HC&S to end sugar operations by year’s end

HC&S (Photo: Alexander & Baldwin)

The sugar farming industry in Hawaii is coming to an end, with the last Hawaiian sugar plantation to shut down by the end of the year.

Hawaiian Commercial & Sugar Company is transitioning out of farming sugar and will instead pursue a diversified agricultural model.

Owner Alexander & Baldwin made the announcement Wednesday for its 36,000-acre plantation on Maui.

The transition to a new model will occur over a multi-year period, and no immediate layoffs will result from Wednesday’s announcement, the company said.

Approximately half of the 675 employees will be retained through the end of the sugar harvest, which is expected to be completed late in 2016.

“No one factor drove this decision, but a lot of factors contributed to it,” Christopher Benjamin, A&B president and CEO, told KHON2. He ran HC&S as its general manager from 2009 to 2011. “I would say that sugar prices, the challenges we’ve had with weather of late, the challenges of harvesting and some of the community opposition to cane burning and water use, all of those things played a role, but no one thing drove this.”

Beginning in March, employees will be laid off as their specific functions are completed. Under the new diversified model, the plantation is planned to be divided up into smaller farms with varied agricultural uses, potentially including energy crops, food crops, support for the local cattle industry, and the development of an agriculture park.

HC&S (Photo: Alexander & Baldwin)
HC&S (Photo: Alexander & Baldwin)

The end of an era

Charly Kinoshita worked in the sugar farming industry for 10 years and was part of the Hawaiian Sugar Planter’s Association, which worked to develop the sugar industry.

“Only 30 years ago, we have gone from 13 down to 12, 10 and eventually just the one sugar mill on Maui,” Kinoshita said.

  • 2009: Kaumakani Sugar Mill ended operations, the last on Kauai.
  • 1999: Pioneer Mill on Maui did its final harvest and closed its doors.
  • 1999: Waialua Sugar Company harvested its final crop, bringing an end to 100 years of sugar production on Oahu.
  • 1999: Hawaii Island’s sugar era ended with the closure of Kau Sugar Mill. The island was once covered in sugarcane, and had the greatest yield in the state.

“A&B’s roots literally began with the planting of sugar cane on 570 acres in Makawao, Maui, 145 years ago,” said Stanley M. Kuriyama, A&B executive chairman. “Much of the state’s population would not be in Hawaii today, myself included, if our grandparents or great-grandparents had not had the opportunity to work on the sugar plantations. A&B has demonstrated incredible support for HC&S over these many years, keeping our operation running for 16 years after the last sugar company on Maui closed its doors. We have made every effort to avoid having to take this action. However, the roughly $30 million Agribusiness operating loss we expect to incur in 2015, and the forecast for continued significant losses, clearly are not sustainable, and we must now move forward with a new concept for our lands that allows us to keep them in productive agricultural use.”

“This is a sad day for A&B, and it is with great regret that we have reached this decision,” Benjamin added. “I know firsthand the professionalism and dedication with which they perform their jobs. The longevity of the plantation is a testament to their resourcefulness and hard work. This transition will certainly impact these employees and we will do everything we can to assist them. The cessation of sugar operations also will have a significant impact on the Maui community and we will do our best to minimize that impact. A&B remains committed to Maui and will continue to be a significant corporate supporter of Maui charities and organizations.”

So why is sugar no longer profitable?

According to Scott Enright, chair, Hawaii Department of Agriculture, “it’s a commodity price. Commodities are usually grown in developing world countries, usually with cheap land and cheap labor. Hawaii stayed ahead of the curve by mechanizing, but with commodity prices trading as low as they are — it’s not just sugar, it’s grains, oil and everything is trading low — it was a time a profit could not be made on sugar.”

Enright says the shutdown will also have a rippling effect on Hawaii’s shipping companies. “It diminishes the back loads from Hawaii to the mainland so yes, it will affect that industry,” he said.

HC&S (Photo: Alexander & Baldwin)
HC&S (Photo: Alexander & Baldwin)

Employee transition and support

A&B will provide transition coordinators to assist HC&S employees in finding alternate employment opportunities. The coordinators will identify and coordinate available federal, state, county and private job assistance programs (including employment counseling, job training, financial counseling, job placement and education services). A&B will offer all employees enhanced severance and benefit packages. Retirement benefits accrued by eligible employees, retirees, and past employees will not be affected by the transition out of sugar. Additionally, the Company will consider displaced employees for positions in its new operations as they become available.

Transition to diversified agriculture

A&B says it is evaluating several categories of potential replacement agricultural activities. These include energy crops, agroforestry, grass-finished livestock operations, diversified food crops, and orchard crops, among others.

“A&B is committed to looking for optimal productive agricultural uses for the HC&S lands,” said Benjamin. “Community engagement, resource stewardship, food sustainability and renewable energy are all being considered as we define the new business model for the plantation. These are leading us toward a more diversified mix of operations.”

