Loading...
HomeMy WebLinkAboutCOM 0080.000 1998-2000 °'a • O JN( .! h ,., CURTIS TYLER, III ` °' ' L � �1�6it; E.' CI Tel: (808) 961 -8273 Councilmember : (�_ _ _ i +� �,� ,,,• . Fax: (808) 969 -3291 +• .: -„ : 99 JHN 5 P 1 2 27 • 1 F•Ul,N�' COUNTY COUNCILCc' H County of Hawaii Hawaii County Building 25 Aupuni Street Hilo, Hawaii 96720 January 5, 1999 TO: JAMES Y. ARAKAKI COUNCIL CHAIRMAN FROM: CURTIS TYLER, CHAIRMAN COMMITTEE ON HUMAN SERVICES VI CI‘: AND ECONOMIC DEVELOPMENT RE: REQUEST FOR REFERRAL Attached for your review is the Economic Development Plan for the District of Ka'u (County of Hawaii) prepared for the State of Hawai'i's Department of Business, Economic Development and Tourism (DBEDT). Please have the attached numbered and referred to the appropriate committee. A copy of the report will be on file in the clerk's office. Att. JA/bb Lueim. File No. Ref. To: I15CDC• Rd [ 0 1 1999 77 -6399 Nalani St., Suite 1 -A Kailua -Kona, Hawaii 96740 Kona Telephone: (808) 326 -5684 Fax: (808) 326 -5697 �..,. O AN ECONOMIC DEVELOPMENT PLAN " FOR THE DISTRICT OF KA U fl rt - is l- or 2 c- so /14,5 E.DC o 0 0 AN ECONOMIC DEVELOPMENT PLAN FOR THE DISTRICT OF KA'U 0 0 o PREPARED FOR: Department of Business, Economic Development and Tourism State of Hawaii PREPARED BY: Decision Analysts Hawaii, Inc. o July 1998 B U v O O PREFACE 3 . 0 PURPOSE This Economic Development Plan for the District of Ka'u (County of Hawai'i) was prepared for the State of Hawaii's s Department of Business, Economic Develop- ment and Tourism (DBEDT) with funding from the Economic Development 4 Administration (EDA) of the U.S. Department of Commerce as well as the State of Hawai'i. DD • The project was initiated, as a result of economic problems in Ka'u which were . • compounded by the closure of the sugar operations of Ka'u Agribusiness Co., Inc., III in March 1996. Iri.comparison to other districts in the County and in the State as a whole, unemployment in Ka'u is high, job opportunities few, household income low, and public assistance high. 3 The purpose of this economic development plan is to help attract and guide D public and private investments in Ka'u that will lay a foundation for orderly eco- nomic growth, increased business activity, and the creation �f permanent jobs. • f Under certain government programs, including those of the EDA, an economic Ll development plan must be in place before investment funding can be provided. In other cases, government agencies and private organizations may be more willing to invest in a community if they can work within the framework of an economic n ' development plan. . —r • This Plan is intentionally focused on economic development, and is not meant to be a comprehensive community development plan that addresses such equally important areas as land use, infrastructure planning, social problems, environmen- tal issues," etc. It is likely, however, that as the community moves to improve its economy, a positive effect will be felt in other areas. 9 .. iii • 0 0 i PREFACE CONTENT AND ORGANIZATION The next chapter of this report provides a brief description of Ka'u and gives relevant background information on the District. Chapters 2 through 9 provide analyses of existing and potential economic activ- 9 ities for Ka'u, covering agriculture, forestry, livestock operations, aquaculture, fish- ing, tourism, cultural and educational centers, and various other activities which L help "drive" the local economy. The chapter on agriculture is comparatively long because of its new potential arising from the release of land and other resources from sugarcane production, the strong community support for agriculture, the many farming initiatives, and the diversity of agriculture (many crops, products O and markets). For each of the economic activities, the analysis generally addresses (as relevant and to the extent that information is available) the current status of the activity, fac- tors affecting its development, community support, its market potential, its feasibil- ity based on similar projects in Hawai'i or elsewhere, the employment and other economic benefits, and requirements for implementation. Chapter 10 discusses the needs for infrastructure to support economic develop- ment in the District, including roads, water, communications, and other improve- ments. 11 The final chapter discusses the oversight management which will be needed to (1) facilitate implementation of various projects and programs, (2) insure follow - through, and (3) adjust and update the Plan to reflect changing circumstances and new opportunities. fl GEOGRAPHIC COVERAGE Q This Plan covers all of the Ka'u District except that portion of the Hawaii Volca- noes National Park (HVNP) lying within the District. HVNP is not included in the Plan because it is located 20+ miles away from the commercial and population cen- ters of Ka'u, and responsibility for the Park is under the jurisdiction of the National Park Service. Furthermore, from an economic perspective, the commercial opera- tions at HVNP are more closely associated with Puna than with Ka'u. 8 8 o o . PREFACE - V . - APPROACH TO THE . Community Meetings, Review and Comment - Information on existing economic problems and activities in Ka'u, and ideas for f economic development were obtained from entrepreneurs, individuals, companies, fS and organizations who are involved with economic development,throughout the District. The information was gathered primarily in meetings with individuals and B - small groups at the outset of the effort, including discussions with farmers, fisher - Li men, hotel arid tour operators, other members of the business community, commu- nity leaders, and government representatives and program administrators. Many took time from their work to show us through their farms or business operations, discuss their challenges and future plans, and provide valuable ideas and information. 3 The initial draft of the report was distributed for review and comment to com- munity organizations throughout Ka'u, and was made available at libraries and other locations. The report was also distributed to a number of government agen- cies and businesses. . The report was then revised and expanded based on the many well- considered L.,. . comments that were received: ; " ' Community Vision for Economic Development U - • Discussions and various written reports revealed a broad community consen- sus on a vision for economic development in Ka'u —a vision which includes agri- - culture, forestry, livestock, aquaculture, fishing, low- impact tourism, and cultural 0 • centers. In most cases, however, details were lacking on the specifics of the vision, ' and on potential projects required to implement the vision. Nevertheless, a num- o ber of ideas were suggested for exploration. . . Although this Plan reflects initiatives emanating from within Ka'u, the Plan is i'' consistent with and supports the economic development concepts contained in the L • Hawai'i State Plan and the General Plan of the County of Hawai'i. Analysis �? • To the extent possible, the various activities and projects that were suggested . - U for economic development were analyzed to provide answers' to the following questions: ' ' 0 0 D vi PREFACE 1) Is the activity or project likely to be pursued by serious entrepreneurs, companies and /or economic - development groups? For the most part, (� intentions are based upon stated plans of the parties involved. 2) Does the community support, or at least not strongly oppose, the activity or project? This is usually based on a community survey and /or on dis- cussions JJ with members of the community. 3) Is the activity or project likely to be profitable? This is usually based on an analysis of the market potential, any unique or strong comparative --� advantage(s), and a history of (unsubsidized) success in other rural com- munities. 4) Does the activity or project offer significant net economic benefits to the Ka'u community? The economic benefits will usually be in the form of new jobs. 5) Are requirements for support reasonable? The cost of developing resources (e.g., water) and providing infrastructure must be commensu- Q rate with the potential benefits. For a number of projects and activities, information was available to allow suf- 0 ficient analysis to answer all five of the above questions. But in many cases, some questions went unanswered because of insufficient information, or insufficient time and budget to obtain necessary information. Community Ranking r Some individuals in the community anticipated that this Plan would contain a Ka'u -wide ranking of economically feasible activities and projects. Such a ranking was carefully considered but was not developed for a number of reasons. 0 First, the kinds of initiatives envisioned by entrepreneurs in Wood Valley, Pahala, Na'alehu, Waiohinu, South Point, and Ocean View differ significantly and, in most cases, primarily affect the immediate community involved and not other communities. Furthermore, most of the initiatives can and should be pursued -, simultaneously by the affected parties. The same is true for farmers, tour opera- tors, fishermen, etc.; most of their initiatives can and should be pursued simulta- S1 neously. �J 0 0 PREFACE O Vii 0 • Second, many County, State, and Federal agericies, and also many private orga- 7 nizations oversee a large number of programs in many disciplines (e.g. agriculture, U aquaculture,, forestry, tourism, etc.). Each program has its own mandate and requirements, and each one also evolves . over time. Occasionally; programs are 0' added or dropped. For many of these programs, the number of proposed projects cc in Ka'u that meet ,program requirements will be so small that all of the projects can be funded. Thus, a ranking of projects would be unnecessary and unwise. Third, many highly desirable projects are not ripe for implementation because U the necessary details have not been worked out. Thus, it may be advisable to pro - need on an acceptable project that can take advantage of a funding "window of - 0 opportunity." Fourth, some projects are entirely private, where the developer has fully vested rights. In such cases, a community ranking is likely to be of little or no cone- . quence. 0 Fifth, some projects are extremely controversial and divisive (e.g., a prison). A • p such as this cannot substitute for lively community debate, detailed factual materials, and the established political process. Sixth, like other districts, Ka'u is composed of diverse groups in different com- munities, each having its own broad spectrum of interests. Under these circum- G stances, a consensus on a Ka'u -wide ranking would have been unachievable, and attempts to develop such a ranking would have squandered limited resources. 3 Even less acceptable and also highly inappropriate would have been the alternative . • of having a consultant impose a ranking on the community. 0 Thus, rather than develop an unworkable priority- ranking of activities and projects, the community will be better served if individual entrepreneurs and the 0 community at large retain the flexibility to pursue multiple priorities based on their t / own initiatives, while working within the context of the market economy and an a established political process. Furthermore, entrepreneurs and the community should retain the flexibility to change their priorities over time, based on evolving , . circumstances and on any new, promising opportunities Which will surely arise. 0 This Plan allows for such needed flexibility by setting out an agenda of eco- nomic activities and projects that were derived from the community and, to the 1 0 extent possible, were evaluated as to whether or not they have economic merit. 