HomeMy WebLinkAboutCOM 0931.019 1996-1998
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Ervin C. Wilfong
Cmnelback Wholesale q
June 1996
Oorjuri No.
File No. < < 7- T
Ref. TPresented cojNc.r-
M. Date AEG S 1998
CONTENTS
Introduction 1
Ag6culture 2
Banking and Finance 4
Consolidation, Packing and Shipping 6
Transpoitation 8
Cur[1CUIUM Vitae 10
Proposal 11
INTRODUCTION
I have found in my many visits to the Islands and meetings with ditf'erent organizations,
that there is a great concern about the future of Hawaii and how to enhance the growth and
development of all phases of economic productivity. It is my belief that a correlation of activities
and the cooperation of various communities/organizations must occur to eventuate this growth and
devclopmont. The areas hereby addressed are Agriculture, Banking and finance, Transportation,
and Packing and Shipping
Each of these areas is important, and each is dependent on the other to be economically
successful individually and collectively in their pursuit of a common goal.
Holland Floral exports total approximately $250 million ,a year in products to mainland
USA It is very possible that Hawaiian growers could increase their percentage of the market by
working togcther with mainland wholesalers coupled witli aggressive marketing. The wholesale
ealuc of green plant and cut flower sales, to mainland USA is projected to be approxunately $13
billion by the year 2000 It is my belief that with a cooperative effort of all persons involved in this
business --from state agencies, to bankers, growers and shippers, this portion could be captured. It
is with this thought in mind that I hereby endeavor to bring together the various concerned parties
for the benefit of all.
"A fantasy is something thought about but never pursued. A dream is an
aspiration which if pursued diligently, consummation can be accomplished "
To make this dreun come true is my wish
V
AGRICULTURE
Agriculture has been a great base for tax revenue for the. State of I-lawaii for many years
However in recent years, due to the vacating of land of large producers, agriculture has become
less of a tax base than in previous years To try and replace such a vast operation seems to be
almost unattainable. There are products however, which can be grown that could create a largo
revenue per acrd and create sufficient income to help enhance the Ctrs. base in Hawaii's future.
Hawmi is very fortunate in the fact that it has every growing clmate in the world--from sea level
and rain torests, to arid and desert-like land. Almost every temperonno and rainftll condition can
be duplicated somewhere in the islands of Hawaii- Thee arc vast acreages which are adaptable to
all kinds of products.
We do understand that there are some obstacles to growing crops in Hawaii--one being lh.
1; nit fly and of course, other pcstilents. The fruit fly stems to be the number one - Other pcstileuts
can be controlled with the proper use of insecticide or radiation. The fruit th could be obliterated
or made harmless through radiation. The use of radiation would be an ideal processing tool, and
would be simpler and less harmful, than trying to erase the blighr. by pesticides or other mate ialy
However, it is believed that to make it mdiatron treatment plant ccononucally feasible, it woulel
require 30 million pounds of product processed through the phmt. It could take sevontt years fur
Hawaii to be able to produce these quantities. Lacking file quantity to process makes a radiation
treatment plant almost an impossibility because private capital would need a faster return on its
money than a radiation plant could produce at this time. It could also be difficult to get sufficient
federal or state moneys to underwrite the operation until such time as it could become a feasible
operation -
A centrally located radiation treatment plant would also require a freight system sufficient
to move the product from island to island or another destination-, Radiation treatment could be a
godsend in the sense that it would save much processing of different types of products such as
papaya and lychee. It is also possible that radiation treatment could treat potted plants in such a
manner that it could kill the burrowing nematodes which would make potted plants salable
anywhere. This could open a huge market in greenhouse plants and certainly open up markets for
other crops and exotic plants.
We understand that there are grants available for producing "agricultural products"
meaning vegetables and such edible crops. However it is our understanding that these grants arc
not available for crops that are termed horticultural such as exotic flowers and plants. Regardless
2
of what is growo or produced in Hawaii, the greatest need that Hawaii has in making itself stably .
the need for a continuous Lund stable air height system both inter-island and trans-ocean. The
&pcndeucy on the baigc systcnh and the Matson freight system ns yen good cucept where ?uu ns
of the csscucc. It is my belief that if landowners work with the financial institutions and the
growers, it would be possible to generate start-up farms. This would help create farms that
someday would produce enough product to take care of Hawaii's needs, as welt as exporting to
other countries Until such time as individual farms would be large enough to Make shipments ul
their own, it would be necessary to have a consolidated packing and slipping facility to handle
products from various sources to be able to make shipment of magoiunk enough to be prof itablc.
