago.

And there is hula everywhere. Here is the halau of well-known California kumu Mark Keali‘i Ho‘omalu practicing outside one of the hotels on Banyan Drive yesterday morning.

And I love the craft fairs with beautiful Hawaiian products, and the food, and the demonstrations and talks and everything Hawaiian.

Here are some of the other things I really enjoy about Merrie Monarch week in Hilo:

• Hearing lots of people around town speaking Hawaiian

• Hula performances everywhere!

• Seeing all the beautiful, woven lauhala hats people wear

• People wearing amazing flowers in their hair. And lei. And beautiful, genuine smiles.

• Seeing the living traditions that people still practice. Such as this hula by Halau O Kekuhi, who performed at Wednesday night’s Ho‘ike, a free performance every year during Merrie Monarch week. It was a thrill to see this renowned halau dancing in the open-air Edith Kanaka‘ole Stadium with Mauna Kea behind them.

• Hearing Hawaiian music

• Seeing Uncle George Na‘ope around town

• People who spontaneously stand up and do a hula because they’ve just gotta dance!

This was unplanned. This woman in the audience was sitting, doing the hula from her chair as she enjoyed this familiar anthem to Hilo, and then just cast aside her cane — really — and got up and danced, to great applause. It was wonderful.

• Seeing cultural traditions survive, and thrive

• Little 3-year-olds up on stage with their elders, dancing hula

• Seeing how many people—young, old, male, female—appreciate hula

At the Hilo Hawaiian on Tuesday, Iwalani Kalima’s halau performed. At one point, the students kneeled on the stage and pulled two sticks, which they would use in the upcoming hula, out of their waistbands. The kumu (teacher), Iwalani, was at the ipu, but suddenly she stood up and climbed on the stage.

She kneeled down next to the tiniest girl — could she even have been 3 years old? Maybe only 2 — and started fumbling around with the girl’s outer skirt. “She lost hers,” she finally said to the audience, and we realized the girl’s sticks had slipped inside her costume. Iwalani had to lift up the outer skirts and hunt around inside the elaborate costume for the little girl’s sticks. It went on for quite some time and was cute and hilarious. Here’s that performance.

There are a hundred other stories and photos and videos I could show you. Search “Merrie Monarch” at YouTube if you’d like to see more.

You can also watch tonight’s Merrie Monarch program live on KITV’s website. It’s Hula Kahiko, traditional hula, and it runs from 6 p.m. to 11

p.m. The final night, which will also stream live on KITV, is tomorrow and runs from 5:30 p.m. to midnight.

And then you can start making your plans to be here in Hilo next year!

Music

Slack Key Class

Richard asked Macario to say a few words about the slack key guitar class they both took recently, which was taught by slack key master Cyril Pahinui.

The class, held at the University of Hawai‘i at Hilo, was popular — so many signed up that they had to split the group into two different classes.

Macario says it was Richard’s “fault” he was there. “Richard told me about this class coming up, and I signed up at the very last minute. It was fun taking the class with a friend. We were having so much fun, we wouldn’t play we would just listen. You get caught up when he starts to play, and we’d just put our guitars down and listen to him playing.”

“Richard was into it,” he says. “Both of us were. He and I were just like two little kids at a candy store. It was great.”

Macario was a professional musician in his “former life” — a couple decades ago, before changing careers and becoming a photographer. But he played drums, not guitar, and says he always wanted to learn slack key.

“It’s more than just playing the music,” he says. “There’s a feeling to the music. Cyril kept saying, ‘Don’t play how I play. Play how you feel.’ Because when you’re playing, and you’re in that groove, then something happens. Because you can move people.”

Cyril’s father was the late great Gabby Pahinui, the legend in Hawaiian slack key, and he learned to play guitar from his father since he was a young boy.

Macario says Cyril taught his father’s tuning — the way he tuned his guitar. In older days, this information was private and never shared. So why does Cyril teach it now?

Cyril told the class he likes to pass it on. “He said if he doesn’t teach anybody, and nobody carries it on after him, then he’s going to lose it.”

Macario says he’d definitely take a class from Cyril again. “There’s so much coming at you. I think it made the beginners a little scared. But it’s good for them. It’s good for them to see we can all do this. All you have to do is work at it. If you practice everything he taught you in this class, then when he comes back to teach the next one you’ll be ready for that class.”