1 . Ll Q 0 Viii PREFACE ACKNOWLEDGMENTS Numerous individuals, companies, organizations and agencies assisted in the D development of this report by providing valuable information and ideas which, tJ hopefully will contribute to the economic betterment of Ka'u. Their time and con- tributions are gratefully acknowledged, and their aloha deeply appreciated. Special thanks go to those who served as volunteer liaisons with the community: Beverly Byouk (Ocean View), Anna Cariaga (Pahala), Mac Cooper (Discovery Harbour), Leina'ala Enos (Wai'ohinu), Bob Makuakane (Pahala), Barry Neal (Ocean View), and Steve Todd (DBEDT, Hilo). Subconsultants who contributed to the research and /or cost estimates were Akala Products; Belt Collins Hawai'i Ltd.; and Stryker Weiner Associates, Inc. Q Agencies, companies and organizations which provided information and /or were provided copies of the initial draft of the Plan to review included: fl Federal Agencies and Organizations Department of Agriculture Q Economic Development Administration, Department of Commerce Hawai'i Volcanoes National Park 1 1 State Agencies and Organizations College of Tropical Agriculture and Human Resources, University of Hawai'i Department of Agriculture Department of Business, Economic Development and Tourism UU Department of Hawaiian Lands Department of Land and Natural Resources Governor's East Hawai'i Liaison Office Hawai'i Community College Land Use Commission Legislature (Senator, 3rd District and Representative, 4th District) LJ Office of Hawaiian Affairs Small Business Development Center County Agencies and Organizations County Council (Chair and Ka'u District Councilmember) Department of Research and Development L. • Q O 0 PREFACE iX - 0 . Hawai'i County Economic Opportunity Council • 0 Office of the Mayor "Planning Department .--- Police Department n - Transit A t } Community Groups , Businesses and Other Organizations 0 All Ka'u Council Aquasearch, Inc. B &E Texaco Station 0 Becky's B &B Bee Enterprise Educational Services, Inc. T 1 • Bougainville B &B u C. Brewer & Company, Ltd. 0 Cafe Ohia C1 Cloud Rest Coffee Cooperative Community Management Associates Damon Estate Discovery Harbour Community. Association Fabric 'n Fashion Coffee House Family Support Services of West Hawai i 0 Friends of Ka'u Libraries Green Sand Beach Tours n Hana Laulima Lahui 0 Ka'u, Inc. u Hawaii Ag Products ICI - Hawai'i Island Chamber of Commer • Haw awaii Island Economic Development Board Hawai'i Visitors Bureau, Big Island Chapter B Hawaiian Civic Club of Ka'u Hawaiian Ocean View Estates Community Association ' Hawaiian Ranchos Community Association Hawaiian Vintage Chocolate • 0 Hobbit House Hokukano Ranch Honson Company, Inc. • IL x PREFACE 0 0 Huliau o Ka'u Insights, Inc. International Longshoremen's & Warehousemen's Union Ka 'Ohana 0 Ka Lae Ka'u Agribusiness Co., Inc. — Ka'u Coffee Co-op Ka'u Community Children's Council Ka'u Community Planning Council on Aging Ka'u Exports Koffee Ka'u Family Health Center Advisory Committee Ka'u Farmers Association C Ka'u Federal Credit Union Ka'u Gallery Cooperative Ka'u Historical Society Ka'u Ice and Fishing Supply Ka'u Kids Drama Club Ka'u Learning Center Ka'u Lions Club Ka'u Orange Kahuku Ranch Kamehameha Schools /Bishop Estate Kamei Garage, Inc. f'( Kapapala Ranch �J Koa Collectables Kona - Kohala Chamber of Commerce Kula Kai Estates Kulana Foods, Inc. • MacFarms of Hawaii MANA Coffee Co. Manuka Farm Mark Twain Square Masazo's Pig Farm Mauna Loa Macadamia Nut Corporation McCall Flower Farm Moaula Kei, Inc. 3 0 0 PREFACE xi 0 Na'alehu Community Club Na'alehu Fruit Stand Na'alehu Main Street Na'alehu School Na'alehu Theatre Nechung' Drayang Ling Ocean View Chamber of Commerce Pacific Livestock, Inc. Pahala Community Association Pahala Elementary and Ka'u High PTA Parker Ranch Punalu'u Preservation Road Maintenance Corporation Roberts Hawai'i Tours S &S Dairy SeaMountain South Point Steel 0 Tel- Hawaii, Inc. Thomas A. Loudat, Ph.D., Economist Tomei Pig Farm Tom Hudson Company r1 Turtle Cove Woods V -Group Vacation Internationale Waiabuta Dairy , Waimea Falls Park ) v c Waimea Water Services, Inc. Wilson, Okamoto & Associates, Inc. Wood Valley Water and Farm Co -op 9 D Q 0 I . CONTENTS . - . Page PREFACE iii 0i MAPS xxv ( � TABLES • xxvii n EXECUTIVE SUMMARY ES- 1 • CHAPTER ' , . • .. . 5 1. THE ECONOMIC ENVIRONMENT 1-1 Location . 1 0 Land Area 1 Community Profiles " 1 Descriptions , , 1 Census Data and Other Information 5 'Markets 6 • , 5 Transportation and Communications 7 Highways . '. 7 0 . Airports and Harbors 7 v Telephone Service 7 0 . Land Ownership 7 Geological' Hazards ' 8 U Enterprise Zone 9 Recent Economic History 9 Community Preferences 10 a Community Characteristics Affecting-Economic Development . 11 Entrepreneurial Spirit 12- .. C` Work Skills 12 L . Community Traits 12 References 13 -xiii XiV CONTENTS O 2. AGRICULTURE AND RELATED PRODUCTS 2_ 1 Introduction 1 Agricultural Resources and Conditions 1 Overview 1 2 Existing Supply of Higher- Quality Agricultural Land in Ka'u 2 Soil Characteristics 6 Erosion 7 Terrain 7 Elevations 7 E Climate 7 Pan Evaporation 8 3 Water Resources 9 Irrigation Water Systems 9 • Other Improvements 11 -, Pest Problems 12 Land Tenure 12 Enterprise Zone 12 RETA -H Program 13 -, • Shipping 13 Competing Farm Areas and Comparative Advantages 14 8 Supply of Farmland in Hawai'i 14 Comparative Advantages of Ka'u Farmers 15 Comparative Advantages of Oahu Farmers 16 Comparative Advantages of Other Neighbor Island Farmers 19 Comparative Advantages of Overseas Farmers 19 Implications for Ka'u Farmers 21 Market Potential for Produce Grown for Hawaii 21 0 Potential for Import Substitution 21 Characteristics of Successful Crops 22 n Produce Crops for the Honolulu Market 23 1J Honolulu Produce Market: 1993 29 3 Production Trends of Hawai'i Crops 30 Hawaii's Seasonal Market Shares 31 8 Honolulu Produce Market: 2010 32 Yields, Water Requirements and Prices for Produce Crops 33 ES c D - 0 0 . CONTENTS xv • Potential Land and Water Requirements to S upply ' D the Honolulu Produce Market: 2010 Potential Land and Water Requirements to Supply • the Big Island Produce Market: 2010 35 p Total Big Island Land and Water Requirements for the U Hawaii Produce Market: 2010 35 fl Market Potential for Specialty Crops 36 • Statewide and Big Island Production: 1995 36 n Potential for Specialty Crops Grown in Ka'u 36 Market Potential for Export Crops 38 Major Export Crops: 1995 38 Characteristics of Promising Export Crops Grown in Ka'u 40 Potential for Increased Production of Existing Export Crops 40 0 ' Potential New Export Markets and Crops 41 Outlook for New Export Crops 46 0 . Market Potential for Other Crops 48 • Feed Crops 48 , 1 Energy Crops 50 .Crops Grown for Extracts 50 B Existing and Planned Crops in Ka'u 51 U' Macadamia Nuts 51 Coffee 54 Fruit Trees 56 • Cocoa . 58 U . V egetables and Melons 59 Flowers and Nursery Products 62 0 Feed Corn 63 . Energy Crops 63 Tea 63 • Marijuana and Hemp 6 0 Summary Outlook for Agriculture , 65 Support Facilities and Services 66 0 Processing and Support Facilities 66 Support Services 68 Location of Support Facilities and Services 70 v I . XVi Q CONTENTS O Infrastructure 2 -70 Water Projects 7 Farm Roads 76 Telephone Service 76 Land Issues 77 Issues Surrounding Leasing Farmland T7 Farmland Program 79 References 80 1 JJ 3. FORESTRY 3- 1 Community Support for Forestry 1 Land Supply and Conditions for Forestry 2 Supply of Land Available for Forestry 2 Agronomic Conditions 2 3 Other Conditions 3 The Place of Large -Scale Forestry in the Hierarchy of Land Uses 3 Koa 4 Importance of Koa to Hawaiians, Pre - Contact 4 -7 Current Use, Production and Revenues of Koa 5 Koa Supply 5 Koa Prices 6 Profitability of Koa 6 Improved Cultivation Practices 7 Outlook and Economic Benefits of Koa 7 Sandalwood 7 (� Historical Importance of Sandalwood 7 �( Sandalwood Markets and Uses 8 C� Sandalwood Prices 9 Sandalwood Suppliers 9 Afforestation Projects 10 Cultivation of Sandalwood 10 Profitability of Sandalwood 11 Research on Commercial Sandalwood Production 11 r . Outlook and Economic Benefits of Sandalwood 12 Eucalyptus and Related Forestry Operations 12 Current Eucalyptus Operations 12 0 V 0 CONTENTS 0 xv i i • Eucalyptus and Related Forestry Plans 3 -12 Market for Eucalyptus and Other General- Purpose Woods 15 ..._/ Prices of Eucalyptus and Other General- Purpose Woods 17 Outlook and Economic Benefits of Eucalyptus Forests in Ka'u 18 13 Paulownia 19 Plans for a Commercial Paulownia Forest 19 0 The Paulownia Tree 19 Commercial Uses of Paulownia 20 U Employment Benefits 20 U - Other Types of Forestry Operations 20 9 High -Value Hardwoods 20 () Bamboo • 20 . Christmas Trees 21 ' D Neem Trees 21 Agroforestry 21 1 Ecotourism 22 Government Support 22 '1 Stewardship Programs 22 U Other State Forestry Programs 22 County Property Tax Code 23 References 23 0 4. LIVESTOCK . 4- Ranching 1 . D Land 1 Herd Animals • 1 Feedlots and Processing Plants 1 Big Island Cattle Trends 2 1 Forage Beef • 2 ( Exports and Shipping 2 Actions to Improve the Profitability of Ranching 3 D Economic and Other Community Benefits of Ranching 4 Outlook for Ranching 4 0 Dairies 5 • S &S Dairy 5 0 Waiabuta Dairy 5 O 0 0 . 3 XViii CONTENTS t" ,../ Hog Farms 4- 6 Production Trends and Self-Sufficiency 6 e-- New Ka'u Hog Farm 7 Potential for Hog Farms in Ka'u 7 Slaughterhouse for Ka'u 7 t..., Bee Operations 8 Honey Production 8 3 Queen Bees 9 References 9 .--, 5. AQUACULTURE 5- 1 Hawaiian Fishponds 1 0 Seafood and Aquaculture Market 2 Hawaii's Comparative Advantages in Aquaculture 2 0 Hawaii Experiences with Aquaculture 3 Potential Backyard Aquaculture in Ka'u 4 Aquaculture Use of Irrigation Reservoirs 4 Aquasearch, Inc. 4 Plans for Ka'u 4 Li Market for Astaxanthin 5 Employment 5 Aquatics Feeds Research Center and Pilot Production Facility 5 References 6 6. FISHING 6-1 ,--, Overview 1 4.._[ Fishing Grounds 1 ,—, Boat Ramps and Storage 1 L., Species of Fish 2 Fishing Season 2 Fishermen 2 Ice 2 Marketing 3 The Fisheries Resource 3 Regulations to Protect Bottomfish Stocks 4 9 Health and Environmental Regulations 4 Value-Added Products 4 --, L. O CONTENTS O Xix D Charter b oat Fishing 6- 5 Deep -Water Shrimp 5 0 • U Support Facilities 5 D Kaulana Bay 5 Punalu'u 7 New Ka'u Harbor 7 Ice House and Flash Freezer 7 Outlook and Development Potential 8 c'j References 8 rt 7. TOURISM • 7 • (_.} Introduction 1 Visitor Trends and Characteristics 1 U Annual Visitors • 1 Daily Visitors 1 n • Selected Visitor Characteristics , 2 ' Museums, Cultural Attractions, State Parks and Zoos 2 Factors Affecting Tourism Growth 2 Q � Implications of More Japanese Visitors 5 • LIS Hotels and Other Visitor Accommodations 5 Existing Facilities 5 6 • Visitor Activities, Attractions and Tours 9 Introduction 9 r 1 • Punalu'u ' 9 vvv South Point 12 0 Green Sand Beach 13 • • Other Beaches 14 'l Trails ' ' 15 • . U Spelunking 18 . Mark Twain Monkeypod Tree 18 . L-, ' Nechung Drayang Ling 18 Kauaha'ao Congregational Church 19 . 0 Na'alehu Theatre 19 • Paniolo Events and Activities 19 ri Lua Palalauhala, Kuhuku Ranch 20 1 0 . - C.- xx CONTENTS 0 Agriculture 7-20 Hunting 20 r--, Target Shooting and Archery 20 —, Golf 21 Ocean-Related Activities 21 —) Restaurants 21 , Hawaiian Arts, Crafts and Culture 22 3 Interpretive Displays 22 Alternative Health Care 22 "Rest-Stop" Tourism 23 Factors Favoring Rest-Stop Tourism 23 Improvements Common to All Communities 24 Na'alehu and Wailohinu 24 ,— Honu'apo Bay Commercial Center 27 3 Punalu'u 28 ed Paha la 28 Ocean View 29 Marketing to Visitors 29 0 Ka'u Visitor Map 29 Internet 30 0 Movies, Television and Advertisements 30 Business Relationships 31 Other Factors Required for a Successful Visitor Industry 32 Telephone Service 32 (-- Airport for Light Planes 32 ,..- Aloha 32 .Control of Crime 32 9 Potential Employment Benefits of Tourism 33 References 34 E 8. CULTURAL AND EDUCATIONAL CENTERS 8-1 n Ka'u Hawaiian Cultural Center 1 Planned Facilities and Activities 1 Project Status 2 E Development Costs and Funding 3 Self-Sustaining Operations 3 0 I . , - , 0 1 . . 0 b _ONTENTS 0 r - • )0C1 r - . L Locational Advantages 8-3 Record of Success of Cultural Centers in Hawai'i 4 Employment and Other Benefits . ' Ka tae Curatorship Program and Cultural Center 5 0 . Introduction ' Cultural and Natural Resources , 5 • 9 - Goals of Ka 'Ohana o Ka Lae _ .. , - Past and On-going Activities of Ka 'Ohana o Ka the 7 Project Plans 1 . Development Issues 10 0 • . Potential ial Marketdaontdh Benefits 11 t s ' 11 , Kawa Cultural Restoration 12 9 IntroduCtion 12 . . Kawa Cultural and Natural Resources 12 13 . . , Cultural Restoration and Pro ' grams 12 - Equipment and Labor Needs 13 ' ,_... ' Cost and Funding 13 , Developinent Issue 14 0 , Pacific Regional Technical College and Punalu'u Ahupua'a 14 Culturally-Oriented Technical College and Ventures 14 • Economic Benefits - '14 9 Market 15 . • Cost and Financing - 15 0 ' • Outlook ' , . 15 'References . 15 0 9. OTHER ECONOMIC ACTIVITIES ' 9- 1 n • Arts and Crafts Business Opportunities Related to Improved Telephone Service, Ocean View . 