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HomeMy WebLinkAboutCOM 0363.005 1996-1998 r a. For Presentation to Hawaii County Council on Tuesday July 22, 1997 concerning: Alternative Crops to Hamakua Proposed Timber Lease Lands RECE1VEp by Tane Datta (Adaptations) nme By farmer, marketer, and distributor based in Kona Data_____..__..,,__. _ _ County Council edited and presented by M. Eileen O'Hora-Weir (Dakini Enterprises) consultant and farmer based in Kapoho Aloha Council Members, The agricultural information presented herein is based on the actual production and marketing of the crops from over 15 farms on the Big Island. It is presented as a production systems/ marketing model which may be considered as a prototype for replication in other areas of the Big Island. Many of the farms involved in this system are located on marginal land without normal access to county water or other utilities. Some of these farms are based in Hawaii Ocean View Estates (HOVE). Others are located on land with a very steep slope. Some are located in mauka Kona above county water pressure and outside the range of the electric utility. These remote conditions are somewhat similar to the Hamakua lands under consideration for timber leasing. All crops produced are sold within the state, though there is interest from mainland winter mazkets. The crops involved in this production system are primarily vegetables and herbs which grow rapidly and can be harvested several times a year from the same field. These crops can begin producing income within three months of field preparations. Most of them are grown under organic guidelines with minimal environmental damage to the surrounding areas. Most are grown under intensive management under 5 acres by the owner of the land with the help of the family and some hired labor. The fully developed farms are generating over $50,000/acre/yr. Much of this revenue goes directly back to the community through wages, purchases of inputs for production needs, and purchases of consumer goods. This group of diversified farms works closely together and has the ability to switch from unprofitable to profitable crops in a matter of weeks. These switches are necessary through the year as a response mechanism to changing climatic and market conditions. This agricultural production system has gained strength and grown steadily for the last ten years. It is a system that may be replicated for use in the Hamakua community and may provide greater and longer lasting stability than the single timber crops now being proposed. ~,~yA 363. b5 >nb x.. R Es _ tt~r. Ta: Pirariwred N5 4 CDC Rer. Date 2 2 1 u The chart on the last page is a sampling of the major types of crops being grown and the economic value per acre. Aside from actual yield information from the 15 farms involved, analyses are provided t'or some other crops using the 1995 Hawaii Ag Statistics as a basis for comparison. The following are some notes on the chart which may help with interpretation of the numbers presented. 1) The column with # 100 sq. ft. per week is taken from the actual field harvests on the farms involved in this production system. It is included so that the reader can get a "hands on" sense of how much production is expected from a space the size of a backyard 10' by 10' garden plat. Yields often exceed the amounts given in this column by several times. Instead of using an average yield for the 15 farms, the lowest yield figures were used as a basis for the rest of the extrapolations thus the computed dollar value estimates may be understated. 2) The production area per acre was based on 20,000 sq.ft. instead of the actual 43,560 sq.ft. of a true acre. This was done to account for the fact that some of the production space is taken up by paths and buffer zones. in reality, the intensive nature of this type of farming allows for very efficient use of space and some of our well-designed farms make use of up to 35,000 sq.ft. per acre. 3) The price used to make the dollar value calculations is based on the low wholesale price, i.e. the price a grower can expect if producing large quantities. 