“The music is just in him,” he says. “And in class, he’s coming at ya. It’s a lifetime, two lifetimes of music coming at you, and you’d better pick up what you can because you’ve only got six classes to do it.”

He says he’s still trying to find his way around his guitar. “But everything Cyril taught us just makes sense,” he says. “If you practice what Cyril taught in that class, you can pretty much play any Hawaiian song. And not only did Cyril teach the class, he made people go up and jam with him. How many chances do you get to play with Cyril Pahinui?”

He says the class was a nice surprise. “Before, his dad just overshadowed everything because he was so great. But Cyril is on his own and carrying on the tradition even without his dad.

“And Cyril himself is ‘the man’ now,” he says. “He’s the icon now. He is a great slack key player in his own right.”

Current Affairs, Peak Oil

Sobering Price Increases

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Aloha Airlines—which has flown all of us between the Hawaiian Islands since 1946—terminates their passenger service today, after filing for bankruptcy protection 10 days ago. We knew the airline was in trouble, but we never expected it would come to this.

Talk about coming to grips with reality. Kimo and I had a meeting with our fertilizer distributor a few days ago, who told us that fertilizer prices have gone up again. Just by itself this fact would not be especially worrisome. But nitrogen fertilizer prices are related to energy prices, and energy prices are likely to keep rising as far into the future as we can see.

The distributor told us some farmers are actually dipping into their savings to buy fertilizer. Not only nitrogen fertilizer, but potassium fertilizer is also rising in price.

It rains a lot here on the east side of the Big Island; maybe 140 inches in an average year. Quite often the fertilizers we surface apply are washed away. With fertilizer prices continuing to rise, it’s just a matter of time before we will not be able to afford broadcasting fertilizer in this manner.

Then he told us that Roundup, the main herbicide we use for our banana operation, has doubled in price. We use Roundup to control the weeds in more than 400 acres of bananas.

Have you noticed there are less abandoned cars now than there used to be? I’m told that tow truck operators are finding that scrap metal prices make it worth their while to haul abandoned vehicles away. Someone told me that one catalytic converter is worth $125.

That’s the other side of the phone call that I got last week asking if I wanted to order more growing houses, because steel prices are going up.

Weyerhaeuser, the corrugated box manufacturing company on O‘ahu, closed a couple of weeks ago. More than half of Hawaii’s agricultural products were packed in Weyerhaeuser boxes. WE used their boxes for many years.

Last week I saw in the paper last week that O’Keefe Bakery here in Hilo is being badly affected by this record increase in electricity costs.

Most of the electricity here on the Big Island is generated using oil. I was told that rising plastic plate costs are hurting Mom & Pop plate lunch places, which cannot raise their prices enough to cover the increase. Plastic is, of course, a byproduct of petroleum.

And medical costs are rising as well. HMSA, which provides health insurance to more than half of Hawai‘i’s population, just announced a substantial price hike in its rates.

It is very sobering to see these cost increases going on all around us.

Most worrisome to me is that farmers cannot control their prices. We are told all the time that farmers are not price makers—they are price takers. In other words, they merely take the price that wholesalers or retailers give them.

We know what is happening. We live in a finite world, and resources are limited. Do we just sit in the pot and wach ourselves cook?

Community

Feeling Good

Whole Foods Buyers Jeff Biddle and Claire Sullivan visited us yesterday, and we spent more time talking about our interaction with the community than about business. We talked about Chef Alan and the Keaukaha School sixth graders, the Andrade Camp water line project, our Tomato Recipe Contest, the farm’s “hanai”-ing Nawahiokalaniopu‘u School, and our plan to grow more products that make up a balanced diet in order to benefit our community. And, oh yes, our hydroelectric project.

It’s not just about our farm—it’s about the community. It’s all of us. You know how sometimes it’s just not appropriate to discuss these kinds of things? With Jeff and Claire, they were the most comfortable things in the world to talk about. We all need to take care of each other, and from my conversation with them I got the impression that Whole Foods feels that way, too.

Although we did do the business thing—Whole Foods knows we are all about good quality, dependability, food safety, etc.—the more important, and most satisfying, thing today was talking about how we interact with our community.