HC&S has several test projects underway to further assess these opportunities, and the company plans to expand the scope and scale of the trials during the coming year. Initial projects include:

  • Energy crops: Building upon its extensive experience with crop-to-energy production, HC&S has initiated crop trials to evaluate potential sources of feedstock for anaerobic conversion to biogas. This on-farm testing currently is being expanded from plot to field-scale and HC&S has entered into a confidential memorandum of understanding with local and national partners to explore market opportunities for biogas. HC&S also is assessing the potential of cultivating purpose-grown oilseed crops for biodiesel production and has entered into preliminary, but confidential, discussions with other bioenergy industry players to explore additional crop-to-energy opportunities.
  • Support for the local cattle industry: The Company is exploring the costs and benefits of irrigated pasture to support the production of grass-finished beef for the local market. HC&S has converted a test site of former sugar land to cultivated pasture and is working with Maui Cattle Company to conduct a grass-finishing pasture trial in 2016. High-quality grazing lands could enable Maui’s cattle ranchers to expand their herds and keep more cattle in Hawaii for finishing on grass.
  • Food crops/Agriculture park: A&B plans to establish an agriculture park on former sugar lands in order to provide opportunities for farmers to access these agricultural lands and support the cultivation of food crops on Maui. HC&S employees will be given preference to lease lots from the company to start their own farming operations.

Would genetically modified organisms be part of that future?

“I don’t think we should ever rule out anything. I certainly wouldn’t want the takeaway to be that we’re moving toward GMO,” Benjamin said. “I also can’t say that we would never look at any GMO crop, but we would certainly be very mindful of that, and frankly try to steer away from anything that is going to be divisive in the community.”

HC&S (Photo: Alexander & Baldwin)
HC&S (Photo: Alexander & Baldwin)

Lawmakers pledge their support

Gov. David Ige:

“It is with sadness that I received the news that Alexander & Baldwin will transition out of sugar farming after 145 years. This is a significant historic marker for Hawaii, the end of an era that touched the lives of generations of hardworking, local families.

“However, A&B will now pursue diversified agriculture – a golden opportunity for the state to focus on renewable energy and food security.

“My administration will work with A&B to help guide the transition. Rapid Response teams from the Department of Labor and Industrial Relations (DLIR) will be deployed to assist displaced workers with unemployment compensation, career transition, training for new jobs and job placement. DLIR will also work with the International Longshore and Warehouse Union (ILWU).

“A&B has played a significant role in the state’s economy and has supported our local communities for many years. The state will continue to partner with A&B to ensure its success.”

Rep. Kaniela Ing, D, Kihei, Wailea, Makena:

“Cane burning is by far the most talked about issue in my district. Most of the complaints that (the Department of Health) gets regarding cane burning comes from Kihei. When I knocked on doors in the first election, it’s all I heard about, but of course, this is an issue that has to do with jobs as well. So this news that A&B is going to end sugar is just historic news, and the people of Maui need to realize that as A&B plots its future, it’s also plotting ours. Our entire local economy hinges on this one industry, because it makes up most of our island.

“We should be concerned about the 300 or so jobs that might be laid off, and I think it’s unfortunate that we weren’t able to come together as activists and as industry employees and as the government to craft a plan knowing this would inevitably be happening.

“This announcement should be seized as an opportunity to reaffirm our understanding of aloha aina and the dependence of each person on the local economy. There’s been so much contention over the last three years regarding cane burning and water rights, and this should be seen as a call for unity between the segments of our community that are so often at odds, because at the end of the day, nobody likes job loss and everybody wants to keep Maui green, so now more than ever we need to come together, decide what’s next as an island community and form unity.”

Maui County Mayor Alan Arakawa:

“The sugar industry in Hawaii first began on Maui so it is only right that it ends here as well. Our hearts go out to the workers whose jobs will be affected by this transition. We hope that they can be absorbed back into the workforce without delay and the county will assist in any way we can. I’ve assigned Managing Director Keith Regan to work with HC&S to see what kind of help we can provide.

“Still, we knew that this day was inevitable. HC&S for years now has planted crop after crop to see what they could use to replace sugar cane, and they have kept my office informed every step of the way. Fruit trees, taro, bio-mass, papayas, avocados and much more have all gone through trial testing, leaving us very confident that while sugar cane is dead, agriculture will remain very much alive here.

“We look forward to HC&S’ plans for the future of ag on Maui and the opportunities it will bring. Although jobs may be lost in the near future we believe that other ag related projects and programs will bring back many positions eventually.

“Today marks the end of an era but also a new beginning for Maui as we work towards food and energy sustainability with HC&S and Alexander & Baldwin. I also ask that community members be respectful to one another about this issue, as people are very emotional right now. Let’s all do our best to help each other out so that we can all get to the next stage of Maui’s future.”

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