State cut farmers aid before rain flooded O'ahu
By Scott Ishikawa
Advertiser Staff Writer
The state Legislature took $4.8 million from a farmers loan program to help balance the state budget, weeks before North Shore and Windward O'ahu farmers suffered an estimated $300,000 in flood damage.
Gregory Yamamoto • The Honolulu Advertiser
While state Department of Agriculture officials say they probably can cover the borrowing needed because of last week's torrential rains, they may not have the means to provide loans in the event of further rain, flooding or other problems.
Papaya farmer James Song surveys the effects of last week's rains. Flooding caused about $300,000 in damage to O'ahu farmers.
"We've pretty much tapped out or already committed money the rest of the (fiscal) year for loans," said loan administrator Doreen Shishido. "Now we have no provision for any type of future emergency. But despite us warning (the Legislature) about this, they really felt they needed the money for their annual budget."
Gov. Ben Cayetano yesterday said he is considering a line-item veto of the legislative decision to raid the loan program.
"I am very concerned about the state's ability to make emergency loans to the farmers whose farms were damaged by the heavy rains," Cayetano said. "Those farmers need help, and we will do all we can."
Preliminary estimates by state agricultural officials have early crop losses at $230,000 from the two-day deluge on May 5 and 6, with $60,000 more in damages to equipment and supplies.
Shishido said a half-dozen small farmers have requested state financial assistance after last week's rains.
"A lot of smaller farmers turn to us if they can't get loans from private lenders," she said. "The program is usually a last resort for them."
Shishido added that the Legislature took the money as weather experts warned about a new El Ni–o phenomenon that could create unusual and devastating conditions such as drought or torrential rains.
Senate President Robert Bunda, who represents the North Shore area where many farmers were affected by the flooding, said the decision by the Legislature to take from the agriculture loan program was a difficult one.
"There were a lot of cuts made this year, and they were not specifically targeting the state Agriculture Department; none of these cuts were easy," said Bunda, D-22nd (Wahiawa, Waialua, Sunset Beach). "We took excess cash from special and revolving funds, but we felt we left enough to keep the programs going."
But Shishido said the department would not have been able to cover losses if the rains had hit larger farmers in the Kunia and 'Ewa area.
"If Central O'ahu got hit, it would have been devastating," she said. "We would not have been able to provide loans at that point."
Big Island banana farmer Richard Ha, who testified before the Legislature this year about the importance of the state agricultural loan program, said the raid by lawmakers was bad timing.
"Farming is exposed to more risks than private lenders are comfortable with," said Ha, one of the state's largest banana growers. "Sometimes a situation comes up beyond their control and the program is the only place they can turn to. We were trying to make that point to the Legislature that disasters are going to happen."
The $4.8 million was part of revolving funds in which principal payments and interest from repaid loans are used to fund other agricultural loans. The program so far this fiscal year provided about 35 loans to farmers at 3.75 percent interest.
Shishido said the state program is normally allowed to approve up to $4.5 million in regular farm loans each year.
Disaster farm aid in the form of special loans and grants is available only if the state or federal government classifies the region as a disaster area. The recent flooding doesn't begin to approach the disaster level.
Shishido said the financially self-sustaining loan program was doing so well that the department didn't have to lobby state lawmakers the past decade to help finance it. In fact, the program created $11.7 million in profits over the past five years that was placed back in the state general fund.
Compounding the problem, some farmers requested a deferment in loan payments after the downturn in business following Sept. 11. That mean less revenue placed back into the revolving loan fund, she said.
"If there is no disaster next year, we may be OK, but you cannot predict that," Shishido said. "If there is one, the farmers may be in a quandary and we won't be able to help."
Reach Scott Ishikawa at sishikawa@honoluluadvertiser.com or 535-2429.