4) The GED wholesale rate (0.5%) is the minimum a grower would pay to the government when the crop is sold. The government would actually gain the wholesale rate again, and probably a retail GED receipt as well, as the goods move into the hands of local consumers. 5) The over the $50/acre lease rate" is the percentage amount by which the GED wholesale tax receipt to government exceeds the $50/yr. lease rate. The $50/yr. lease rate is based on the proposed amount the government would charge the timber company, i.e. $40/acre plus $10 for the cubic meter charge for the chip produced. This calculation highlights the fact that the vegetables and herbs produced in a production system like this would be sold within the state whereas most, if not all, of the proposed timber crops would be sold outside of the state. 6) Rent of $50/yr/acre would also be paid by farmers for the lease in addition to the GED revenues. * The figures presented here for this production systems/ marketing model can be confirmed empirically, The simple analysis presented does not attempt to account for the macroeconomic multiplying effects on the other sectors of the economy. For a more advanced analysis on that subject refer to "Estimated Impact on Hawaii's Economy of Replacing Selected Vegetables and Fruit Imports" by K. M. Yokoyama, K Wanitprapha, P.S. Leung, & S. T. Nakamoto. 2 • This simple analysis does not address the potential use of these lands for growing medicinal plants. Demand for Kava is increasing and far exceeds the current supply. One of the most important groups of commercial Kava buyers is the European pharmaceutical industry. The market for Neem, Noni and a wide variety of medicinal plants which can be cultivated in the climate of the Hamakua coast aze also expanding rapidly. In order to meet the demand of many herbal pharmaceutical companies, product must be grown "free from pesticide and herbicide" contamination. This ensures that such production would be environmentally benign. Unfortunately, the market for these products is too new to do a historic calculation of dollar value per acre and therefore, these types of crops were not included in this analysis. Questions which may arise after viewing the following chart; 1. How well would these types of crops to on the proposed lease lands? 2. How strong is the market for these crops? 3. How does timber compare as a crop? The simple answers for the herb and vegetable crops is they are generally hearty plants with the ability to grow under a large range of conditions. Some crops will do better at some locations than others and it is up to the grower to determine which crop is most profitable for their unique situation. There is centuries of accumulated knowledge on growing many of the these crops and a wide variety of markets are available to sell in to. Our locally-owned grocery store chains are becoming very receptive to buying locally- produced vegetables as that is in response to consumers' demand. There has been an increase in well organized farmers' markets around the island. Subscription farming (selling a prescribed "basket of goads" on a weekly basis to families and small commercial establishments) has become a profitable business on the mainland and is just gaining momentum here. The large restaurants and hotels demand large quantities of fresh produce which is not currently being met by local production. State-wide, we are still importing over 70% of our fresh vegetables. A timber crop is worth less per acre, and depends on an extremely volatile future market. As proposed, this crop would be produced in a manner that is destructive to the lands surrounding it. Questions that the Council needs to answer before making a decision are: "What are the economic and social ramifications of crop choice?" "What is the highest possible value these lands could have for the community?" "How can that value be realized?" "Where and by whom will that value be realized?" The highest value of the land must be realized on the island by the greatest number of people possible in order to justify the granting of a long term lease. 