Sugar, pineapple industries showing signs of comeback
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By Sean Hao
Advertiser Staff Writer
Hawai'i's sugarcane and pineapple production both showed signs of growth last year, a small but significant upturn in industries that were once the foundation of the state's economy.
Jeff Widener • The Honolulu Advertiser
Production of sugarcane grew 18 percent to 2.3 million tons, after falling 18 percent in 2001, according to recent state figures. State sugarcane production and sales have steadily fallen for decades as companies exited the business and fields were converted to other uses.
Field workers handle pineapples from a harvesting machine. Farm-level sales of pineapple grew last year about 4 percent, partly due to a greater mix of sales from higher-value fresh pineapple products.
However, based on an increase in sugar prices last year, it's likely 2002 sugarcane sales will top the 2001 level of $57.8 million, said Donald Martin, state agricultural statistician. That would mark the first time since 1998 that farm-level sugarcane sales have risen year over year.
After years of decline, last year's rebound may be sustainable, Martin said, in part because of improved production techniques and a trend toward sales of higher-margin sugar products.
"I don't look at the rebound in 2002 as just kind of a blip," he said.
The state's largest sugarcane grower and sugar producer, Hawaiian Commercial & Sugar Co. of Maui, is also optimistic that years of industry erosion may be at an end.
"I would think that the decline is over," said Steve Holaday, plant manager for HC&S in Pu'unene, Maui. Going forward "I would expect production to creep up."
The company sells raw sugar to C&H Sugar Co., which is then shipped to California and refined. Last year, production of raw sugar at HC&S grew to 215,900 tons, or about 79 percent of the raw sugar produced in Hawai'i, versus about 191,500 tons produced in 2001.
Holaday attributed the increased production to good weather and improved factory efficiency. HC&S is a division of Honolulu-based Alexander & Baldwin Inc.
Alan Kennett, general manager for Gay & Robinson on Kaua'i, the state's only other major sugarcane producer, also attributed the strength in the market to higher sugar prices resulting from last year's federal farm bill, which he said requires producers to stay within production caps or face storing excess sugar.
Average U.S. industry raw sugar prices hit a 52-week high of 22.49 cents a pound Feb. 26, after averaging between 20 cents and 21 cents a pound in 2002. The price has since backed down to close at 21.30 cents a pound Friday.
Gay & Robinson, which acquired sugarcane land leases and equipment from Amfac Hawai'i after it shut down in Kaua'i in 2000, planted 1,500 additional acres last year and plans to farm an additional 1,950 acres this year.
Kennett said the company will boost production from about 55,000 tons of sugar last year to 57,000 tons this year, and eventually 73,000 tons in 2005. Gay & Robinson has added 50 workers for a total of 320 employees to handle the additional work.
"I like to tell the story of how we are one of the few companies to add 50 employees since Sept. 11th," Kennett said. "We feel very confident."
Profiting from pineapple
Jeff Widener • The Honolulu Advertiser
Also rebounding last year were farm-level sales of pineapple, which grew about 4 percent to $100.6 million, after falling 5 percent in 2001.
Sales of farm-level pineapples rose about $100 million last year. However, the industry remains but a small piece of the Hawai'i job market.
That gain came despite a 3,000-ton drop in year-to-year production of pineapples, according to the Hawai'i Agricultural Statistics Service. The gains were a result of a greater mix of sales from higher-value fresh pineapple products, Martin said.
Once the heart of Hawai'i's agriculture industry, pineapple and sugarcane represented only about 30 percent of $511.07 million in farm sales in 2001. Overall agriculture industry sales figures won't be available until later this year.
But as the sugarcane and pineapple industries matured, diversified agriculture, which among other things includes flowers, melons, nuts and coffee, has steadily grown. In 2001, sales of diversified agricultural products grew 1 percent to $356.07 million.
Despite the encouraging signs, employment in the sugarcane and pineapple industries remains a small piece of the Hawai'i job market, accounting for about 1,900 of the 5,400 agricultural workers last year, according to state figures. Overall agriculture employment, excluding jobs in food processing and transportation, is down to roughly half of the nearly 10,000 farm jobs statewide in 1991.
In 1991, there were 55 sugarcane farms and plantations in Hawai'i, compared with two today. Most farmers and agricultural companies couldn't afford to reinvest capital to improve productivity and remain competitive with overseas markets that use cheaper labor. Most of the sugar produced today comes from developing countries in areas such as Latin America and the Far East.
Many of Hawai'i's remaining sugarcane and pineapple jobs are in areas where tourism and the military are less concentrated. Sugarcane mainly is grown on Kaua'i and Maui, while pineapple mostly is grown on Maui and central O'ahu, though there are some smaller farms on the Neighbor Islands.
Shifts in production
Local pineapple and sugarcane producers aren't taking the rebound for granted. HC&S, Gay & Robinson and Maui Pineapple are trying to shift portions of their production to higher-profit niche products.
At HC&S, the company is working to shift its sales mix to food-grade sugar — a product started about five years ago that now represents about 7 percent of production. Unlike raw sugar, which represents the bulk of what HC&S sells, food-grade sugar does not undergo full processing and instead is packaged for consumers or used in beverages, jams and jellies.
And in the pineapple industry, Maui Pineapple is looking to build profits by shifting from sales of canned fruit to fresh fruit. Overall, revenues from the company's pineapple operations last year rose 2 percent to $99.2 million. However, the company reported that the West Coast shipping companies' lockout and dockworkers' litigation costs sapped profits.
Maui Pineapple, a subsidiary of Maui Land & Pineapple Co., is the state's largest pineapple producer, though Del Monte Fresh Produce and Dole Foods Inc. are also significant growers.
Despite posting a $5.7 million loss, Maui Land & Pineapple reported in its 2002 annual report that it made progress transitioning from sales of canned pineapple to higher-margin noncanned pineapple products. Sales of noncanned products increased to 30 percent of overall pineapple sales last year, which was up from 25 percent of overall pineapple sales in 2001.
In addition to creating jobs and money for Hawai'i, the success of pineapple and sugarcane industries discourages the development of farmland, an important concern for the visitor industry appeal and for Hawai'i residents, Martin said.
"Residents have a high interest in maintaining these open spaces," he said. "If there's not anything on them, these areas are going to become prime areas for development. Once that happens, that's the last crop you'll ever plant out there."
Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.
Correction: The Pacific Maritime Association, which represents West Coast shipping companies, locked out dockworkers at the 29 major Pacific ports for 10 days last fall. The companies had accused workers of an illegal work slowdown. A previous version of this story incorrectly called the dispute a strike. Also, 2.3 million tons of sugarcane were produced in 2002. The story used an incorrect number. The graphic shows production for sugarcane, not refined sugar.
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