Therc have been feasibility studies of consolidating and shipping which have piovcu to b~
valid, as well as feasibility studies of inter-island and trans-ocean shipmonts of freight The
Agncultural Department has made studies oil how to pack and Ship glcen plants Which is vcn
tbasnble and could prove to be all asset to the growers when tune is i.hf the csscucc
f fiend is Itic bclidI lion many hcsearch orgamzauons fruuh the.JL'ncCaluilal fields, that
vN ithin the nest 30 to bll pctus dhcic will become food shuitagcs based upon tLc population gruv, Lk
of the world Hawaii as a state with its existing land could possibh be w arci i? which
agricultural production could become a vital factor in both the existence of the people of Hawaii
and supplying people of other countries. If you take the existing population oCthc State of Haw:u~
and project it out at a rate of 6%, per year you would more than double the population in tell years
The need for increased agriculuual production ~vill bocolnc deticnicl~ vital to sustain the
people of the Slate of I lawaii. It is with this thought in mind that I am auuuiptiug to bring togcOw.
the people of the financial conunuuity, the agricultural community, the rescaich and dcvckipuhool
community and the hansportation entities to try and derclop as many ul' lhcs potential uecds as
possible ill as short amount of fine as is humanly possible, because Buie is of the esscncv I
address this to all pcrsous interested ill cithcr their business of pCrM nal future ill the i afiOUS f nclda
that touch upon these subicus, and appnxiate any and all input that could bnug this to fuliillmcut
3
u
BANKING AND FINANCE
In the past, the stability of the economy of the State of Hawaii was secure in the
production of pineapple and sugarcane, aided by the strong presence of military operations and
government functions on the Island of Oahu. These very large entities had no problem with
seeking financing, and each in its own way had a direct bearing upon the daily lives of the
residents of Hawaii. However, with the reduction in defense spending, the military and
government presence was drastically cut, and many jobs were lost. The decreasing operations of
the pineapple and sugarcane companies had an even greater affect on a number of people.
In the years that I have spent within the State of Hawaii and having visited all of the
islands repeatedly, and talking with various organizations and g,ovcmnhental agencies, I have
observed that there is much difficulty in creating newer businesses, especially in the, agricultural
and horticultural fields. It is almost impossible to imagine large companies such as the sugar and
pineapple companies coming into the islands and creating operations requiring mass enhployment
Beginning new endeavors and projects to fill needs that do exist in Hawaii would have to be done
on a much smaller scale and begun as pilot programs which would in time grow into stable and
productive operations.
It has been my observation that lending institutions are hesitant to commit to small loans or
seed financing to smaller operations, especially where there has been no history of either
production or marketing of a product. We believe that under the right circumstances small
productive farms could be developed which could in turn supply products not only for the state
itself but also export to other countries or other areas.
Pear seems to dominate both the potential grower, the potential user, and the financial
institution which might supply funds to make these projects a reality. In making this statement I
refer to the potential sales of agricultural and other products to the military. It is my understanding
that Senator Inouye housed enough votes in Congress for the government to put aside money to
purchase Hawaiian products for the military if products are available in the local market.
Presently, there does not seem to be enough production of produce to assure a sufficient supply to
the military and quartermasters.
The food chains import vast amounts of produce and other products which could be
supplied by Hawaiian farms. The grocery chains have no history on which to base local
purchasing because there has not been sufficient production of these products in Hawaii, Grocer)
4
chains must contract with their suppliers as much as five years in advance, in order to be assured
of sufficient production.
I have spoken to some market chains about the possibility of purchasing local products.
They have assured me they would be interested in purchasing local products if they could be
assured of ample quantity and quality to satisfy their customers needs. The question again returns
to enabling the smaller potential producers to obtain financing to start an operation which could
eventually supply the markets with their needs
It is my belief that the markets would commit a percentage of tllCn purchases to suppliers
within the state, if they were assured of consistent productivity This would lend creditability to
the establishment of small farms, which would in the beginning be able to supply a small amount of
the market's needs. It is my hope that with agreements between potential growers and potential
buyers that the banking and financing industry could make hinds available to small beginning
farmers. I would ask the financial institutions to research any possible way in which they could
either underwrite or in some way furnish financing for these small operations.