3 Alternative Crops For Hamakua Lease Lands b Tane Datta 328-9044 Financial Assumptions proposed lease $50 acre/yr incl.chips GED tax 0.005 wholesale Production GED % above '#/100 sq.ft. Yield Price Value Tax proposed Crop (15 Farms) per week #/yr #/yr/acre whsl $/acre GED/whsl $50/acre er bed er bed lease rate Herbs Basil 4 200 40,000 $2.00 $80,000 $400 800% Lemon Grass 2 100 20,000 $2.00 $40,000 $200 400% Onion Chive 2 100 20,000 $2.00 $40,000 $200 400°h Oregano 1 50 10,000 $3.00 $30,000 $150 300% Rosemary 0.5 25 5,000 $8.00 $40,000 $200 400°k Spearmint 1 50 10,000 $2.00 $20,000 $100 200% Thyme 0.5 25 5,000 $6.00 $30,000 $150 300% Lettuces Romaine 10 500 100,000 $0.50 $50,000 $250 500°k Greenleaf 10 500 100,000 $0.50 $50,000 $250 500°~ Bab ,Gourmet 5 250 50,000 $3,00 $150 000 $750 1500% Other Cro s usin Hawaii A Stats 1995 Corn 3,300 $0.53 $1,749 $9 17% Ginger 10,000 $0.95 $9,500 $48 95% Tomatoes 22,000 $0.61 $13,420 $67 134°~ Taro 3,000 $0.48 $1,440 $7 14% Sweet Potatoes 8,800 $0.55 $4,840 $24 48% Snap Beans 3,300 $0.95 $3,135 $16 31°.6 Tree Crops Mac Nuts 2,600 $0.74 $1,924 $10 19% Coffee 1500 $1.00 $1,500 $8 15°~ 4 Estimated Impact on Hawaii's Economy of Replacing Selected Fresh Vegetable and Fruit Imports Economic Fact Sheet #7 May 1990 Department of AgricuRural and Resource Economics College of Tropical Agriculture and Human Resources Universfty of Hawaii sy Kevin M. Yokoyama, Kulavit Wanitprapha, PingSun Leung, and Stuart T. Nakamoto I INTRODUCTION INPUT-OUTPUT ANALYSIS Agriculture inI-Iawaiiisoftencategorizedas An economy consists of various industry the sugar industry, the pineapple industry, and sectors such as agriculture, food processing, and diversified agricu]ture, which includes any crop transportation. Growth in any industry results (includinglivestock)besidessugarcaneandpine- in an increase in output, income, and employ- apple. Within diversified agriculture are crops ment for that industry. This is the direct impact sold as fresh produce and crops that are pro- of industry growth. There is an interdependent cessed. Diversified agriculture also consists of phenomenon, however, whereby growth in any crops that are consumed in Hawaii and crops single industry will also affect the output, in- whosefinal products are exported (e.g., macada- come, and employment in other industries. This mia nuts, coffee, and guava). is referred to as the indirect impact. Input-output ThisanalysisfocusesonHawaii'smarketfor (I-O)models'specifythe interdependenciesamong fresh vegetables and fruits. Hawaii farmers face industry sectors, and I-O analysis is an appropri- strongcompetition for their own local market, as ate toolto estimate the effects ofindustrychanges. the state imports a relatively large quantity of The 1982 State of Hawaii input-outputmodelwas vegetables and fruits from the U.S. mainland and used to estimate the impact on Hawaii's economy foreign countries. In 1988, the supply of fresh of replacing imports of selected fresh vegetables vegetables in Hawaii was 221,586,000 potmds, of and fruits. The I-O model was developed by the which 149,251,000 pounds, or 67%, were im- Hawaii State Department of Business and Eco- ported. During the same year, the fresh market nomic Development. supply of fruits and melons amounted to Import replacement requires that farmers 149,772,000pounds,ofwhich 90,777,000pounds, inHawaiPsdiversifiedagriculturesectorincrease or 61%, were imported (Statistics of Hawaiian Agriculture, 1988). The objective of this study is to estimate the maximum potential impact on t There are many publications that explain inputout- Hawaii's economy if local producers were to re- put analysis. One is The Elemears o/'Inpur-Ourpur place imports of selected fresh vegetables and Analysis by William H. Miernyk, published in 1965 by fruits. Random House. i a~ ~ ~ o to ~ P ~ O ~_ut 1988 Hawaiia FrezttVpela~k. Fruit, anE Melon MarYet O/--•f .'