Then in the afternoon it was on to a meeting with the staff of Kalaniana‘ole School, where I volunteered to coordinate the Hamakua Coast farmers who will set up booths at their fundraising bazaar.

I stepped out of that meeting to participate in a phone conference that Dwight Takamine arranged with the USDA, Board of Water Supply, officers of the Andrade Camp Community Association, Senator Inouye’s liaison and a consultant to the Board of Water Supply. We discussed the final steps that will occur before construction begins to replace the old, plantation-era water system of the tiny former sugar plantation camp next to the farm with a new, county water system.

It’s been an amazing process that started a couple of years ago, and with everyone’s cooperation we have been able to make it work. At our next meeting we will be planning the groundbreaking ceremony.

I stepped back into the Kalaniana‘ole School meeting, and then home to see Keaukaha Elementary School on the PBS program “E Ola Pono.”

It all makes work fun, and it sure made for a “good feeling” kind of a day.

Food Security, Government, Renewable Energy Sources

Selling Electricity

I’m starting to become a policy wonk, which was not in my plan!

Monday I testified at the legislature on behalf of resolution HR 254/HCR 504, which urges the Public Utilities Commission (PUC) to rule that all Schedule Q contracts should receive the full “avoided cost” pricing.

It was important to me to testify about this because the PUC is changing its interpretation of how to pay for electricity that is sold to the electric company under “Schedule Q.”

Schedule Q applies to small power producers that generate less than 100 KW. One hundred kilowatts is enough power to continuously run approximately 15 refrigerated containers, each 40 feet long.

Schedule Q always paid “avoided costs” of oil—in other words, the oil costs that would have been used to generate the electricity.  For instance, if HELCO charges 32 cents per kilowatt hour (KWH) for electricity, and 23 cents of that cost was for oil costs, then HELCO would pay small power producers 23 cents per KWH for any electricity they bought.

Now the PUC says that the rate the utility pays should not be tied to “avoided costs” of oil. We worry that this will mean lower returns. If that’s the case, people will not want to undertake alternate energy projects.

Because the “avoided costs” in my example of 23 cents/KWH is much less that the 32 cents/KWH that HELCO charges customers, Schedule Q actually encourages innovation as people seek ways to maximize the use of the electricity generated. I know we ask ourselves everyday: “How else can we use the excess electricity from our hydroelectric project?”

I feel it’s important that Schedule Q continue to be interpreted as-is, because then we are keeping the money for electricity in our own economy. It does not end up making electricity cost more. And why pay foreigners for oil, when you can keep the money here with our own people? And if farmers happen to take advantage of this rate, maybe more people will farm, and then we will have the added benefit of becoming more food secure here in Hawai‘i.”

Electric Bills Stun

Just a couple days ago, the Hawai‘i Tribune-Herald’s front page headline read: “Electric bills stun isle residents; Fuel surcharge adds $76 to typical home’s cost.”

Electricity rates are rising, and food costs and everything else related to oil is also getting more expensive. A couple weeks ago I spoke about food and fuel to the Hilo Bay Rotary Club, and one person there told me that he owns a service station snack shop operation. His electric costs, projected to be $70,000 just a few months ago, are now projected to cost $100,000 annually. He told me that his profit margins are shrinking because he can only raise his sandwich prices so much.

If there is an opportunity for him, and others, to sell electricity under Schedule Q, it will benefit all of us. If not, we will just keep importing more foreign oil to generate the electricity he could have produced.

Recently I looked at a modeling exercise done by Dr. Makena Coffman at the University of Hawai‘i Economic Research Organization. It was titled “Oil Price Shocks and Hawai‘i’s Economy.”

I told her of the Alternate Energy Ag Farm Loan Bill that we are pushing through the legislature. She said she was glad to hear there are “renewable energy for agriculture” bills going forward, because, she said:

“Initiatives like that are exactly what we need to mitigate a drawn-out recession. Oil price shocks historically have short-term effects that dissipate over time, largely because it induces some innovation and behavioral change. Getting local Ag through all this really depends on its ability to decouple the sector from oil as an input.”

Schedule Q plays a crucial part in enabling behavioral change.

Biofuels

More and more I hear that biofuels will play a big part in our energy future. First we need to realize that biofuel production is farming.