I realize there are numerous sources for financing but most of them have been based upon
either past record or known expertise and ability to create different products. In many of the
instances in which there needs to be some commitment, than has been no past history or record on
which to base any projection, and the expertise for doing man} of those projects falls short of what
might be considered necessary. In essence what I am asking is that the banking or tinaucial
institutions look into the various methods of financing such as the Small Business Administration,
the agricultural banking facility or to some instances, private capital willing to back such a
venture. I world welcome any assistance or help that l might get from any financial institution
which would help to bring about the creation of the programs that I will be presenting throughout
this analytical projection.
5
r
CONSOLIDATION, PACKING AND SHIPPING OF PRODUCT
Due to the very diversified areas on the islands of Hawaii, it would be difficult to create
individual shipments many one area which would utilize the full capacities ofa regular scheduled
Aupping facitit} Havntg pnrclrased products from all of tic Oaads o~ cu the past 30 \ cats, ~Nr
have found that there is a problem to getting fresh products, such as curt flowers and green plants,
which is our mainstay, without having a delay of sonic kind and having to meet the requirements or
schedules of commercial passenger air freight systems. In many instances, this creates delays
which are costly, not only in time, but in the shelf life of the product once they are received.
By the establishment of a regularly scheduled freight system, products could then be
fumteled into one packing, shipping and loading point and flown to a central distribution center
which could then facilitate the transport to all points on Mainland USA, Canada and Mexico,
Also, by consolidating various kinds of products into one container shipment, it is possible to sell
more products by not overloading a distributor with one particular product. Over the past year, 1
have made pilot Shipments of bulk packing of cut flowers and these flowers have come through m
vcq good condition. However, it is very difficult to get a bull; shipment that could have as many
as five different cut flowers, as few growers have access to a variety of these products.
We envision being able to purchase these products from dive:rsilicd growers, creating a
stable mix container of several cut Bowers and foliage, which could be sold at a predetermined
price, including an freight door to door anywhere on Mainland USA, Canada or Mexico. Also,
there is a great nod for the smaller greenhouse plants which were being shipped out of Hawaii at
the time of the wide body availability and the inexpensive air freight. When the wide-bodied planes
ceased to nv in dud out of Hilo, many of the growers of the smaller plants ceased their production.
ILving done pilot programs on what is tenned 6" and 8" plants, we find that there is a tremendous
market for them, particularly in the midwest and southwest Mainland. We believe that with propci
grovvmg and packaging, this particular product could again become a very lucrative hLISitICSS lot'
I tawaii_ We base this on our experience of having shipped plants in from Central America and the
expense of processing and materials entailed before the,v can be sold or distributed on Mainland
USA.
I belicvc the establislunent of a planting and shipping facility in Hawaii which could ship
directly into a holding facility in mainland USA and Canada, could prove to be ecrnuomically
feasible. This ,vould eliminate the need for high cost greenhouses for plants than are full grown
6
and potted, as holding facilities are less costly to operate than greenhouses. These products are
also in condition to be sold immediately without holding time.
Through pilot programs and a survey of potential users of these products we find there
would be a great acceptance and usage of these diversified products. Many purchasers are still
apprehensive about depending on an untried method of obtaining their product, and would like to
be assured that their needs call be met.
At the present moment, 1 do not have details on how to establish a major operation of this
kind. I am planning to research the possibilities of starting an operation such as this on a small
scale, when I vi,it the Islands in July Of 1996.
As in all other endeavors I would greatly appreciate, the input, knowledge and help of all
the individuals and organizations that have either expertise, financing or other abilities in making
this particular operation a reality.
7
TRANSPORTATION
Hawaii's lifeline to the rest of the world relies on the capability of utoving all products
either inter-island or trans-ocean, and depends upon three modes of transportation: barging, trans-
ocean shipping and air transportation.
Barging has long been used as the major means of transporting products inter-island
hctwecn the major shipping ports of Hilo, Matti, Honolulu, etc. By barging containers to these
locations they can be loaded on Matson Shipping Lines and taken to all points of the Pacific.
