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The Honolulu Advertiser
Posted on: Thursday, January 24, 2008

No local milk as last Oahu dairy closing

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By Sean Hao
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

The 42-acre Pacific Dairy property was sold to a transportation company. The dairy's remaining 300 cows will be shipped to California or slaughtered.

DEBORAH BOOKER | The Honolulu Advertiser

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O'ahu's last dairy will shut the spigots Feb. 15, which will make the island's 910,000 residents entirely dependent on imported milk.

The closing of Pacific Dairy in Wai'anae Valley will leave Hawai'i with just two Big Island dairies, which produce milk almost exclusively for that island.

Since 1999, four dairies on O'ahu and three on the Big Island have closed. Pacific Dairy will be the eighth to shut down. As recently as 1980, Hawai'i had about two dozen dairies and was totally self-sufficient in milk.

The shuttering of local dairies makes Hawai'i more dependent on the Mainland and more vulnerable in an emergency, said Chin Lee, a dairy extension specialist at the University of Hawai'i.

"Now let's wait for a strike and see what happens," he said. "The bottom line is in the event that we have any kind of disruption of any kind of transportation, this time around there will be no local supply to tide us over until the issue is resolved."

Although Hawai'i's $500 million farm sector remains relatively small compared to the $11 billion tourism industry, agriculture plays an important role in diversifying the state economy, preserving greenbelt lands and reducing the Islands' dependence on imported food.

The decline in Hawai'i's dairy sector and livestock industry in general comes amid rising feed, shipping and land costs, urban encroachment, environmental regulations and stagnant sales. Those trends are reflected in declining poultry, egg and milk production. For example, milk production in November plunged 50 percent from November 2006 to 2 million pounds, according to the National Agricultural Statistics Service.

Cumulative milk production through November 2007 totaled 33.2 million pounds, which was down 37 percent from the same period in 2006.

Lower local milk production is being offset by increased imports. The lack of local milk production should not impact the availability of milk, said Meadow Gold spokeswoman Carissa Tourtelot. Meadow Gold is Hawai'i's sole milk processor.

PRICE EFFECT UNKNOWN

It's unclear how the closing of O'ahu's dairies will affect milk prices, which generally have been rising because of increased feed and transportation costs. What is clear is that fewer Hawai'i dairies means less competition, which isn't necessarily good for consumers.

Do "you think there will be a chance for price gouging" without local milk producers, asked Jeri Kahana, commodities branch manager for the state Department of Agriculture. "I don't know."

The 42-acre property now occupied by Pacific Dairy was recently sold to a transportation company and will not remain in agricultural production, Kahana added.

Pacific Dairy, which originally planned to close last summer, had hoped to relocate to pasture lands on O'ahu or the Big Island. The company currently is in the process of slaughtering or selling its remaining 300 head of cattle.

Monique Van Der Stroom, manager for Pacific Dairy, said she hopes to someday restart operations.

"I hope the public ... sees that island fresh (milk) is a benefit or something that they really want and hopefully in a year or two, if we can get land and we try to start up again, we'll get more support both from the public and the state," she said.

STATE HELP NOT ENOUGH

The continued decline in Hawai'i's livestock sector comes despite a new state program aimed at defraying escalating feed costs. Lawmakers last year passed a bill creating a $3 million-a-year, two-year program aimed at subsidizing feed costs for livestock producers.

Pacific Dairy's closing is disheartening, said state Rep. Clift Tsuji, D-3rd (S. Hilo, Kurtistown).

"It's very disappointing devastating news," said Tsuji, who chairs the House Committee on Agriculture. "It's really another example of the dwindling dairy industry in Hawai'i."

The amount of land farmed in Hawai'i is only expected to fall even further as more agricultural land gets converted to housing. For example, the Schuler Division of D.R. Horton Inc. recently purchased 1,600 acres of former sugar-cane land near Kapolei from the Campbell Estate for $71 million to build 10,000 to 15,000 homes plus schools, parks and commercial establishments. Much of the land is now used by diversified-crop farmers such as Aloun Farms, Larry Jefts Farms and others that will eventually need to relocate or close operations.

In addition to urban encroachment, farmers face other hurdles, including a lack of long-term leases on private-sector agricultural lands, said UH's Lee. Farmers can't justify investing in their operations without long-term leases, he said.

"The inability to have long-term leases makes farmers here practice nomadic farming," Lee said. "Farmers can't be constantly in a nomadic state because you cannot nurture the land. How can you establish a business if you're constantly in a nomadic state?

"The state could have done more" to preserve its dairy industry, Lee said. "But it's an issue of priority."

Lawmakers this year are expected to debate a variety of agriculture-related measures, including loan programs, tax credits and incentives for preserving prime agricultural lands.

"This is an ongoing process," Tsuji said. "Are we concerned (about the decline in agriculture)? We certainly are. Agriculture is part of the entire circle of our economic structure."

Reach Sean Hao at shao@honoluluadvertiser.com.

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