~W\/, SuCPIy (10001E) Vegetables Frutlc Mebna LoWM B'^w^ T2.i35 lg.095 te.90g Irrpgrls 1!9251 ]S.al 15.558 e Table 1. Estimated Changes In Acreage antl Farm Value of Selected Fresh Vegetables and Fruits from Import Replacement, 1988 Market Supply Hawaii State Yield Estimated Estimated Share Acreage per Farm Additional Increase in Inshipments Hawaii 1988 Harvested' Acres price Acreage' Farm Value' (10001b) (t0001b) (acres) (10001b) (¢/Ib) (acres) ($1000) Fresh Vegetables Bean, snap 337 950 73.8 160 5.9 78.6 57 265 Bittermelon 21 180 89.6 20 9.0 79.7 2 17 Broccoli 6,024 550 8.4 90 6.1 47.0 988 2,831 Burdock 6 450 98.7 25 18.0 90.0 5 Cabbage, Chinese 247 7,000 96.6 450 18.4 17.3 13 43 Cabbage, head 628 15.620 96.1 560 27.9 16.4 23 703 Cabbage, mustard 147 1,260 89.6 120 10.5 40.4 14 59 Carrot 10,607 30 0.3 2 15.0 21.5 707 2,281 Cauliflower 1,944 480 19.8 45 10.7 56.0 182 1,089 Celery 5,553 2,200 28.4 85 25.9 22.9 214 1,272 Corn, sweet 973 660 40.4 185 3.6 40.1 270 390 Cucumber 1,702 3,950 69.9 220 18.0 33.0 95 562 Daikon 41 2,610 98.5 230 14.3 19.4 3 8 Dasheen 43 220 83.7 10 22.0 67.0 2 29 Eggplant 337 1,180 77.8 50 23.6 55.8 14 188 Ginger root 300 8,100 96.4 165 49.1 62.0 6 186 Lettuce 79,925 4,500 18.4 360 12.5 36.4 1,594 7,253 Lotus root 18 190 91.3 30 6.3 117.0 3 21 Onion, dry 17,070 1,420 7.7 150 9.5 78.3 1,797 13,366 Onion, green 307 1,240 80.2 170 7.3 86.1 42 264 Parsley, American 75 280 78.9 25 11.2 83.5 7 63 Pea, Chinese 294 55 15.8 10 5.5 153.0 54 450 Pepper, green 2,634 1,430 35.2 170 8.4 48.5 314 1,277 Potato' 42,777 N.D. N/A N.D. 16.4 25.0 2,608 10,694 Pumpkin 1,262 95 7.0 8 11.9 22.0 106 278 Radish 2 325 99.4 35 9.3 39.0 1 Romaine 2.868 1,680 36.9 150 11.2 33.1 256 949 Squash, Italian 1,200 1,040 46.4 100 10.4 36.7 115 440 Squash, Oriental 121 350 74.3 20 17.5 31.2 7 38 Sweetpotato 823 1,540 65.2 140 11.0 34.4 75 263 Taro° 615 600 49.4 420 16.2 28.0 38 172 Tomato 11,997 7,000 36.8 250 28.0 48.5 429 5,819 Watercress' 4 1,200 99.7 35 34.3 100.0 4 Subtotal 4,490 10,035 50,700 Fresh Fruits & Melons Avocado 684 1,200 63.7 290 4.1 36.5 167 250 Banana 8,866 12,900 59.3 1,070 12.1 33.0 733 2,926 Tangerine 420 30 6.7 7 4.3 38.0 98 160 Watermelon 1,616 18,900 92.1 790 23.9 11.7 68 189 Subtotal 2,157 1,066 3,525 Total 6,647 11,101 54,225 Source: Statistics of Hawaiian Agdculture 7988, Hawaii Agricultural Statistic Service (NABS). ' As defined by HASS, one acre harvested and planted repeatedly during the year is counted each time toward the total. Z Yield is derived by dividing total Hawaii production by harvested saes. 'Estimated additional acreage =inshipments .yield per ave. Tha implicit assumption is one crop per eve per year. The estimate, therefore, is unadjusted for more than one crop cycle per year. 'Estlmated increase in farm value = inshipments x farmgate price. 'Average of Hawaii's yield from 1973 to 1975, Statistcs of Hawaiian Agriculture, 7976. The price is assumed to be 25¢Ab. This assump- tion was based on Hawaii wholesale prices in 1987, adjusted for wholesale and transportation margins. Price =farm price of all types of taro. Yield =average yield of all types of taro. ' Yield per eve =production . aveage in crop. Note: N. D. =Not disclosed. N/A =Not available. ' =less than one ave. crop production. This has direct and indirect ofthe farm value of production in Hawaii sdiver- effects on the economy. Besides the more obvious sifted agriculture sector in 1988. In addition, direct impact on Hawaii's diversified agriculture personal household income and employment sector, the increase in crop production has a less within the diversified agriculture industry sector obvious indirect impact on the rest of Hawaii's would increase by an estimated $16,902,000 and economy. For example, to produce additional 1433 jobs, respectively. The additional output crops, more inputs (e.g., fertilizers, farm machin- (sales), income, and employment are direct con- ery) are required from nonagricultural industry tributions to Hawaii s economy from diversified sectors. As these nonagricultural industries feel agriculture. the increase in demand for their outputs, they in Since off-farm linked industry sectors are turn require inputs from other industries in the also indirectly affected by activity in diversified region. In other words, theeconomyisstimulated agriculture, there would be further impacts on by a chain of repercussions started by the in- Hawaii s economy. The combined direct and crease in crop production. These repercussions indirect impact is an increase in output to are called the multiplier effect. Although these $66,667,000, an increase in personal household off-farm activities are not part of diversifiedagri- income to $19,772,000, and an increase in em- culture, they are associated with agricultural ployment to 1591 jobs. activity andhave an impacton Hawaii s economy. For this analysis, it is