1 Certified Kitchens 2 - State Requirements 2 Existing Certified Kitchens in Ka'u 3 0 Proposed Certified Kitchens Commercial and Industrial Activities, Ocean View 4 0 - Non-Conforming Activities -) . , • xxii CONTENTS 0 Li Permitted Land Uses within Agricultural Subdivisions 9- 5 Light- Industry Park 6 Commuter Bus Service 8 — Proposed Service 8 Potential Market 8 Availability of Commuter Buses 8 Cost of Bus Service 9 G Economic and Other Benefits 9 Digital Arts Business Incubator 10 Energy Production 11 Wind- Powered Generators 11 9 Ocean Thermal Power 11 Geothermal Power 12 D Solar Power 12 Energy Crops 13 Prison 13 E I Proposed Prison 13 r 1 Economic and Other Benefits 14 (� Community Issues and Concerns 14 Retirement Communities 15 Introduction 15 r. Economic Benefits 16 ,� Efforts to Attract More Retirees 16 Rural Roots Technology Center, Na'alehu Main Street 17 9 Spaceport 18 Past Proposal for Spaceport 18 n Employment Benefits 18 Community Support 18 ( j Demand for Launching Services 18 El Sea -Based Launching Services 19 j` Outlook for a Spaceport 19 L Trade School, Pahala 20 References 20 +-_, U 0 0 O CONTENTS O xxiii 10. INFRASTRUCTURE NEEDS 10 -1 (� Roads 1 {� Water 1 0 Telephone Service 2 Past GTE Service 2 Universal Service Fund 2 a Proposed TelHawai'i Service 2 Current GTE Service 3 Honu'apo Pier 3 Airport for Light Planes 4 0 References 5 �} 11. OVERSIGHT MANAGEMENT 11 - 1 County Office of Research and Development 1 • All Ka'u Council 2 0 References 2 D 3. J 0 0 0 i 0 D O Q a E MAPS c —P Paage 1 -1. County of Hawaii 1- 2 9 9 1 -2. District of Ka'u 3 2 -1. State Land Use Districts and Elevations, Ka'u 2- 3 9 . 2 -2. ALISH Soil Ratings and Solar Radiation, Ka'u 4 2 -3. ALISH Soil Ratings and Rainfall, Ka'u 5 9 9 9 c 9 3 a 3 xxv 3 D o o a TABLES U Table Pine 2 -1. Honolulu Produce Market: 1993 2 -24 I D 2 -2. Hawai'i Production Trends and Seasonality 25 2 -3. Projected Honolulu Produce Market: 2010 26 D 24. Yields, Water Requirements and Prices of Produce Crops 27 2 -5. Potential Land and Water Requirements, and Farm Revenue j to Supply the Honolulu Produce Market: 2010 28 2-6. • Hawaii's Specialty Crops, State of Hawai'i and Big Island: 1995 37 l,J 2 -7. Hawaii's Export Crops: 1995 39 D 2 -8. Specialty Crops in the U.S. Mainland Markets " 42 2 -9. Produce Approved for Shipment from Hawai'i to,the U.S. Mainland 44 2 -10. Produce Approved for Shipment from Hawaii to Alaska Only 45 2 -11. Illustrative Production and Resource Requirements for a New Export Crop Grown in Hawai'i: 2020 47 0 2 -12. Agriculture Water Projects for Ka'u, Ka'u River Basin Study 72 U 3 -1. Forestry Land, Wood and Capital Requirements, by Type of Mill 3 -13 D 7 -1. Attendance at Major Attractions, County of Hawaii: 1994 and 1995 7- 3 • • xxvii 0 0 a 0 EXECUTIVE SUMMARY U , INTRODUCTION (� -The Economic Development Plan for Ka'u amounts to, pursuing a widely - ��11 shared community vision for economic development, tempered by "economic reali- _ • u f • ties." The vision reflects the desire of most Ka'u residents to have more job oppor- ' . tunities while preserving and enhancing the natural beauty of the area, the rural. , character and lifestyle and, for some in particular, the Hawaiian culture. U The adjustment for economic realities reflects the need to consider: available ' .. resources in Ka'u; land ownership; infrastructure limitations (e.g., no airport or har- • i • boil; limited entrepreneurial and labor skills in some fields; the small population of Ka'u and the corresponding small market within the District; the isolation from J major marketsfexposure of projects to geological risks (i.e., lava flows, earthquakes, ' and tsunamis); and the comparative advantages of Ka'u with respect to other: locations that are available for supplying goods and services'. . With few exceptions,•econoinic development and job creation will depend upon • 9 the initiative, abilities, and successes of a number of key entrepreneurs working in - ' Ka'u, combined with support from government. Not all opportunities and initia- ' 0 ' tives discussed in this Plan will be pursued and, for those which are, not all of them will reach their potential: 3 This report was funded primarily by the Economic Development Administra- tion (EDA) of the" U.S. Department of Commerce. Implementing projects and . programs suitable for funding by the EDA are designated in parentheses by the acronym '.'EDA." ' Those which could be funded by other government agencies are r designated .. "OGov." And those which would be funded by private parties (includ- ' i • ing foundations and community organizations) are designated "Priv." —} - - ES-1 • 0 0 EXECUTIVE SUMMARY ES -2 AGRICULTURE AND RELATED PRODUCTS Economic Development Strategy r The economic development strategy for agriculture is to pursue an industry characterized by: the entry of many new farmers from Ka'u, a diversity of crops, a diversity of farm sizes and, to the extent possible, processing in Ka'u to produce "value- added" goods. Recent and new crop plantings are expected to include macadamia nuts, coffee, fruit trees, possibly cocoa, vegetable and melon crops, flowers, nursery products, and possibly feed crops. These plantings could cover about 2,500 acres, including v former sugarcane lands, land near upper South Point Road and, to a lesser extent, lands in Wood Valley and Ocean View. Because of its central location, Pahala is expected to remain the primary pro- cessing and service center for agriculture. 3 To realize the potential, a number of water projects, processing facilities, and other projects and programs will be needed. But the potential is limited by (1) 1. agronomic conditions which favor certain crops but not others; (2) the shortage of low -cost irrigation water (even with water projects); and (3) the size of the market — which can be profitably supplied from Ka'u in competition with other farm areas �. which, for many crops, have superior agronomic conditions and locations. Potential Job Creation Within a decade, as many as 250 people in Ka'u could be engaged in new farm- ing activities during peak harvest season, provided that a number of key entrepre- neurs pursue their plans and are successful. Support Projects Programs, and Action (1 To support agriculture in Ka'u, meaningful and economically justifiable �} projects, new or expanded programs, and actions —many of which would be sub- ject to technical studies before funding — include: — Processing and other support facilities as part of the "Ka'u Food Process - ing and Visitor Facility," (see top of page ES -11 under "Pahala" for the L , visitor - related elements), about $800,000 for both the agriculture and tourism components (EDA, OGov and /or Priv). 9 0 ES-3 . EXECUTIVE SUMMARY . • Near Term: . 0 0 + Areas to wash crops. + Coffee dryers, roasters, and a mill to support new coffee farms. J + Secure warehouses to store supplies. + Certified kitchens to add value to fruits and vegetables. , Q + One or more garages to maintain farm equipment: . Introduction of a new macadamia nut cracker which increases the - yield of whole nuts and reduces processing costs. , 9 • Potential long -term (depending upon which crops prove to be successful and in what volumes and for which markets, and depend - ing upon how products are to be packaged): - J + Processing plants to cut and puree fruit, extract juice, dry or dehy- ' drate products, process taro into poi and /or chips, etc. 9 + Bottling plant for jams and jellies. +- Packing plants to box agricultural products. ' + Vacuum cooling plant and refrigerated storage to extend the shelf - 9 U lives of crops. ri +. Fruit -fly eradication facility for export crops. J - Water projects: O • Wood Valley, about $500,000 (EDA or OGov). • Keaiwa and Pahala, already funded at $1.5 million (OGov and Priv). • Upper Moa'ula, about $300,000 (EDA or OGov). 0 • Honu'apo, possible recycling of water from proposed aquaculture operation (Priv). - 1 n. • Na'alehu /Wai'ohinu, about $220,000 (EDA or OGov). � • Upper South Point Road area, about $2 million (EDA or OGov). • Ocean View, for farmers and other businesses, about $2 to $2.9 mil- lion (EDA or OGov). — Improve farm roads: • Upper South Point Road area (OGov). • Plantation roads (Priv). 9 — Support services: - • Land clearing services (Priv). - 9 . ' • Installation and repair of irrigation systems (Priv). - , '1 . J , J 0 0 '3 EXECUTIVE SUMMARY ES -4 3 • Maintenance and repair of tractors, farm trucks and related equip- ment (Priv). (� • Rental of specialized farm equipment (Priv). • �J • Sale of fertilizers and pesticides to farmers (Priv). • Marketing services to sell fruits, vegetables, flowers, etc. (Priv). • Farmers' Markets, Pahala and Na'alehu (Priv or OGov). • "Vegenet," an internet service, to help market farm products, sup- plies, and services (OGov). • Trucking services to transport fruits, vegetables and flowers to mar- ket, etc. (Priv). ti • A 4- wheel -drive vehicle to transport new farmers from Pahala to Keaiwa Agricultural Park, about $40,000 (OGov). — Research and extension services: • Research support for macadamia nuts to (1) help develop new variet- (� ies that are hardier and produce higher yields, (2) improve farming l• practices, and (3) control pests (Priv and OGov). • Increased agricultural extension services for Ka'u (OGov). — Farmland program to make land available to farmers (OGov and /or Priv). FORESTRY Economic Development Strategy The economic development strategy for forestry is to pursue an industry char- acterized by: — a diversity of forestry operations, ranging from small part -time forestry and 1-, agroforestry on family farms to very large operations involving thousands of acres; — a variety of high - value, fast - growing trees, plus some slower growing trees of very high value; — multiple products manufactured using different types of woods, and with r - the products becoming progressively higher in value as the forests mature; — to the extent possible, milling and manufacturing in Ka'u to produce "val- ue- added" products; and — scenic hiking trails within mature forests to support ecotourism. For the most part, the large -scale forest would be planted on former sugarcane lands which are not irrigated, and which remain after setting aside the higher -qual- ity land for growing crops. The forest could cover as many as 15,000 acres, the Q O O . ES-5 EXECUTIVE SUMMARY O majority of which would be comprised of high -value varieties of eucalyptus and . paulownia, but also would include other high -value woods such as koa. J Milling in Ka'u would include (1) in -field chipping of small trees that are D removed to thin the forest to make room for the remaining trees to mature, as well as in -field chipping of branches pruned from larger trees, and (2) a processing plant for paulownia. It is expected that any other milling to higher value products (fiber- -- board, veneer, lumber, etc.) will occur outside the District closer to forestry opera- (� shipping ions in Hamakua as well as erminals. U � g Potential Job Creation . Once the forests mature, employment is expected to reach about 150 field and 0 mill jobs in Ka'u. Support Projects Programs, and Action J - To support forestry. in Ka'u, meaningful and economically justifiable projects, PP Y• ' � g YJ P J s and new or expanded programs —many of which would be subject to technical studies before funding — include: — Continued research. to determine how best to grow koa to obtain a large 1 volume of high - quality wood in as short a time period as possible j (OGov). - Sandalwood: • Research to verify the profitability of commercial sandalwood farms, $15,000 (OGov). 9 I • If the results show promise, further research to determine where and how best to grow sandalwood to obtain a large volume of high -qual- Q ity wood in as short a period as possible (OGov). — Mills: • Portable chipping mill, Ka'u (Priv). 9 • Paulownia processing plant, Ka'u (Priv). • Fixed chipping mill outside Ka'u, $71 million (Priv). • Medium - density fiberboard mill outside Ka'u, $24 million (Priv). • Veneer mill outside Ka'u, $40 million (Priv). 