Local products can be shipped inter-island when seas are calm enough to permit passage. With the
exception of a few air freight systems moving into and out of Honolulu. a primary means of
transport has been the airlifts provided by the commercial passenger airlines. In analyzing the
possibility of am major expansion to accommodate the growth of products that need to be shipped
cithu out of the islands or received into the islands, there are several factors to be considered.
Matson Shipping can handle many kinds of freight, including hard products, frozen
products, and lire gram plants shipped in containers. However, this depends upon the capacity of
the vessel and die direction in which it is sailing. They cannot take on extra freight if the space is
not available, and it would take a huge amount of freight to the point of impossibility, to bring in
another vessel or to have a vessel make it special stop. Matson will accommodate the islands as
much as possible, as long as it is economically feasible.
Oceangoing barges have been and are being used to transport large objects and large
shipments that can withstand rough seas and longjourneys. Young Brothers Inter-island barging
handles a great quantity of both hard goods and perishables, but one has to think of the possibility
of not being able to barge enough products to make it worthwhile increasing their fleet.
Inter-island air freight has been limited mainly to the conversion of passenger planes by
Aloha Airlines for hauling larger amounts of freight, as well as snnaller packages on their
commercial air passenger flights. Hawaiian Airlines have limited themselves to smaller freight,
loaded as belly freight on their passenger flights. American International has run some flights and
are attempting some flights inter-island using a 727 jet. This plane allox~s for a fair size container
but it cannot land and take off on the island of Molokai.
8
Therc has been a Ictsibility study done which proves beyond auv doubt that the use of ah
L-100 bubo-prop plane capable of hauling 50,000 pounds could be rue ~~it lm the island chant
cconomicslly_ If such a plan as this were put into operation it would allow th, growers of
produce, cut flowers, and green plants the opportunity to expand iinnronsely_ There is a market to]
al! of these products, but the lack of stable transport of these products to their dcstinanons huutpci
the growth of these businessos in Hawaii. At the present tune their arc tow growers and shippers ti.
the island that would be capable of Filling a massive order per week- But there is the possibility
through inter-island in freight that these products could be cousolidatcd into wic shipping mca auk,
combined for shipment to other destinations and be redistributed from a central point.
A feasibility study has been done which indicates that this consuhdatton, slipping and
distribution is nut oul_v feasible, but could create many millions of dollars in sales for the pcoplc of
Hawau. There arc numerous organizations--state, federal and ccmO that world like to create
business and growth for 1 LMaii. 'I bets are many growers who would hkc to either mcicasc their
own gromb pattern of establish new growth patterns if thk: oppornuiity was open to them. It is
with these thoughts in mind--having spoken with agricultural deparlmcnis, research and
development departments , economic departments, and many of the bu9lncSSO9 Much are involved
in transporting or importing products, that we address this situauoo. It is my believe that if we aui
bring these persons and businesses together, working to~~ard a conmum cause md goal, this could
b,xomo a icahlh through thou individual and combined cflortS, capabiliucs and resources.
Based upon this research. I am enclosing a proposal for both interisland and tu'ans-ocean
:ur transportation for products grown, developed, and shipped from I-lawaii.
9
CURRICULUM VITAE
of
ERVIN C. WILFONG
The following information is presented to show you my wide-ranging interests and broad
work background in many areas such as horticulture, shipping, marketing and business
management which are pertinent to this proposal.
was born on February 2, 1924 in Chattanooga, Tennessee and attended school there. In
1 1941 1 worked at Standard Coosa Thatcher Company, a textile processing company in
Chattanooga, working my way up to becoming the foreman of the warehouse, packing and
shipping department. In February 1943 1 left my employment for the military, entering the Ist
Battalion which later became the Green Beret Special Forces. In February 19461 left the military
and returned to .Arizona, opening the first ice cream parlor in Ajo, Arizona I then Icft Arizona and
entered the University of Chattanooga, earning 100 credits in lour semesters.
In 1948 1 left the University returning to Arizona where I managed the warehouse for
Phelps-Dodge Mercantile Company in Ajo. At this time 1 also designed women's clothing for two
Arizona clothing manufacturers, including the design of special wedding gowns. From there I went
to California, to work in the chemical laboratory of Standard Oil. During this time I also operated
a ceramic manufacturing and retail shop.
For several years, 1 worked for the Valley Area Traffic and Transportation Study as a
planning analyst, planning the socio-economic development of the City of Phoenix to the year
2000+. 1 also performed feasibility studies for shopping malls, housing developments and
businesses in the area.