Here is a quick and dirty estimation of what a farmer can earn farming biofuel:

Say a barrel of oil costs $100 and each barrel contains 42 gallons; that means each gallon of oil is worth $2.38. Each gallon weighs approximately 8 lbs., so each pound of liquid oil costs 30 cents. If it takes three pounds of palm nuts, jatropha, kukui nuts, macadamia nuts or whatever to make one 1 lb. of oil, then the most the farmers could expect as a return is 10 cents per pound.

No farmer would farm biofuels, or anything else, for 10 cents/lb., or even 20 cents/lb. And the Big Island’s terrain and weather do not lend themselves to big agriculture.

I really don’t think biofuel could even take care of transportation, let alone generate electricity. So we really need to think about relying more on electricity for most of our energy needs.

Here is an analysis that says that when oil hits $162 per barrel we will go into a recession much like the recession of the 70s. http://www.financialsense.com/Market/cpuplava/2007/1003.html.

The exact price that will trigger this to happen is not important. What is important is that when we go into recession because of high oil prices, it will be very difficult to come out again – because demand will be outstripping supply by larger and larger amounts. And oil prices will continuously rise. How we fare will largely depend on how successful we have been in decoupling ourselves from foreign oil.

Schedule Q is one way to incentivize people to decouple from foreign oil.

As I have said before: “The kahuna not going save us.”

Awards

Hawaii Business Hall of Fame

Richard was inducted into the Junior Achievement Hawaii Business Hall of Fame a couple weeks ago, and Penny Mau took some lovely photos at the Waikiki ceremony.

Penny (now a school principal on O‘ahu) and her husband Ron (a well-known entomologist with an illustrious career at the College of Tropical Agriculture and Human Resources at UH Manoa) were neighbors and good friends of ours back in the early 70s, when we lived in apartments overlooking Hilo High School.

We’ve stayed friends all these years, and I invited them to be with us at our table at the awards ceremony. Ron was in China, on assignment, and couldn’t make it, but Penny came with her brother Terrance. Tracy and Kimo were also at our table, as were Dan Cabrera and Edna Bartolome. Dan was Best Man at our wedding; we attended UH together in the late 60s.

See Penny’s photos of the event here.

Renewable Energy Sources

Hydro Power

You have to give the Board of Water Supply, under the leadership of Milton Pavao, credit. While everyone else is talking about alternate energy, the Board of Water Supply is quietly doing something about it. They finished the first hydroelectric unit on Hina Lani Street this past September.

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The tall unit on the left is a turbine that generates electricity. It is at the third water tank at the intersection of Hina Lani Street and Queen Kapiolani Highway in Kona.

And now they are working on another at the Kahalu‘u Shaft just above Keauhou.

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The hydroelectric generator located just outside the Kahalu‘u Shaft. This generator provides electricity to the three pumps down in the shaft. Additional power is provided by HELCO.

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There are three big water pumps in this shaft located above the Keauhou shopping center, just off the main highway. The Board of Water Supply generates electricity from a higher elevation source. The electricity generated will help to lower the cost of running the three pumps. Savings may be in excess of $150,000 per year. This will benefit all Board of Water Supply customers on the Big Island.

At approximately 40KW, these units are tiny compared to the big generating plants, which can be up to 700 times larger. But they can save the Board of Water Supply system more than $100,000 each. And they have plans to install these kinds of units all over the island. This will stabilize water rates and avoid our having to pay for oil from foreign governments who may not even like us.

I am interested in all this because we plan to install a similar type unit soon at our farm. But I am very concerned, because there seems to be a problem getting permitted under Schedule Q.

Schedule Q applies to small projects that are less than 100 KW in size. By contrast, geothermal is 750 times larger than that. HELCO enables the larger projects by competitive bidding. This insures lowest rates to rate payers.

Schedule Q has different goals and results. It contemplates encouraging alternate small energy production, and it encourages food security as well as economic security through enabling small producers of energy.

The first unit on Hina Lani Street, completed in September, still has not received its permit from the PUC. That is nearly six months. For half a year we haven’t avoided oil usage and Water Supply customers have not received the benefit of its use. I worry that the PUC is contemplating some other payment schedule, rather than the “avoided cost” of using oil, as was the procedure all along under Schedule Q.