9 • Sawmill outside Ka'u, $11 million (Priv). i n � U 0 0 ' EXECUTIVE SUMMARY ES-6 LIVESTOCK Economic Development Strategy The economic development strategy for ranching, dairy, hog, bee and other livestock operations is to enhance the profitability of existing operations to support r their continued operation, and to support expanded and new operations where possible. r -. For the most part, ranch operations are suitable for lower - quality agricultural ._ lands that are unsuitable for. crop production or commercial forestry. Although ranching is only marginally profitable, it provides tax benefits to the landowner and contributes to the rural character and lifestyle of Ka'u. With the demise of sugar, some additional lands may be leased for ranching. The profitability of ranch operations could be enhanced somewhat if the ship- ping costs to the U.S. mainland were lower, and if ranchers were to increase their marketing of forage beef to various high -value niche markets on the Big Island. The profitability of the existing dairy in Ka'u and of other livestock operations could be enhanced if they could purchase competitively priced locally produced L feeds, such as corn silage. It is anticipated that a new dairy proposed for Ka'u will encounter difficulty in obtaining a milk allocation quota from the State. t. i f Opportunities exist to displace pork imports, but declining production trends and low self- sufficiency indicate marginal profitability of Big Island hog farms. Also, a slaughterhouse in Ka'u would have too small of a volume to cover costs. For a select few entrepreneurs, honey operations would provide a source of (1 income. UU • Potential Job Creation Little change is expected in ranch employment in Ka'u. For dairies, if the pro- posed new dairy is successful in obtaining a milk allocation, a milk contract, and � financing, it would add about 10 new jobs. If new hog operations are successful, they could provide employment for a handful of families. Finally, honey opera- 3 tions could provide employment for a few families. Support Projects Programs, and Action To support livestock operations in Ka'u, meaningful and economically justifi- fl able actions —some of which would be subject to technical studies before fund- J ing— include: 3 3 0 o ES -7 EXECUTIVE SUMMARY 0 - Lobby for a change in the Jones Act to allow use of foreign livestock can riers to ship cattle to the U.S. mainland (Priv and OGov). - Increase the marketing of forage beef to supply niche markets (Priv). . — Develop more chill space to.accommodate forage beef (Priv and OGov). — In State leases of ranch land, provide rent credits for fences and other improvements that are made by rancher - lessees (OGov). — In State leases of ranch land, permit additional uses on the land (ecotour- ism, dude ranches, mountain biking, paid hunting, etc.) to allow ranchers to earn supplemental income (OGov). AQUACULTURE Economic Development The economic development strategy for aquaculture is to support private initia- tives and joint use of irrigation reservoirs. The near -term future of aquaculture in Ka'u will depend largely upon the suc- cess of Aquasearch, Inc. (Aquasearch), which plans to produce astaxanthin, a food - coloring microalgae using a new process. In the longer -term, the success of Aquasearch could entice other aquaculture operations to locate in Ka'u. Potential Job Creation 0 If Aquasearch is successful, the company could provide about 120 jobs in Ka'u. • Support Projects Programs, and Action • To support aquaculture in Ka'u, meaningful and economically justifiable assis- tance would include training programs for jobs at Aquasearch, provided 9 Aquasearch proceeds with its Ka'u venture (Priv and OGov). J COMMERCIAL FISHING Economic Development Strategy 9 The economic development strategy for fishing is to support efforts to increase the fish catch, subject to protecting the resource and maintaining a sustainable • yield; process in Ka'u a portion of the catch to produce "value- added" products; and increase the fishermen's safety. rl 0 0 EXECUTIVE SUMMARY ES-8 Because of the steep drop -off to deep waters, the fishing grounds in Ka'u are limited and are regarded as insufficient to support a larger commercial fishing industry. At Kaulana Bay near South Point, fishermen support improvements that would protect the launch area from the south swell. Benefits would include increased safety to fishermen and their boats, and an increase in the number of days when the fishermen could launch their boats. They would also benefit from a pavilion, a fresh -water wash -down area for their boats, and restrooms. At Punalu'u, the catch could be increased somewhat with an offshore fish aggregating device (FAD). Also, the boat - launching ramp needs minor repair. (' Potential Job Creation Little increase is expected in the number of people who engage in commercial fishing in Ka'u, but some additional employment could be provided by processing a portion of the catch to supply dried and smoked fish. Support Projects Programs, and Action D To support commercial fishing in Ka'u, meaningful and justifiable projects — many of which would be subject to technical studies before funding — include: — Improvements at Kaulana Bay near South Point: • Build a breakwater, channel, turning basin, and new launch ramp, about $2 million (EDA and /or OGov). • Fresh -water wash -down facilities for fishing boats (EDA and /or O OGov). • Compost toilets, about $12,000 each (EDA and /or OGov). • Open -air pavilion, $50,000 (EDA and /or OGov). — Improvements at Punalu'u: • Fish aggregation device, $10,000 (EDA and /or OGov). • Minor repairs to boat launching ramp (Priv). — A certified kitchen (possibly in combination with one for agricultural products), from $10,000 to $50,000+ for equipment (EDA, OGov and /or Priv). C I D o 0 ES-9 EXECUTIVE SUMMARY ' 9 TOURISM Economic Development Strategy • • J The economic development strategy for tourism in Ka'u is to support low -im- . • • D pact forms of tourism characterized by: , U more visitors staying in the same units for longer periods, resulting in higher occupancy rates; , — — modest development of additional visitor units (small resorts, bed -and- D — breakfast operations, cabins, etc.); • cultural tourism primarily at South Point and Punalu'u; • — ecotoi.irism featuring shoreline trails and mountain trails (hiking, biking, 9 riding, etc.), wilderness tours, visits to remote beaches, hunting, etc.; • — special events and activities to attract more visitors; and - "rest- stop" tourism centered primarily at Na'alehu and Punalu'u, and sec - ondarily at Pahala and Ocean View, where lunches,-snacks, crafts, souve- . ' . nirs,mini- tours, etc., are sold to visitors who make rest -stops while travel- J ing to or from the volcano, or around the island. 9 number of low-cost marketing opportunities are available for attracting visi- tors to Ka'u, including .a greater presence in existing visitor publications and other, - • promotional 'material;,expanded use of web pages to market Ka'u on the internet, • • J . - and nurturing business relationships both within and outside Ka'u to promote Ka'u... - - Also, greater efforts to attract and accommodate Japanese visitors are war- . ranted. . • . . Potential Job Creation - . . (-1 Within a decade, as many as 250 or more new jobs in Ka'u could be provided by tourism. This assumes that about 150 new visitor units are added to the District, • n and the estimated average of 2,000 visitors per day who pass through Ka'u are induced to purchase an additional $5 worth of goods and services in Ka'u. . . J Support Projects Programs, and Action To support tourism, in Ka'u, meaningful and economically justifiable projects, D • pro and actions -many of which'would be subject to technical studies before n • funding— include: . • J . . , 0 0 9 EXECUTIVE SUMMARY ES-10 r — Punalu'u: • Improved signage to notify visitors in advance of .the turnoff and r available stores and services (OGov). • Modest resort development (Priv). • Revive the Village Restaurant at Punalu'u (Priv). • Revive the Ka'u Center of History and Culture (Priv). • Ka'u Hawaiian Cultural Center —see following section on Cultural ti Centers. • Resurface the rock wall surrounding the petroglyphs inland from the beach pavilion, $10,000 (EDA and OGov). • Relocate the unsightly telephone poles at the beach to the road cir- cling behind the beach, and relocate the one telephone pole away from the petroglyphs (EDA and OGov). • Stop maintaining beach road so that the beach will widen and the area will appear more natural and attractive (OGov). • Signage to mark the trailhead to Hololua Church and explain the his - toric role of Henry Opukaha'ia, and make minor improvements to the short walking trail to the church (OGov and /or Priv). • Remodel or construct a new beach stand to harmonize with the natu- ral surroundings (Priv). �- • Cultural tours of the area (Priv). — Na'alehu and Wai'ohinu: • A Town Plan to guide improvements, $60,000 to $100,000 (EDA and OGov). C • Restore Na'alehu Theatre (EDA, OGov and /or Priv). • Space to display arts and crafts, including those of the Ka'u Gallery Cooperative, $68,000 (Priv and OGov). • Public restrooms (EDA, OGov and /or Priv). • Reconstruct the historic Kauaha'ao Congregational Church (Priv). • Additional B &Bs (Priv). • Restaurants, food carts, etc. (Priv). C • An attractive produce stand (Priv). • A town greater to welcome visitors and encourage them to stop r (Priv). • A commercial center overlooking Honu'apo Bay (subject to commu- nity support) (Priv). f� U D O 0 ES-11 EXECUTIVE SUMMARY — Pahala: . 1 • Improved signage to notify visitors in advance of the turnoff and ' available stores and services (OGov). - 0 • • In the long -term, provide tours of agriculture processing facilities and nearby farms, combined with a coffee and gift shop, display of photo- graphs and old farm equipment, public restrooms, etc., with improve- ments provided as part of the "Ka'u Food Processing and Visitor — Facility" (see bottom of page ES-2 and top of page ES-3 for the agri- culture- related elements),-about $800,000 for both the agriculture and J tourism components (EDA, OGov and /or Priv). — Ocean View: . (J • Improved signage to notify visitors in advance .of the turnoff and available stores and services (OGov). • Additional B &Bs (Priv). •. Provide spelunking tours of a large cave in Kula Kai View Estates (Priv). • Craft studios and outlets (Priv). .. — South Point —see following section on Cultural Centers. . ' — Other visitor accommodations: - J • Additional B &Bs in Wood Valley and in other areas (Priv). • Cabins at Kapapala Ranch and in other areas (Priv).. . . r — Improve or develop trails: . `., • Ala Kahakai (OGov). . n . • South Point -to- Punalu'u bike and running path (subject to commu- nity support), $100,000 to $200,000 per mile (EDA and /or OGov). • • • Plantation roads, biking and running (EDA, OGov and /or Priv). 0 • Mountain trails (EDA and /or OGov). • Newly planted forests (Priv). • (� • ' Kapapala Ranch (Priv). • . (� — Obtain access rights and improve roads to selected beaches' (OGov): '1 • ;Green Sand Beach. • J • Kawa Bay.. • • Ka'alu'alu B . 0 • Pohue Bay. — 'Provide other tours and activities (Priv): . J • Hiking and wilderness tours 7 . • Mountain biking tours. • J 0 0 0 EXECUTIVE SUMMARY ES-12 • Paniolo events and activities. • Hunting, target shooting, archery. • Weddings and special events in Lua Palalauhala, the sunken crater below Kahuku Ranch headquarters. — Compost toilets in remote areas frequented by visitors, about $12,000 each (EDA and OGov). — An airport for light planes, if and when a large number of rooms for visi- tors are developed in Ka'u, about $2.5 million (EDA, OGov and /or Priv). — Marketing: • Develop, print, and distribute a Ka'u visitor map, about $10,000 for 10,000 copies (Priv and OGov). • Develop internet web pages for businesses which serve visitors, about $15,000 (Priv and OGov). • Develop an "information package" to promote movies, television, — and media advertising that features Ka'u, about $15,000 (Priv and OGov). • Contact publishers of visitor maps to correct statements that rental cars are not allowed on South Point Road (OGov). • Organize a Ka'u tourism association (Priv). — Increase efforts to prevent crimes of theft and vandalism directed at visi- tors (OGov and Priv). — Japanese visitors: 9 • Japanese - language signs, directions, prices, brochures (Priv and OGov). • Parking areas for tour buses in selected areas (Priv and OGov). CULTURAL AND EDUCATION CENTERS C Economic Development Strategy The economic development strategy for cultural centers is to support the eco- nomic components —i.e., the components which are based primarily on selling tours, demonstrations, crafts, and food to visitors —to the full extent of their market and economic feasibility, and to the extent the sponsoring group is willing to develop. Evaluation of the merits of the non - economic (and often subsidized) com- ponents of cultural centers —i.e., cultural preservation, restoration, education, cele- bration, etc. is beyond the scope of an economic development plan. r , The Ka Lae Curatorship Program and Cultural Center has an unparalleled nat- ural advantage: its location at South Point is the southernmost point of land in the r- o • 0 • • r ES-13 EXECUTIVE SUMMARY United States. This, combined with dramatic views and cultural attractions makes it a magnet for visitors. In addition, the Center is in a favorable position to offer tours of