"My fear is that no matter what happens here, it's going to be the triggering event for what happens to use in East Maui, and the triggering event for the rest of the state. This is the tip of the iceberg," he said.

The result, Holaday said, could be the collapse of agriculture throughout the islands.

This came on direct examination by Hawaiian Commercial & Sugar Co. attorney David Schulmeister, who was trying to show the effects on the 36,000-acre sugar plantation if water from the four streams in West Maui known as Na Wai Eha are redirected away from sugar.

At the end of 90 minutes, Schulmeister asked Holaday, "Is there anything else you would like to tell Dr. (Lawrence) Miike?," the hearings officer.

"Not without getting tears in my eyes," Holaday said.

HC&S draws as much as 30 million gallons a day from Na Wai Eha — the Waihe'e, Waiehu, 'Iao and Waikapu streams. It gets as much as 300 million gallons a day from the East Maui Irrigation system, which taps watersheds from Ha'iku to Nahiku under permits from the Board of Land and Natural Resources.

Hui O Na Wai Eha and Maui Tomorrow Foundation have petitioned the state Commission on Water Resource Management to set permanent instream flow standards for the Na Wai Eha streams that would reduce the amount now diverted to the plantation irrigation systems.

But Holaday was more concerned that the decision on Na Wai Eha will establish standards for the East Maui streams that will further reduce the water available to the plantation. East Maui taro growers filed a petition in 2001 for the water commission to establish permanent stream flow standards for the East Maui streams as well.

Under the state Water Code and a Hawai'i Supreme Court decision, the state water commission is required to establish permanent instream flow standards that provide for native stream life and for traditional and customary uses such as taro growing.

The commission was created by a constitutional amendment in 1978 and the Water Code was updated in 1987, but the commission has not finalized permanent stream flow standards for any Hawai'i streams.

The Na Wai Eha contested case follows up on a Supreme Court decision for an old plantation diversion affecting the Waiahole and Waikane streams on O'ahu. With the Waiahole case, the court is reviewing the commission's decisions on stream flows and allowing diversions. One proposed allocation was rejected by the court.

On Maui, the Na Wai Eha contested case has been proceeding off and on since early December and will continue at least until Feb. 22, with hearing officer Miike accumulating scientific, engineering, historical, cultural and business evidence to determine how much water the streams need.

He will submit findings for the commission to decide who gets how much for off-stream uses. As the biggest off-stream users, HC&S and other operations supplied by Wailuku Water Co., are the likeliest losers in the reallocation.

HC&S is one of two surviving sugar plantations in Hawai'i. If it has no future in sugar, then that would release water for other uses. At least, that is the argument that the petitioners have used in connection with the closure of Wailuku Sugar Co.

Schulmeister asked Holaday if HC&S has a future in sugar.

Holaday, who managed the plantation from 1996 until Dec. 31 and still heads Alexander & Baldwin's agricultural group, said, "I think HC&S has a future with the same parameters we have faced — the same amount of acres and the same amount of water."

In his testimony, Holaday explained how he had redirected the plantation's business model.

He said that HC&S was in trouble when he took over, and he thought it was because its executives misunderstood what business they were in.

"They thought they were in the sugar business," Holaday said. "The business they were in was growing the sugar cane plant."

Cane provides three potential sources of revenue: biomass, sucrose and molasses.

Holaday said he acted to enhance revenues from each.

Biomass in the form of bagasse is burned to produce electricity to sell to Maui Electric Co. In the past decade or so, HC&S revenues from power sales have risen from about 5 percent of all income to 20 percent to 21 percent.

Molasses, the least valuable product in itself, has been studied for conversion to ethanol for fuel. However, said Holaday, that use is capital intensive, and A&B would not go ahead until it is assured of its water supplies. The contested case will go a long way toward clarifying what may happen to its water allocations.

"We're constantly focused each day on how do we increase the value of the product streams," he said.

Counting on commodity sugar won't work, he said, because the price of commodity sugar hasn't moved in more than 20 years, while the plantation's operating expenses go up every day.

The solution has been to move toward producing food-grade sugars at Puunene, which has required capital investments of more than $20 million in the past four years.

These products (Maui Brand Sugars, Sugar in the Raw and the latest "evaporated cane juice" for sale to health store shoppers who don't want to buy "sugar") cost more to produce but bring in more, too.

"We measure sugar in tons," Holaday said. In a good year, HC&S makes 200,000 tons of sugar. With new equipment being installed, the proportion of food-grade sugar should rise to 30 percent and potentially to half the mill's output.

When dealing with such big numbers, even small gains make a difference, Holaday said. A penny a pound increase in return multiplied by 2,000 pounds in a ton, multiplied by 200,000 tons equals an increase in HC&S' revenue of $4 million.

He called the plantation "income-producing green space" but said it needs water to produce the green.