Because of the uncertainty, it was suggested that we consider a different rate schedule—something called Net Metering. This means that usage would be accumulated for the month, and if we used more than we generated we would pay the net difference. But if we generated more than we used, we would just give it free to HELCO.

For us, this would make it more difficult to justify starting the project in the first place. Our project is estimated to cost more than a million dollars. And nearly 25% of the unit’s output would not contribute to the loan repayment.

But this is about more than just us. In a world where oil supplies are decreasing and where we, sitting in the middle of the Pacific, are especially vulnerable, we need to encourage more people to provide renewable energy so we can free ourselves from foreign oil. We should encourage our small businesses to produce energy, not discourage them.

Earlier in the session, we submitted a separate bill that attempts to empower farmers by enabling them to finance alternate energy projects under favorable terms. It expected that Schedule Q would continue in effect.

The benefits of this bill are:

1. Food security. If farmers make money, they will farm.

2. Energy security. The less we depend on foreign oil, the more secure we will become.

3. Economic security. If we pay our own businesses for energy instead of paying foreign government for oil, the money will circulate and multiply in our own economy.

The PUC needs to streamline the whole process and it needs to pay “avoided costs” of oil under Schedule Q.

Here is the resolution that we drew up to bring clarity to the PUC regarding the legislative intention of Schedule Q.

Alan Wong

Alan Wong’s “Farmers Series” Features Hamakua Springs

June and I went to Alan Wong’s Restaurant on Monday evening, when Chef Alan featured Hamakua Springs Country Farms. We were the third farm in their Farmers Series of special menus. The food was unbelievable – beyond words. We also chatted with the guests and it was a great experience.

Today we received an email from Arizona. This is what it said:

I was in Honolulu last weekend and had the great fortune to dine at Alan Wongs. The server indicated that the produce used in the dishes at Alan Wongs came from your farm. I was so smitten with the food at the restaurant that I purchased the cookbook.

That said, I will be having a dinner party next month at my home and it is my ambition to use recipes from the Alan Wong cookbook. I think the best way of achieving the level of quality that I experienced at the restaurant would be to use the really extraordinary produce that I enjoyed during my meal. I am not sure whether or not you have the ability or the interest in selling and shipping your produce to the mainland but, if you do, I would celebrate the opportunity to order all of the products that I need from your farm and have them shipped to me via overnight for use in my attempt to replicate the wonderful food at Alan Wongs.

Unfortunately, we are unable to ship to the mainland due to quarantine restrictions. We also chatted with a couple who told us that they had just been to Monaco and Paris and that Alan Wong’s Restaurant had the best food by far. June and I could not believe they were talking about the four-course dinner featuring tomatoes that came from our farm.

See the amazing Hamakua Springs Farmers Series menu

Company News, History

Building History

I asked John Cross, an executive of C. Brewer & Co., the sugar cane folks we bought our land from: “How old is that green shack on our property, the one located next to the old airstrip?”

He told me that the shack predated airplanes. In fact, the building was used to support mules that cultivated sugar cane in the old days. So this building is at least 55 years old. And best guess is that it’s been there for longer than 65 years. It was called Duggan’s Shack in the old days. But that’s another story.

A few months ago, we started thinking about what we could do with this old building. Trees and grass were threatening to cover the building completely and the roof had holes.

We didn’t know exactly what we would do with it, but we knew we had do something or we would lose a part of this land’s history.

First we thought about putting up a farm stand. Kimo decided to repair the most obvious problems, like holes in the roof, etc. We really liked the idea of doing a farm stand, since it was located right on the farm, but we worried there might not be enough customers to support the business. While we were thinking about it, Kimo made the necessary repairs and cleared the brush around the building.

About that time, my grandson Kapono and I started to participate in the Kino‘ole Street Farmers Market. We’ve been there for maybe six weeks now, and from that experience we both realized we didn’t think we could get enough customers to come to Duggan’s Shack. It’s off the highway and the area’s population is not large enough. Lose money.

But then the Alan Wong cookout came up and we offered to dig an imu and make kalua pig. Kimo decided to take that the opportunity to kalua enough so each of our employees could take home a container.

And right then we figured out what we can do with Duggan’s Shack in this new age. We will use it for company parties—where we will do an annual kalua, have fun and send everybody home with food. Perfect!