the cultural attractions and Mahana Bay (Green Sand Beach). Insufficient information was provided to assess the likely economic success of . the Ka'u Hawaiian Cultural Center. If built, it would benefit from being visible and accessible from the Belt Road. However, similar projects have not demonstrated a record of economic success in Hawai'i. • The Kawa Cultural Restoration is in an early conceptual stage and rights to the • land are not secured. - • The Pacific Regional Technical College and Punalu'u Ahupua'a would provide 3 significant.employment, but funding its development would present a formidable challenge, and would most likely require a wealthy benefactor. Potential Job Creation - r The Ka Lae Curatorship Program and Cultural Center has the potential of gen- erating sufficient revenues from visitors to support about 14 full -time salaried staff: Additional jobs would be supported by grants and other funding to support cul- tural•preservation, restoration, education, celebration, etc. • J Support Projects Programs, and Action To support the Ka Lae Curatorship Program and Cultural Center, meaningful and economically justifiable projects and actions —many of which would be subject to technical studies before funding— include: — Expand the managed area to include Mahana Bay with shared access for other tour operators (OGov). — Facilities: • • Certified kitchen, from $10,000 to $50,000+ for equipment (EDA, OGov and Priv). • • Compost toilets, about $12,000 each (EDA, OGov and Priv). • Library and meeting room (EDA, OGov and Priv). • C Sleeping facilities (EDA, OGov and Priv). • Water catchment, tank and water line (EDA, OGov and Priv). • Solar water.heater (EDA, OGov and Priv). • - Photovoltaic solar -power systems (EDA, OGov and Priv). n EXECUTIVE SUMMARY ES -14 — Equipment: • 4- wheel- drive, 8- passenger van for tours, $40,000 (OGov and /or Priv). • Truck and tractor to improve and maintain the grounds, roads, trails, etc. (OGov and /or Priv). • Back -up power generator (OGov and /or Priv). RETIREMENT COMMUNITIES Economic Development Strategy The economic development strategy for retirement communities is to attract new families to the existing subdivisions in Ka'u which offer an ample supply of vacant lots. Potential Job Creation — New retirees will generate jobs through their purchases of goods and services in Ka'u —about 25 new jobs for every 100 new retirement families. r- U Support Projects Programs, and Action To attract retirees to Ka'u, meaningful and economically justifiable programs and actions include: — Market Ka'u to retirees using web pages on the internet (Priv and OGov). — Form a community task force to identify and lobby for cost - effective improvements in health -care facilities and services (Priv). COMMERCIAL AND INDUSTRIAL ACTIVITIES, OCEAN VIEW Economic Development Strategy r - In Ocean View, the economic development strategy for additional commercial and industrial activities is to (1) permit limited commercial activities and cottage industries within the agricultural subdivisions, provided that they do not create nuisance problems; and (2) designate about 14 acres for a light industrial park. These changes would allow more businesses to develop to support the growing 1 population of the many subdivisions in Ocean View. C ES-15 EXECUTIVE SUMMARY • . Potential Job Creation Within a decade, about 90 jobs could be located within the light industrial park, eventually reaching 150 jobs within a few decades. • Support Projects Programs, and Action - J . To support commercial and industrial development in Ocean View, meaningful and economically justifiable projects and actions include: , — For large -lot residential subdivisions within the -State Agricultural Dis -' trict, change the County zoning code to permit limited commercial activi- ties and cottage industries that do not create any health, safety or nui- '1 • sane problems —i.e., screening to insure no visually offensive structures J or equipment, no unsafe or unpleasant odors or noises, no noticeable • , increase in traffic or parking, and a limited number of customer visits at (� any one time (OGov). U — Studies and planning to (1) confirm the demand for a light - industrial • • park, (2) identify a suitable location, (3) design a site plan, and• (4) obtain . the necessary land -use designations, permits and approvals for the light - industrial park; about $50,000 (Priv and OGov). . • OTHER ECONOMIC ACTIVITIES , PROJECTS AND PROGRAMS • J Commuter Bus Service Subject to test -runs to verify initial ridership and revenues, Ka'u,would benefit • if some of the new buses being obtained by the County were used to establish com- muter bus service from Pahala, Na'alehu and Ocean View to North Kona and South Kohala (OGov). This. would allow more Ka'u residents to take advantage of job opportunities there. In turn, these workers would spend a portion of their incomes on local purchases of goods and services, thereby creating some additional jobs in J Ka'u. A commuter bus service would provide new job opportunities for an estimated 25 Ka'u residents, not counting existing workers who would switch from using cars to using the commuter bus. • • Business Opportunities Related to Improved Telephone Service, Ocean View Until recently, Ocean View and other parts of Ka'u have been served with party telephone lines which prevented private conversations or use of standard business (^' O 0 EXECUTIVE SUMMARY ES-16 equipment (fax machines, answering machines, modems to connect to the internet, etc.). However, new equipment has been installed and the responsibility for tele- phone service may be transferred to another company. This development is likely to accelerate business development in Ocean View and other affected communities. In particular, businesses which require modern — telecommunications to service distant clients (e.g., software developers) can now — operate in Ocean View. _, Business development can be accelerated even more by marketing this new telecommunications capability, the low land and housing costs in Ocean View, and other attractions and advantages of living in Ka'u. The least expensive marketing approach would be to use web pages on the internet, possibly developed with the aid of the Rural Roots Technology Center discussed below (OGov). Digital Arts Business Incubator The proposed Digital Arts Business Incubator, which will be based at the — Na'alehu Theatre, will (1) provide training, technical assistance, and support ser- — vices to clients who wish to use state -of- the -art visual, audio and computer equip- ment to produce broadcast - quality media for distribution; and (2) serve as an inter- active distance learning center. The operation merits support to explore opportuni- ties (OGov ,and Priv). C Energy Production r Ka'u is blessed with a variety of natural energy resources while the Big Island as a whole is burdened with relatively high electric rates. Also, many homes in Ka'u are not connected to the electric grid. This situation presents opportunities for — energy-production ventures in Ka'u, the most promising of which are: wind- pow - ered generators, solar panels to provide hot water, and photovoltaic panels to gen- erate electricity (Priv). Rural Roots Technology Center The Rural Roots Technology Center, a project of Na'alchu Main Street, is a busi- ^' ness service center which supports local ventures by providing business training, assistance in writing business plans, computer training, help in developing web pages for marketing goods and services, and office support. The operation merits continued support (OGov). r7 ,. . ES -17 EXECUTIVE SUMMARY J Spaceport '1 Potential exists for renewed interest in Ka'u as a sift for a commercial "space- J port" to launch satellites into space. B a spaceport is not part of the widely- shared vision for the - economic development of Ka'u. In the early 1990s, a proposed . -- ' spaceport was opposed strongly by a segment of the population due to safety and , !- other concerns. u . . • Trade School, Pahala ' . . In the long term, a trade school may be needed to provide skilled tradesmen (welders; mechanics, computer technicians, etc.) to support new activities.in the C District. But development should be postponed until it is verified that the demand for these workers is growing at a rate which outpaces the supply froth on- the -job 0 ' . apprenticeships and established high - school and community-college programs. ' OVERSIGHT MANAGEMENT The County of Hawaii, Office of Research, and Development is the logical , • J choice for providing oversight management of this economic development plan to, • facilitate implementation of various projects and programs, and fo insure follow - .1 - through= $75,000/yr (EDA and OGov). ,J At the community level, the All Ka'u Council is best- positioned to play a coor- dinating role in advocating and supporting the economic development initiatives. r . L . . . • r ' - - . • o 0 . y . -- 1 r • 1. THE ECONOMIC ENVIRONMENT ' A description follows of economic factors which affect the potential of many economic activities in Ka'u. ` h J . LOCATION - Ka'u is the southernmost district of the Island of Hawai'i (also called the Big Island), and is also the southernmost district in the State of Hawai'i and the south- ernmost land area in the United States, excluding the U.S. territories. Maps of the • Big Island and Ka'u are shown on the following pages. Because of its comparative remoteness, Ka'u is at a disadvantage for many eco- nomic activities, particularly those which require proximity to population centers. 0 LAND AREA I • • At 606,200 acres (947 square miles), Ka'u is the largest district by area on the Big Island.i In fact, it is larger than any of the other 'islands in Hawai'i, and it is also ' larger than the combined areas of O'ahu, Moloka'i and Kaho'olawe. • In spite of the size of the Ka'u District, less than one -third of its land area is D usable for economic activities because much of the District is taken up by rugged and mountainous terrain (the .13,679 -foot Mauna Loa and the 4,078 -foot Kilauea), ' ' relatively recent lava flows, and deep gulches.i COMMUNITY PROFILES Descriptions - Ka'u has three main communities: Pahala, Na'alehu /Wai'ohinu, and Ocean View. In this report, the name "Ocean View" is interpreted to include Hawaiian 3 . r� 1 0 0 . __ y 1 -2 THE ECONOMIC ENVIRONMENT MAP 1 -1 COUNTY OF HAWAII � , N Hawaiian IMMO OAHU Islands ^ r Main Mend Grcw 0pol. .npon — UP0.0 PT. \ a ol I u MOLOKAI --• NAW C� (�"', MAGI NORTH ""' , KANOOIAWE KOHALA I KAWAIM \IL. % .141111111141111 / J �( AIAEI. � / r SOUT� 1 M/. LAUPANOENOE �` KOHAL • , " HA _ • • __ Kr„OLO "NORTH ., A HA rctA • \ \\\ ♦ U TH pE 7RTH-r- W, o A,.pn Antipode r ��' S . a ♦ IG oral! Yw.n Fr.111 H lAl N oa• k K.2 >I , HILO f �ILO I — • KAILUA KONA KONA �f ` � v • �' CAPE C PTAI COOK • r P NA r'� `• P p W I{1 — - r A 0 ` — — _ VOLCANO .--. °` N SOUTH , °ba YEOTNFY.xAI L. • • AAN, /`. ` tLL ^ VOLCLCANOS{ ` NALAPANA III Y ° °O I NATIONAL / KONA A'U i ARK PAHALA ° I w... MILOLII �-` i \ 8.. <1...1.,,,, NAA HO JUDICIAL DISTRICT BOUNDARY y lOGMAY ..-, `.-( AOA KA LAE . LJ LA C___) [ ) 1 J 1n ( 3 CD 1.__J [ 3 CD [ ) i. ) C L 3 I ) C`1 CD C 1 ) [ 1 i ce; q • V Hawaii Volcanoes ' - - ��- - - L Nabonal Park .� '' \ 4 F _ � ".. , . ,/ ; l 'i Kilauea t - , i � a V -.O • • r r; x • rn . r DISTRICT YJOOdI � ':i z �f _ " _� {valley; / �' �!- -.'. .%= - o • Pi _ 1 S - > '. " , Pahala C; • {, . _ Y M 0 l -I r "�I / ' 'Y1 ��71 - ''.- Pupal 'u i pai nt N - l Hawaii Volcanoes National Park G _ , tge Kau Judidal Maid % View 'I(awa Bay A Ma Roads i =; "�` \___...., _-" i HDnu' o Bat l'i . Ocean - �Na'alenu 1 _ • ..w . �;� -1111- Island of - -- v '°^,�. Hawari • _ 0 25 5nalou ` . - - Vie —I . r. Pohue Bay c, ( ' - -_ ;:!� : - � - pro*j 00 1 This mapwu aodxsE by the Oaks al � ^• .. • K Bay flaming should not flaming (OP) lot plannln9W�t DteTiu ' be for boundary Id or 1 Y . prelatins or other spatial snarl, byroad Atli Q � - Iha llmkell of Me dale Information � :e .