assumed that import In addition to the direct and indirect im- replacement does not alter the total market sup- pacts, there is an induced impact that refers to ply of the selected vegetables and fruits in Ha- the effect of additional personal household in- waif. The additional crops produced will follow come. The additional output from diversified the same distribution and marketing channels as agriculture results in more personal household previously used by imports. The indirect and income for those within this industry sector, as induced impacts are the result of only the in- well as £or others in off-farm linked industry crease in crop production. They do not reflect an sectors. Since it is unlikely that all of this addi- increase in demand for the sectors beyond the tional income would be saved, taxed, or spent point where imports are replaced, e.g., wholesal- outside Hawaii, the state's economy wouldbefur- ing and retailing. ther stimulated as this additional income was Assumingthe same consumption pattern as spent here. The I-O analysis can estimate these in 1982, the combined direct, indirect, and in- induced effects in terms of changes in output, ducedimpactonHawaii'seconomyisanoutputof employment, and income. $95,885,000, an increase in personal household income to $29,265,000, and an increase in em- ployment to 2113 jobs. It should be noted that the RESULTS analysis is performed in 1988 dollars for output and income, while employment reflects the situ- More land will be required to produce addi- ation in 1982. The implicit assumption behind tional crops to replace imports. A maximum of this analysis isthatproductiontechnologieshave about 11,100 additional acres would have been remained unchanged from 1982 to 1988. needed to grow the selected vegetables and fruits in 1988 (see Table 1). Crops selected for this analysis include those for which data are avail- SUNHAT;y able on the fresh market supply in Hawaii? These crops are both grown locally and imported. The Import replacement has an impact not only crops requiring the most additional acreage are on the diversified agriculture industry sector,but potatoes, dry onions, and lettuce. on the state's entire economy through indirect The estimated farmgate value of the addi- and induced effects. The I-O analysis provides a tional production offresh vegetables and fruits is means to estimate these impacts. The analysis $54,225,000(Table2). This representsabout2l% was performed using the following assumptions. One is that the state has the necessary resources and the infrastructure to handle the additional ' Data on Hawaii market supply of potatoes were crop production. It was also assumed that Hawaii incomplete, but this crop was included in the analysis consumers would accept local produce in place of because more potatoes are imported than any other fresh vegetable. imports. This implies that local produce is com- Table 2. Estimated Maximum Impacts on Hawaii's Economy Estimated Increase in Output (In 1988 dollars) Direct and Direct Indirect Indirect Direct, Indirect, and Impact Impact Impact Induced Impact Fresh Produce ($looo) ($looo) ($looo) ($looa) Selected vegetables 50,700 11,633 62,333 89,652 Selected fruits and melons 3,525 809 4,334 6,233 Total 54,225 12,442 66,887;` 95,885 Estimated Increase In Income (In 1988 dollars) erect an Direct Indirect Indirect Direct, Indirect, and Impact Impact Impact Induced Impact Fresh Produce ($1000) ($1000) ($1000) ($1000) Selected vegetables 15,803 2,684 18,487 27,363 Selected fruits and melons 1,099 186 1,285 1,902 Total- 16;902 2,870 19,7721 X9,285 Estimated Increase in Employment (In 1986) Direct and Direct Indirect Indirect Direct, Indirect, and Impact Impact Impact Induced Impact Fresh Produce (jobs) (jobs) (jobs) (jobs) Selected vegetables 1,340 148 1,488 1,976 Selected fruits and mesons 93 10 103 137 Total 1,433 158 ' 1,591 ' . 