Posted on: Saturday, December 29, 2001

Aloha Farms files for bankruptcy

By Andrew Gomes
Advertiser Staff Writer

The second-largest producer of locally grown bananas has abruptly shut down and filed for bankruptcy, affecting about 80 employees of the Mokule'ia-based business.

Aloha Farms Inc. filed for Chapter 7 liquidation on Wednesday after ceasing operations Dec. 17. The company estimated debts and assets both in the range of $1 million to $10 million. The company produced 20 percent of the state's banana crop.

Ryan Lum, company president and farm manager, declined to comment yesterday on the filing or the reasons for it. But Aloha Farms' demise comes at the end of what other Hawai'i banana farmers said has been the worst year in a string of tough years.

The shutdown was a particularly harsh blow for North Shore residents, many of whom found work at Aloha Farms five years ago after Waialua Sugar Co. closed.

The loss is not expected to affect banana prices in Hawai'i, though it should help ease the pressure on other local growers, according to Richard Ha, president of the Hawaii Banana Industry Association.

Ha said prices of Hawai'i-grown bananas, which account for about 75 percent of the local market, are generally set to match prices of imports from Central and South America. Those prices have been low because of worldwide oversupply.

"The last five years have been really tough," said Ha, who operates the largest local banana farm, about 600 acres in Kea'au on the Big Island. "We're real competitive, but we don't have much control over the price."

Banana farming is a $10 million-a-year industry in Hawai'i, according to state statistics. Last year, there were 210 local banana farms — most under 30 acres in size.

Aloha Farms had a 370-acre farm that produced roughly 6 million pounds of Cavendish bananas a year.

"It's been tough for awhile now battling the imports," Lum acknowledged.

Hawai'i banana farmers have received 35 cents to 36 cents a pound for their crop in the last four years, down from about 40 cents a pound in the early- to mid-1990s, according to the state.

Ha said this past year has been the toughest for many farmers, especially in the past few months when most have lost money.

"If I could just erase my farm and erase my debt at the same time, I would in a heartbeat," said Lynn Richardson, a banana grower in Hilo with a 20-acre farm. "I encourage my kids to do something else — anything but (banana farming)."

Aloha Farms got into the business in 1996, planting banana trees on former sugar cane land leased from Dole Food Co. Two years, later the farm was producing 200,000 pounds of fruit a week. The company began exporting much of its crop to Japan in 1999.

But local banana growers said Aloha Farms' success getting premium prices in Japan drew the attention of multinational producers that improved the quality of their fruit in the Japan market and began eroding Aloha Farms' market share.

Meanwhile, demand in the Hawai'i market this year has slowed since summer, with the decline in tourism since Sept. 11 especially affecting sales of local bananas, growers said.

The Hawaii Agricultural Statistics Service recently reported that farmers have been cutting off young fruit branches to slow supply.

Bunchy-top virus has also been a problem for Cavendish banana growers on O'ahu, according to the Hawai'i Farm Bureau.

Richardson, the Hilo farmer, said that if Aloha Farms had directed more of its crop to local retail outlets, it would have flooded the market and only made a bad year much worse.