� rMahana Bay npaNmp completion delay and seat lay ot -`✓ - ...s (South a "49`� r G Sand Beach) • � (Green aeac) _ the dots presented can Os Dashed Iran OP a" D, '' (. • 1-4 O THE ECONOMIC ENVIRONMENT Ocean View Estates (HOVE) and the seven nearby subdivisions of Hawaiian Ran- chos, Kahuku Country Gardens, Keone's Ranchos, Kona Country Gardens, Kona Gardens, Kona South Estates, and Kula Kai View Estates. Smaller communities also surround Pahala and Na'alehu / Wai'ohinu. Pahala, a well - maintained former plantation town, is centrally located with respect to the best agricultural lands in the District. In addition to the homes in Pahala, the community features a small commercial center, a State hospital, and the recently closed sugar mill which is owned by Ka'u Agribusiness Company, Inc. (Ka'u Ag), a subsidiary of C. Brewer and Co., Ltd. (C. Brewer). Few tourists stop in Pahala as they pass through this part of the island because the town is situated about % mile inland from the main highway. Mauka of Pahala is Wood Valley —an upscale community in comparison to the other communities in Ka'u. Wood Valley has homes, some farming, grazing areas for horses, and a Tibetan Buddhist temple. A few miles southwest of Pahala are the beach communities of Ninole and Punalu'u which have two -story condominiums for residents and visitors and a few -- single- family homes. — A few miles farther southwest is Na'alehu, the southernmost town in the ,_. United States and Ka'u's main commercial center. Nearby is the smaller town of Wai'ohinu. Unlike Pahala, Na'alehu and Wai'ohinu are located on the main high- way, thereby providing opportunities for local businesses to serve visitors who pass through the area in private rental cars or on commercial tours. These commu- nities also contain residential areas and some agricultural activities. Many of the homes and structures are quite old, although the most prominent old struc- ture —the "new" Kauaha'ao Church built in 1880 —was torn down in 1998. " Nearby residential communities include the subdivisions of Discovery Har- bour. Mark Twain. and Green Sand. Additional homes, farming, and ranches are located along the upper portions of South Point Road. Along the lower portion of South Point Road are farm and pasture lots awarded by the Department of Hawai- ian Home Lands. Farther west is Ocean View, where the subdivision HOVE is the largest of its kind by area in the United States. HOVE, upslope of the main highway, contains more than 11,000 one -acre agricultural lots and the Ocean View Town Center —a small commercial center along the main highway. On the makai (ocean side) of the o o •• THE ECONOMIC ENVIRONMENT 1-5 highway across from the Ocean View Town Center is Pohue Plaza -a second small commercial center. It is part of the Hawaiian Ranchos subdivision containing 1,235 three -acre lots. 'The remaining six subdivisions makai of the highway are comprised of 677 parcels, some of which are not yet subdivided into the planned 3 -acre lots. Although most of the lots in Ocean View are still empty, the area is being settled slowly, primarily by newcomers to Ka'u. In fact, most of the homes have been built since 1985. Census Data and Other Information • In 1995, Ka'u had a population of about 5,600 people. 11 Based on the 1990 cen- sus, about 34% of the residents lived in Pahala, 23% lived in Na'alehu, and 22% lived in HOVE, while 21% lived in other communities. 0 The District is ethnically mixed, with large numbers of Caucasians (37% in IIJJ 1990), native Hawaiians and part- Hawaiians (24 %), Filipinos (22%), Japanese (12 %), and other races (5 %). The ethnic groups are not evenly distributed among the communities, however., In HOVE, Caucasians comprised 79% of the residents, fol- lowed by Hawaiians at 10 %. In Na'alehu, Hawaiians accounted for 43% of .the resi- dents, followed by Filipinos at 30 %, Japanese at 14 %, and Caucasians at 13 %. In Pahala, Filipinos accounted for 43% of the residents, followed by Hawaiians at 25 %, J Caucasians at 15 %, and Japanese at 14 %. • In 1990, household incomes in Ka'u were comparatively low: the median income was $22,229 per household (25% below the County median) while the per- capita average income was $10,271 (22% below the County average). Per - capita incomes were particularly low in Na'alehu and Pahala: $8,308 and $8,788, respec- tively. The exception is Wood Valley where incomes were significantly higher: the 7 median household income was $41,250 and the average per- capita income was $18,721. Offsetting the lower incomes is the lower- than - average cost of housing, which has been and continues to be one of the major attractions of living in Ka'u. In 1990, the median home value and monthly rent were $73,700 and $301, respectively (35% and 29% below the County medians). Also, home ownership was comparatively high: 70% for Ka'u vs. 61% for the County. Because many of the homes in Ka'u are J located in subdivisions which rely on water catchment systems, 11% of the homes lacked all or some plumbing compared to 4% for the entire County. In 1990, the 1 - 6 THE ECONOMIC ENVIRONMENT median age of homes was 20 years for Pahala, 41 years for Na'alehu, and 5 years for HOVE. Educational attainment is somewhat below the County average: in 1990, 29.5% of the adults in Ka'u over age 25 had less than a high- school education (vs. 22.3% — for the County), while 36.5% had at least some college (vs. 47% for the County). -- The mobility of Ka'u residents (i.e., the number of times they change resi- dences) is somewhat lower than average, and their stability is higher than average. In 1990, 62% of the residents lived in the same house that they lived in 5 years before, compared to 53% for the entire County. The figures are particularly high for Na'alehu and Pahala -86% and 70% respectively —but are quite low for HOVE, 21 %. Most of the residents of Ocean View are comparatively recent arrivals to Hawai'i. The labor force amounts to less than 2,500 workers, an estimate which is based on the 1994 population and the 1990 census for labor participation. In 1990 L while sugarcane was still being grown and processed, a comparatively high pro- portion of the workers were involved with agriculture, forestry and fishing (17% vs. 10% for the County) and manufacturing (18% vs. 5% for the County). Compara- tively few workers were involved in construction (5% vs. 9% for the County), retail and wholesale trade (10% vs. 22% for the County), and public administration (3% vs. 6% for the County). In 1994, 12 to 15% of the workforce was estimated to be — unemployed. Average commute times to jobs were 28 minutes for all of Ka'u and 38 minutes for workers living in Ocean View and Na'alehu, compared to 21 minutes for the entire County. MARKETS Because the population of Ka'u is small, the local market for goods and services is small, while the Big Island offers a somewhat larger market: it had an estimated 138,400 residents in 1996. The largest nearby markets are the Districts of South Hilo and North Kona, about 44,640 and 22,280 residents, respectively in 1994. In addition, an average of about 20,860 visitors were present on the island in 1996. Most visitors stay in North Kona and South Kohala, but travel around the island and visit the Hawai'i Volcanoes National Park (HVNP). L 0 0 L THE ECONOMIC ENVIRONMENT 1-7 The Big Island's export markets include Oahu (871,800 residents in 1996, plus an average of about 85,500 visitors present on the island), plus the large overseas 'markets of the United States (266.5 million people in 1996), Canada (28.8 million), 0 and Japan (125.4 million), and other countries.I' 6 I TRANSPORTATION AND COMMUNICATIONS - . Highways . , n Access to the rest of the island is provided by the two -lane Mamalahoa • Highway— commonly referred to as the Belt Road —which passes through the , • District. Major island markets are over an hour away from Ka'u. J During heavy rainstorms, floods cross the Belt Road, closing access to and from 1 Hilo. " • J . _ . Airports and Harbors . J Ka'u has no harbors or airports. The nearest commercial airport and - harbor - facilities are over an hour away: Hilo Airport and Hilo Harbor in South Hilo, Kona , International Airport in North Kona, and Kawaihae Harbor in South Kohala. - - • Telephone Service ` Until recently, businesses in some areas of Ka'u struggled with telephone ser- _ vice that was inadequate for modern communications. They were served with old mechanical switches rather than the - faster and more reliable modern digital : . • switches, some had to share 4-party telephone lines, and some had to pay high line- installation fees in order to obtain service: As a result, some businesses could r use their telephones when another party was on the line, business conversations were not secure, and they could not use such common office equipment as answer ing machines, fax machines, or modems to link their computers to the internet. As discussed iri Chapter 10, many problems with telephone service have been . solved with the installation of new equipment. . LAND OWNERSHIP • • • Except for HVNP, which is owned by the Federal government, the major land- - owners in the District include: C. Brewer; Bishop - Estate /Kamehameha Schools i J .: . 0 0 1 -8 THE ECONOMIC ENVIRONMENT (KSBE); Samuel Damon Estate Trust; and the State of Hawai'i (including lands managed by the Department of Land and Natural Resources and the Department of Hawaiian Home Lands). GEOLOGICAL HAZARDS Among the factors affecting potential financial investment in the District are the — geological and related risks associated with the fact that Ka'u contains two active volcanoes — Mauna Loa and Kilauea, the only two active volcanoes in Hawaii. Because of these volcanoes, Ka'u occasionally experiences strong earthquakes, — ground sinking and cracking, locally generated tsunamis, volcanic eruptions and lava flows. The earthquakes are generated when a volcanic rift zone flank slips on .... its base. The south side of the Big Island can expect an earthquake of magnitude 7 or greater on the Richter scale every 29 to 44 years, and of magnitude 8 or greater „_ every 120 to 190 years?' The most severe of these events in recorded history occurred about 130 years ago during an extended eruption of Mauna Loa and a short -lived eruption of Kilauea.j Numerous earth tremors accompanied the volcanic activity for almost a week, culminating in a tremendous earthquake on April 2, 1868 — estimated by • modern experts to be approximately 7.9 in magnitude. The earthquake killed at least 78 people and caused all the structures in Ka'u made of brick, stone, or wood to collapse or to be torn from their foundations. In Wood Valley, where heavy spring rains the previous month had saturated the soil, the violent agitation gener- — ated a massive mud flow that buried a village, killing all inhabitants and animals. On the southeastern side of the Big Island, large sections of shoreline sank -- abruptly—as much as 7 feet in some areas —and the resulting tsunami destroyed all the coastal villages from Kapoho in Puna to Honu'apo in Ka'u, causing additional loss of life and property. In some villages, 50 -foot waves swept in over the tops of — coconut trees. On November 29, 1975, a 7.2- magnitude earthquake caused portions of the shoreline to drop 10 feet, generating five tsunami waves, the first of which hit the shoreline 30 seconds after the earthquake.E The earthquake killed two people and caused millions of dollars in damage.I At Punalu'u, the ocean water from the tsu- nami ran up 18 feet beyond the normal water line. o 0 • THE ECONOMIC ENVIRONMENT 1 -9' The kinds of economic development projects which are most at risk from geo- logical hazards are major capital investments requiring long payback periods, par- ticularly those projects which are located near the shoreline. Also, access to and from Ka'u could be cut off by a major volcanic eruption if it were to generate sufficient lava flow to cross the Belt Road. Or access could be cut off by a major earthquake if it were to cause bridges' to collapse or if a ground crack were generated that cut the Belt Road. (The well -known "Great Crack" bordering the HVNP is tens of feet wide.) • ENTERPRISE ZONE .Except for the HVNP and areas in Forest Reserve, the District of Ka'u has been . designated as an Enterprise Zone (EZ). Businesses eligible for EZ benefits include those that (1) are engaged in agriculture, food processing, other manufacturing, wholesaling, and aviation and maintenance repair; and (2) increase the number of J full -time employees by a specified percentage.I State tax benefits include: (1) a 7 -year exemption from use taxes on supplies and equipment purchased out of State; (2) an 80% income -tax abatement the first year of participation, decreasing 10% each year thereafter over the succeeding 6 years; and (3) an income -tax credit in an amount equal to 80% of the unemploy- ment taxes paid during the first year of participation, decreasing 10% each year thereafter over the succeeding 6 years.J In addition, contractors are exempt from General Excise Tax on revenues earned from work done for an EZ- enrolled busi- ness at its EZ site. • County benefits include a 3 -year exemption from any increase in property tax resulting from new construction. These benefits can help attract various businesses to Ka'u. It should be noted, however, that EZ benefits are not unique to Ka'u. Each County has a number of EZs, including four additional ones on the Big Island. RECENT ECONOMIC HISTORY For over a century, the economy of Ka'u was dominated by the sugar industry and, to a lesser degree by ranching. In recent years, these activities were supple- mented by macadamia nut operations and limited tourism. I 1-10 0 O 1 THE ECONOMIC ENVIRONMENT More recently, Ka'u has suffered from economic setbacks and failed initiatives: —Ka'u Ag, which was the largest employer in the District, dosed in March 1996 because of unprofitable operations. In late 1992, Ka'u Ag provided 275 jobs for sugar workers, as well as additional jobs which were supported by — the purchase of goods and services associated with the sugar industry." —Plans to replant sugarcane fields in corn to produce ethanol and to fuel a — power plant were not realized. s only upscale restaurant (the Village at Punalu'u), which served resi- dents as well as local visitors and tourists passing through the District, closed due to unprofitable operations. - -Plans to build a major resort (the Hawaiian Riviera Resort) below Ocean View were not realized, even though the resort was supported by most resi- — dents. The developer encountered financing problems, partly because of expensive conditions imposed by the State. —Plans to build a major resort at Punalu'u (the Sazale Black Sands Resort) — were not realized, even though the resort was supported by most residents. The developer encountered legal and financial problems. — Plans to improve the boat ramp at South Point, which was intended to help — fishermen, were not realized even though the project was fully funded by the Federal government. The project was derailed by community opposi- tion. —State plans to build a commercial spaceport at Palima Point were aban- doned, largely due to community opposition. - - State plans to build a prison in Ka'u were abandoned, again due to commu- nity opposition. — The cumulative effect of these economic setbacks and failed initiatives has left many residents pessimistic about their financial future and the futures of their chil- dren, and has also left potential investors leery — particularly those who would be _ likely to invest in large projects requiring broad community support.'14I — COMMUNITY PREFERENCES — In 1995, the Na'alehu Main Street organization conducted a door -to- door — survey of all 599 households which could be located in Na'alehu, Wai'ohinu and nearby communities, but excluding Pahala, Wood Valley, Punalu'u and Ocean _ View.E Altogether, 95% of the households participated in the survey. 0 0 THE ECONOMIC ENVIRONMENT 1 -11 • The survey indicated that residents of Na'alehu and its surrounding communi- ties: • — overwhelming prefer the rural lifestyle of Ka'u; — believe that the natural beauty and rural character of the area should be preserved; and = favor agriculture and small business development as the best ways to real- ize a future where the beautiful rural character is preserved, while still allowing enough job development to support their families. More specifically, community preferences on economic development are indi- cated by the following distribution of weighted scores:I — Many small businesses - 21% — Farming, forestry 21% _ — Dairy farming, ranching 12% — Fishing, aquaculture " 18% — Small -scale tourism that emphasizes Hawaiian heritage and natural beauty 18% —. Resort development- 9% — Other 1% These survey results are consistent with discussions with residents from throughout the community, including Pahala, Wood Valley, Punalu'u and Ocean View. Discussion also revealed preferences by many for economic self - sufficiency, economic sustainability, and determination of their own economic future. In summary, acceptable themes for economic development include non- _ plantation agriculture, sustainable forestry and agroforestry, ranching and other livestock operations, small -scale commercial fishing, aquaculture, tourism ( "rest- _ stop" tourism, B &Bs, ecotourism, and cultural tourism), and development of small businesses. COMMUNITY CHARACTERISTICS AFFECTING ECONOMIC DEVELOPMENT A number of entrepreneurs, employers, and workers made a special point of relating their opinions about certain community attitudes and traits which they _ believe affect the success of businesses and the number of jobs created in Ka'u, but which are difficult to quantify. These are discussed briefly below. • a o 1-12 THE ECONOMIC ENVIRONMENT - 1 Entrepreneurial Spirit — In order to be a successful entrepreneur, a person must have considerable drive, r organizational skill, management skill, and a willingness to assume the high risk of embarking on a new business venture. Ka'u is typical in that only a small percent- age of people in any population has the characteristics necessary to be successful — entrepreneurs. — A number of Ocean View residents express pride in their "pioneering spirit" — which, for many, embodies the entrepreneurial spirit.I Many of them moved to — Ocean View expecting that they would have to create their own economic opportu- L_ nities without working as employees. — But many displaced sugar workers strongly resent losing their jobs, and find themselves being reluctant entrepreneurs.I Some of them report that they would much prefer to be hired as employees where they can count on a steady income _ and a full range of company benefits. Also, a number of people who are exploring new economic initiatives prefer to — function as members of groups (usually non - profit cooperatives), rather than being entirely on their ownJ Non - profit cooperatives are required in order to qualify for certain grants and other benefits. ` Work Skills — A number of employers report frustration at not being able to hire enough employees who have good work habits, are proficient in the necessary skills, are reliable, and can work without close supervision.I14I 9 Furthermore, some believe that the current welfare system undermines the work ethic of recipients as well as their children.I Community Traits — Several Ka'u residents and business - people mentioned community traits which — can affect economic development, some of which are positive and some negative. — These include: —the considerable efforts that individuals, groups and families make to sup- — port and help one - another, particularly in hard times (such support carries _ over to helping one another with new business ventures); r 0 THE ECONOMIC ENVIRONMENT O 1 -13 • r J —a slow acceptance of newcomers, particularly those who may unwittingly violate local customs (newcomers can include needed entrepreneurs); and an over- reliance on private conversations for news and information due to the isolation of Ka'u from standard sources, which can lead to community decisions being made based on inaccurate rumors (for proponents of new initiatives in Ka'u, this requires that they make special efforts to develop mutually beneficial relationships with the affected communities in order to ` communicate accurate and timely information). • With regard to the above - mentioned slow acceptance of newcomers, some Ka'u • residents trace their mistrust of outsiders back to 1791 when Keoua, the ruling chief of Ka'ii,'was killed upon his arrival at a meeting to discuss peace with his rival — Kamehameha I.t Soon afterwards, Keoua's body was sacrificed on the altar of the — . newly completed Pu'ukohola Heiau in Kawaihae. { 1 REFERENCES • U [1] State of Hawaii, Department of Business, Economic Development & Tourism. The State of Hawaii Data Book: 1995. Honolulu, Hawaii. [2] Department of Geography, University. of Hawai'i. Atlas of Hawaii, Second Edition. University of Hawaii Press.. Honolulu, Hawaii. 1983. • [3] Kauaha'ao Congregational Church. [4] U.S. Census. ' [5] County of Hawaii. . [6] World Factbook. [7] Fred Klein. U.S. Geological Survey. Menlo Park, California. J [8] John R. K. Clark. Beaches of the Big Island. University of Hawai'i Press, Honolulu, Hawai'i. 1985. [9] Bruce S. Wedgeworth and Ronald L. Soroos of Harding Lawson Associates. "Geologic Hazards, Environmental Impact Statement, Palima Point Rocket Launch.Facility, Pahala, Ka'u, Hawaii." Conceptual, Plan, Commercial Satellite Launching Facility, Palima Point, Ka'u, Hawaii, Draft Environmental Impact State- ment, Volume III, Technical Appendices: The Natural Environment. Department of Business, Economic Development & Tourism. Honolulu, Hawai'i. March 29, 1993. . [10] The Honolulu Advertiser. Honolulu, Hawaii. April 9, 1997. [11] State of Hawaii, Department of Business, Economic Development & Tourism. • [12] County of Hawaii. • [13] C. Brewer and Co., Ltd. and /or Ka'u Agribusiness Company, Inc. J • • 0 0 1-14 THE ECONOMIC ENVIRONMENT [14] Discussions with entrepreneurs, business operators, and /or other community members. [15] Na'alehu Main Street. Strategic Planning Survey, Na'alehu, Big Island of Hawaii, — 1995. Na'alehu, Hawai'i. 1995. [16] Samuel M. Kamakau. Ruling Chiefs of Hawaii. The Kamehameha Schools Press. Honolulu, Hawai'i. 1992. L 0 r L 0 L r U • 0 . .. O • 2. AGRICULTURE AND RELATED PRODUCTS ' r . j INTRODUCTION Development of agriculture and related products are discussed in the sections . , J which follow. The material covers: (1) agricultural resources and conditions in Ka'u, (2) competing farm areas and their comparative advantages relative to Ka'u, . (3) the market potential of crops grown in Ka'u for the Haivai'i market, (4) the mar - ket potential for various specialty crops, (5) the market potential for export crops, `— (6) the market potential for•other crops, (7) existing and planned crop plantings in , Ka'u, (8) facilities and services needed to support agriculture, (9) infrastructure. L . needed to support agriculture, and (10) land issues related to developing the agri- • • culture industry. The related subjects of forestry, livestock and aquaculture are discussed :in , chapters which follow. " 0 . . - . . ' AGRICULTURAL RESOURCES AND CONDITIONS . Overview . . . • . ,J The District of Ka'u has over 25,000 acres of good farmland. Most' of the high -- . quality lands are recently - fallowed sugarcane fields located between Na'alehu and Wood Valley and mauka of the Belt Road. Although most:of these fields are'not irrigated, they are regarded as high - quality lands for growing a variety of crops due to the: deep; -well- drained soils; moderate slopes which allow mechanized farming; plentiful • sunshine; mild climate; windbreaks; and afternoon rains. . "T. Smaller 'concentrations of good farmland are located near the upper portions of South Point Road, while dozens of small farms at the higher elevations of Ocean n . View have been created by farmers who have trucked in topsoil. In spite of these,high- quality lands, there are two factors which limit the devel- . - . r . opment of agriculture in, Ka'u. First, in most of the farm areas, water for irrigating 24 2-2 AGRICULTURE AND RELATED PRODUC Q crops during droughts is not available or is very expensive. Second, Ka'u's remote location places it at a competitive disadvantage for serving major markets. [� Existing Supply of Higher - Quality Agricultural Land in Ka'u Most of the usable land in Ka'u— excluding the Hawai'i Volcanoes National Park, the Manuka Natural Area Reserve, and' the upper slopes of Mauna Loa —is — classified by the State as part of the Agricultural Land Use District (see Map 2 -1). — However, a large portion of the Agricultural Land is unsuitable for growing crops because it is rocky (in fact, much of the lands is bare lava), slopes are too steep for farming, irrigation water is unavailable, access is difficult, etc. Based upon current and recent areas which have been farmed, the supply of — land suitable for cultivating crops in the District exceeds 25,000 acresl' About 12,000 acres were recently fallowed due to the closure of the sugar operations of Ka'u Agribusiness, Inc. (Ka'u Ag) on March 28, 1996. The higher quality lands in Ka'u are shown in Maps 2 -2 and 2 -3, based on the ALISH (Agricultural Lands of Importance to the State of Hawaii) soil ratings.' -- This rating system was prepared by the Cooperative Extension Service of the Uni- versity of Hawai'i (1.11-I) College of Tropical Agriculture and Human Resources, and adopted by the State Board of Agriculture in 1977. In the ALISH rating system, agricultural lands are classified as follows: —Prime Agricultural Land This land is "... best suited for the production of food, feed, forage and fiber crops. [It] has the soil quality, growing season, and moisture supply needed to produce sustained high yields of crops economically when fl treated and managed (including water management) according to modern farming methods. Prime Agricultural Land gives the highest yields with the lowest inputs of energy or money and with the least damage to the environment." r -- - Unique Agricultural Land This is "...land other than Prime Agricultural Land that is currently used for the production of specific high -value food crops. [It] has the spe- cial combination of soil quality, growing season, temperature, humidity, sunlight, drainage, elevation, aspect, moisture supply, or other conditions, 'r such as nearness to market, that favor the production of a special crop of — high quality and /or high yield when the land is treated and managed L. 1 t I) C - ) LJ CD C C"1 . C] F 3 E___D t 1 C`l Li C F 0= C C 1 • A V y ,, ! HawaPl Volcanoes � / � . ' ., , National / , , .' / / � i ) e \ . F.d 8 . . M auna lne a ( '; / l - . Y %�; ; _i �; c ., � r i. , �_ . ilik '' t. ' i' ''' ' ' . . . . . C / 4 ////, � KAU }� L' „i; ,-__ 7 7:5- (715 2 / 1 (;), / / ',. / r / ...? 