2,1.1'9 petitive with imports in terms of price, quality, lettuceareimportedinrelativelylargegtrarttities timing of supply, and other service-related fac- compared to other crops. If Hawaii were unable tors. With Hawaii's limited resources (e.g., labor) to expand production of these crops, the impacts and relatively high production costs, however, it would be substantially reduced. is unlikely that the maximum impacts could be Theanalysisestimatesthemaximumpoten- realized, as it would be diflicult to replace all of teal economic impacts of import replacement of theimports. This analysis also does not take into selectedvegetablesandfrvits. To assess whether account differences in crop varieties that may af- particular crops are economically feasible or fact the results, such as the difference between whether Hawaii has the necessary resources and imported dry onions and those produced on the the infrastructure to expand crop production island of Maui. requires further study. Factors such as limited It should also be recognized that a few crops resources and strongoverseas competition would account for most of the impacts that are gener- make it ditlicult to achieve the maximum im- ated. For example, dry onions, potatoes, and pacts. Hawaii Agriw Iturnl Experiment Station, HITAHR, College of Tropical Agriculture and Human Resources, University of Hawaii at Manoe. Noel P. Kefford, Director and Dean. UR!1NER5ITY G~ ~ . ~ _ riiLO LIBRA 1988 1994 % Gain or Loss FRESH VEGETABLES Hawaii's°r6 Hawaii's% in Market Share of Market Share of Market Share Bean, snap 74 34 -40 Bittermelon 90 67 -23 Broccoli 8 7 -1 Burdock 99 88 -11 Cabbage, Chinese 97 93 li Cabbage, head 96 87 -9 Cabbage, mustard 90 90 N/C Carrot 0 0 N/C Cauliflower 20 14 ~ Celery 28 17 -11 Com, sweet 40 39 -1 Cucumber 70 62 -8 Daikon 99 97 -2 Dasheen 84 50 -34 Eggplant 78 61 -17 Ginger root 96 92 -4 Lettuce 18 8 -10 Lotus 91 N/D -91 Onion, dry 8 11 3 Onion, green 80 80 N/C Parsley, American 79 85 6 Parsley, Chinese 16 7 -9 Pepper, green 35 49 14 Potato N/A N/D N/C Pumpkin 7 8 1 Radish 99 99 N/C Romaine 37 27 -10 Squash, Italian 46 32 -14 Squash, Oriental 74 61 -13 Sweet potato 65 64 -1 Taro 49 63 14 Tomato 37 24 -13 Watercress 100 99 -1 All other vegetables 26 35 9 TOTAL VEGETABLES 33 29 ~ FRESH FRUITS Avocado 64 38 -26 Banana 59 49 -10 Papaya 100 100 N/C Pineapple 100 100 N/C Tangerine 7 5 -2 Watermelon 92 81 -11 All other fruits 18 19 1 TOTAL FRUITS 47 45 -2 HOFA HAWAII ORGANIC FARMERS ASSOCIATION P.O. Box 984, Haiku, Hawaii 96708. (808) 573-0995 (Phone & FAX) http:/ddi.digltaLnet/ planet/liofa.html email: hofa@aloha.net Aloha Council Members, HOFA is now astate-wide, non-profit organization in its fourth year of existence. HOFA has nearly 200 members, both commercial organic farmers and associate or supporting members. It administers an organic certification program in compliance with the Federal Organic Standards as mandated in the Organic Food Production Act passed in the 1990 Farm Bill. These federal standard were established by the National Organic Standards Board (NOSB) and were recently accepted by the Federal Secretary of Agriculture on June 13, 1997. It is expected that the standards will become law by the end of the year. Besides administering a certification program, HOFA's two other main mandates for operation are education and research. Currently, HOFA has been granted a lease for a County agricultural lot (29 acres) in the Kula Ag Park on the island of Maui. It is the intention of the organization to pursue the establishment of afor-profit farm on this acreage which will become a center for research in tropical organic agriculture. The facility will offer workshops, field tours and demonstrations to the public, and provide a training ground for "interns" of organic agriculture. The farm will also serve as a trial and certifying site for organic fertilizers and inputs, some of which can be locally-produced such as compost and seaweed extracts. Currently, HOFA has received a grant to do a video documentation of the development of this large-scale organic farm which, when completed, will be widely disseminated as an educational tool. Due to the wide diversity of agro eco-systems in the Hawaiian islands, HOFA would like to pursue similar ventures, both small and large scale, in other locations. HOFA would like to recommend that the Council consider setting aside a small acreage of the Hamakua public lands for use as a research site in sustainable/organic agricultural practices. Respectfully submitted M. Eileen O'Hora-Weir, Vice President of the HOFA Board of Directors & East Hawaii Coordinator