In 1969 1 became associated with McElhaney's Flowers and am now Vice President. In
1972 we established Camelback Wholesale, a division of McElhancy's Flowers, which deals in the
wholesaling and distribution of green plants and exotic flowers to the trade. Since the 1940's
McElhaney's has purchased many horticultural products from Hawaii. During this time we
became interested in the possibility of helping Hawaiian growers develop into a major supplier of
all kinds of horticultural products.
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PROPOSAL
FOR
INTER-ISLAND AND TRANS-OCEAN FREIGHT TRANSPORTATION
This proposal would tie together all of the different operations--including inter-island and
trans-ocean cargo movement; consolidating, packing and shipping, of product; and the need for
cooperation and possibly financing to establish these particular entities.
In looking for a means of creating a useful and beneficial inter-island air freight movement,
we failed somehow to look in our own backyard. In researching the possibility of establishing a
good inter-island air freight service we turned our eyes toward the existing locations in all airports,
the personnel required to handle freight, and a long-standing reputation in air fights. When these
facilities were recognized, the one thing that was needed to make it work was a tie-in to trans-ocean
bights that could bring products to the Mainland.
Hawaiian Airlines with its regular flights from Honolulu to the great city of Las Vegas,
Nevada, and the capability of moving freight inter-island, is a made to order consolidating and
shipping facility We found that there was good lift on the wide body planes to Las Vegas from
Honolulu, and that there were flights many times a day from every location in the Islands. This
almost automatically made for a consolidation of freight. It also gave reliability to the moving of
freight within 24 hours to almost any location on the Mainland
Distributing out of Las Vegas makes this a no-stop plane transfer shipment front Hawaiian
Airlines to other carriers going to all major cities on the Mainland. Thcrc are many flights in and
out of Las Vegas, and would be a great freight movement facility because most of their business is
dependent upon passengers. When we realized that this made a perfect distribution point, we
brought Lynden Air Freight and Hawaiian Airlines together to create a pilot program in which we
shipped the products through in record time and in good condition.
After analyzing the potential freight that is moved between the islands and the amount of
freight that is moved trans-ocean, we have researched the possibility or putting into operation two
planes known as Electras which have the capacity to move what is known as the igloo or A-hut that
will handle large green plants or other large articles which need to be shipped in containers. The
smaller parcels and smaller freight items could be put into LD3 containers and shipped on wide-
body planes. Other larger containers could be used to transport products to Japan and to the
11
Mainland US, and could be shipped by other large aircraft or a DC-8 could be brought in as
needed. We believe there is a possibility of bringing together Lynden Air Freight and perhaps other
large freight movers so that we could basically fill every Hawaiian Airlines trans-ocean flight from
Las Vegas to Hawaii. If this could hr fact, be realized, then the distribution of that quantity of
freight, together with the freight that could be picked tip and moved inter-island and distributed, as
well as the freight that could be collected and brought to Honolulu for consolidation, would
possibly bring enough movement of gross poundage to make it feasible to operate the Electras
inter-island.
We feel that if somehow we can bring all parties interested in this type of project together,
vve might be able to create an understanding which would bring about thc, reality of this operation.
To make this work, certainly, Hawaiian Airlines would have to be given sufficient poundage to
make the operation economical and piotitablo_ Lynden Air Freight would have to be given the
assurauce of the stability and the cooperation and patronage of Hawaiian Au lines Coupled
together, it is believed that they could become the largest freight movers into and out of the islands
fhcsc operations also help to stabilize the consolidating and shipping of products that do not exist
in the Islands at this time, Some of these programs may require some type of financing, either
short tcrm or long term, of which, if the stability and feasibility can be proven, the financial
institutions would consider their cooperation in bringing these about
Our pilot program of packing and shipping (which is creating cartons ol'various products
to be shipped to one purchaser) has proven to be successful. Our pilot program of air freighting b~
Hawaiian Airlines coupled with Lyndon Air Freight has proven to be not only tcasible, but very
much desirable. I will be sending individual letters to persons with whom I have spoken about
these projects, together with this packet- Each of you will be informed to whom the letters and
packets are going, and I hope, with great respect and humility, that each of you would weigh this
proposal carcfulhy, search your mind and resources for ways in which we might make these
pioNcts a realit,
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