1 :-.t ! ' / _ ; ,-/;, i - ' ". __: r , . A/V:-/z.-,,,,H)-2- Z n r \ DISTRICT'/ " ikeL ipo, -i' - a / Vall9 - P j „ ' � • _ _ _ , r � - ' I MI Urban Land Use District i t - • J a - rte /:.3aoo j ' • j - :-�1 r � f ' . ' 1 ; • P Palma ` - 1 Agricultural Land Use District O Pu ndu'u "r :- -:- point 7. O I Conservation Land Use District ; Ocean : Jr- J d n • - r 7 i Q y \ \ �=� View l - f't <I Hawaii Volcan N eon/ Pa . . y \\� <, r -�'�.... _, / -II'J jlfawa B aY 1 , _ -�, �;_-i I • :J _) � .e Kau Judicial District -11- ^ . I"1 '� \ \. \ �"'`T'i` ir�' 1NOni8P0 BaY `/ Elevation Contour .'(ieet) O trl i \\ __ dr X �Vt /� -' M \� j; Ocean -=x ! ; Major Road ,t ;Yew; �r _ / - -L I . \, 75Hawall M of Pollee Beiii, Alf r Z � 7375.000 CA • \ II it / - y i d, 0bb map ow produced by teoib el MV •. F � }_� r' r f Ka'a4'du Bay Planning (OP) tor DlmmnO ambers. ORiW - 'X' ` p doultl no be and lce boundarybeer- 1 . it ; T - ry mherepalal olorm p ymd '� V.. / � NermkLmeolmeda4 and accuracy • �.4i' '- Ka Lae l - •Mahan Sand mwala pre earned petrolatum din e teem aamq a N ” (South Pointa/� (Green Bantl Beach) • the d+e Dneemea rn be abdned from bP. r W • • > .4 �' 4 {/ �HaWa'1 VOILalgeS 7 ART r - - N N -Mauna lna l ` vi `:` y1 � � „ , r • I J eao i / ! " ' A 'a (n ma 7 �.. / 500.7:✓ Y. - n '-, r ' , n z �� 450 j T i -/ i.J {' ; , L y / 7 i ® Pri me '' p 5,r , ;, / / Apricunuallands V) '" • St 1 / rr Qy ' ,_._ / 4 ima F,' � Other 1 dcullral Lands 230 - PalPoinl 0 Ocean P y I / ` _ .. ,' I f 1 Hawaii Volcanoes National Park ..:..� r \� Vie 0 A r' :{ MO • - `� - f , ' Wawa /�v Kau Judicial Distnct rte- Q - ., ' o 1 !tir `' Solar Radiation (calories) 1--1 �" O co . . ,.� 1, M���.WelOhnu y:FW�Y A. Major Road .. " f-r--i - Na'aaehu i New - 150 q e 1 -( ^ „., Island or H t ..� 1 ©. '1D ?1 t: Mawall •' 1 0 2 5 5 MIN ' - H �” J hue Bay .\ �� —i N. E ' .+F' 1276,000 �' . ~ 1. _� O Po '�ti � I.%b "44;42,..f This m�was produced by the 0lfigd M .� � ...:.: t K e ' alu ' a l u Bay %m�pp (0 for pbnnbyy W ryry ry I 1 _ !'. Y d bm de Oi5T01oI Z L h' eahml m ntl aueed to n rybder- 7 ,(� - pMahme or other wane eneryeb beyond % \�t� Y the Imitations N the data Mlormanm 1 `DWI �,__ \y Mahana Bay mambo mnpllarm dale; end accuracy el j (South POY11) (Green Sand Beach) the dalepraaeMed ran be oblaned from OP. _ ( C - fl [ > ( J 1 o r .) 1 1 Cn CL3 C J r1 0 cJ r 1 1 D [ C q C- 1 ) 17) 1 ) C1 C cn. 0 0 c Ct) • f•Li cc C) - L-_3 (..___ ) L2 (.._....11 en (.. - 1 . • . . . • • • • • • , . • . . . • . . . . - . . . . - . - . - -\; ; . . ... . ‘'°‘ . ., el - , . . . . . .. . . . , . . 4 . • ... -...... • • . . •:,.- :.••--,,•:,. ‘.. s i - • . - . • .1., . .. - I . • +•%.\\ -- i:-iit,'"'" - 7 ::. ,,,,?:::: ....--•f• - . '' ,-:•-• : •:- •-• 4....., / -1 -- ts,„ • . ... . ,• .... . . \ -..7 th / , ,: ---r ) ' 2/ ., , . - . .._ • ,_ , , . , H•AV- '';:-.:':- -•'-' -r .- \ / . -:.:., .\--.: . - •N____-- 750 11-1 n , ‘ , / 3 ocio pa Z L _ n L '' .. '" . P.: . :,-- •-,' .-:. - - . Cr) —3 • • / . "C.,:''-‘ 1500 T: c' 1 I. '' :''.. 0 . c o KA' U ,, , i . . ,. 7 . -, . ,' 4. . -. .. '''''-'7■;-/ i. P:$ . \ N DISTRICTtte i' ‘ WctDd.` •-_,___ r .6 . ;,/, 1// . .. , \ • „ ., - // . / / ( .• .. 'II/hala:1 o ; -. • • -1 Z . .--3 / / :.). .. -. , • • - — - in 61 , J " ' / / / /, , , ..-- -11 : '31L H.I .I V 't rl ,:li j" I ' ' - - - MI. Prime Agricultural Lends , \ : °' ityr., 77 / J/ .../ Ballma •c7::71. other Agorourai Lands : Z ' Z jci:t-77 / 7 ,:_,,, --- poi . 0 0 2% / I nt F -7-1 Hawaii Volcanoes National Park - C Ocean 24t 7., , ei KEW Judicial Distnct Q , ........ .. • r. ••••---, N-- view • yi. - - EKana BO' - . . : -i Rainfall Contour (mm) 1-( '° (D ° ,,, Cid \ ks, 2000 . ' Z • A Major Rood hrl .P4, ryVaohlnu 4 1 ,1 1 143 / 004 a 510 BaY Ocean — se r i t -rNa'alehu - . . i • Island of r )"' • \ • • : NN Vlow --------______ l i - L 1�C4_•___•_-•C• ::"; • • c - ..11- o 2 5 5 miles V '.I Bowan 4 • . . • -• --N-,__.-..,„ IN - - ,/ .. • • Pohue Bay.7-:.--___ . . t . , ... / --% ,,,.. . • • 1 375000 . • . . ' ''C -----r— I : , • • ,,,,,,_ • Oa - 11 ; i 4.. i r Thlt map was produced by the Offoce of k - KAU , e • p::1 rartruittltrt=lt DISMCT- , Ka'alu'alu Bay ' \ .,_ l if cr E 'CO k - - t -- 1 5 .. to l v° . r r rdirt Tote"st and i *4 ' . ‘11b... ;-- - . \ ....ri - . . Ka LaIr ilti...-Mahana Bay al . (3 eon Sand Beach) disor kp comp0ation tht•s d fe aunty the dm presented or In obtained Prom OP. ti) (south Point) c.:. - r , . .01 . ' . • . . . . ' ' . . . , . . . • ■ 0 0 • 2-6 AGRICULTURE AND RELATED PRODUCTS Q according to modern farming methods. Land that qualifies as Prime Agri- cultural Land and is used for a special or specific high -value crops is classi- - fied as Prime Agricultural Land rather than as Unique Agricultural Land." None of the land in Ka'u is rated as Unique. —Other Important Agricultural Land This is "...land of statewide or local importance for the production of food, feed, fiber, and forage crops and [is] not Prime or Unique Agricultural Land. These lands are important to agriculture yet they exhibit properties, such as seasonal wetness, erodibility, limited rooting zone, slope, flooding, or droughtiness that exclude them from the Prime or Unique categories. These lands can be farmed satisfactorily by applying greater inputs of fertil- izer and other soil amendments, drainage improvements, erosion control practices, and flood protection, and can produce fair to good crop yields when managed properly." fl — Unrated Agricultural Land Land within the State Agricultural District that is not Prime, Unique, or — Other (i.e., the poor - quality agricultural land) is not rated. This generally includes "junk" land that is unsuitable for the Conservation or Urban Dis- tricts, so was placed in the Agricultural District even though the land may 0 be unsuitable for agriculture. Maps 2 -2 and 2 -3 reveal that most of the Prime Agricultural Land in the District C is located between Na'alehu and Wood Valley, and mauka of the Belt Road. For the most part, these lands were formerly planted in sugarcane. f Some fields were created near the sugar mill in Pahala from topsoil which was u washed from the sugarcane and deposited onto lava fields below the mill by the [� mill wastewater. �J Also, small concentrations of Prime Agricultural Land are located near the upper portions of South Point Road. A number of farmers in Ocean View have trucked in topsoil to create small farms with good soil. Soil Characteristics Most of the Prime agricultural land in Ka'u is the result of prolonged weather- ing and the accumulation of decomposed volcanic ash. These lands have deep soils, are not stony, have good machine tillability, and are well- drained.I L .. u O O AGRICULTURE AND RELATED PRODUCTS 2 -7 Erosion Some higher - elevation fields are subject to erosion due to'the nature of the soils, the heavy rainfall and the steep slopes.i Terrain The better agricultural lands in Ka'u have large fields that have a gentle slope to a moderate slope— conditions which allow mechanized farming. Steeper fields have slopes as great as 25 %. [3,4] Elevations J The majority of the higher - quality agricultural lands in Ka'u range in elevation from about 1,000 feet to 2,500 feet (see Map 2- 1). Ka'u is suitable for crops which _ are generally referred to as "low- elevation crops," such as those grown on O'ahu and Moloka'i, while some of its high - elevation fields are marginally suitable for some "high- elevation crops" such as those grown in Waimea on the Big Island, or in Kula on Maui. Farms created in Ocean View are located at elevations as high as 3,000 feet and, in terms of climate, are well- suited for growing certain "high- elevation crops." Climate 0 Like the rest of Hawai'i, the Ka'u District has a mild semitropical climate. This is due primarily to three factors: (1) Hawaii's mid - Pacific location near the Tropic of Cancer, (2) the influence of the surrounding warm ocean waters which vary little in temperature between the winter and summer seasons, and (3) the prevailing ' northeasterly tradewinds which have air temperatures close to those of the sur- 9 rounding waters. Solar Radiation Solar radiation (sunshine) in the main farm areas ranges from a relatively low average of 250 calories per square centimeter per day in the mauka fields above Pahala, to a relatively high average of 400 calories per square centimeter near , C Na'alehu (see Map 2- 2). High levels of sunshine contribute to higher yields for • most crops: 9 IC 2-8 O AGRICULTURE AND RELATED PRODUCT y 0 Temperatures The average Tow temperature in Pahala (at the 870 -foot elevation) ranges from about 57° Fahrenheit in the winter to about 65 °F in the summer, while the average high temperature ranges from about 76 °F in the winter to about 85 °F in the sum- mer. As a general rule, mean temperatures in Hawaii drop at the rate of about 1 °F for each 200- to 300 -foot increase in elevation. '1 Rainfall The rainfall in the agricultural areas in the District averages from about 40 inches (about 1,000 mm) per year in farm areas near upper South Point Road to _ about 120 inches (about 3,000 mm) per year in the higher - elevation fields above Pahala (see Map 2- 3). Unlike most tropical areas, Hawaii's winter, rather than its summer, is the rainy season. Most mauka fields in Ka'u receive afternoon showers. The characteristic daily rainfall pattern results from the interplay of the enormous land mass of Mauna Loa, which blocks and diverts high- and low- elevation winds, the heating of the land in Ka'u by the mid -day sun, the surrounding ocean which changes little in tempera- ture, and the normal tradewinds and upper atmosphere winds. On occasion, however, Ka'u suffers from severe droughts, particularly during El Nino periods which disrupt the normal wind patterns. 0 Winds and Storms J Except for fields located in gulches and other protected areas, agricultural areas in the District are exposed to strong tradewinds and occasional storms 111 Because 2 of this, many crops require windbreaks to protect them from wind damage. Pan Evaporation Mean annual pan evaporation —which is a crude measure of water require- ments for many crops— ranges from about 80 inches per year for farm areas near ` the upper South Point Road to about 50 inches in the higher - elevation fields above Pahala. 0 0 O O • AGRICULTURE AND RELATED PRODUCTS 2-9 ' v The high pan evaporation for farm areas near the upper South Point Road, and J the low rainfall (see "above) result in a need for supplemental water to irrigate . crops. ` Water Resources • ' "-', Because most of the ground in Ka'u is extremely permeable, the District has no perennial streams or fresh -water lakes, and the fresh -water basal lens is thin.m In n . the South Point area and in other coastal areas, the basal water is brackish due to the extreme permeability of the young lava which allows sea water to move inland 9 ' ' through cracks and crevices. • hi the wet uplands between Wai'ohinu and Wood Valley, " "perched water" is . present; these are thin underground aquifers perched at high elevations, and where J. the water flows underground upon dense lava flows, ash beds or soils.i °1 This perched water often creates high- elevation springs which can be diverted to irri- gate crops, or the perched water can be tapped directly by man -made tunnels dug along the surface' of the underground ash beds. The output of most of these J springs and water tunnels is greatly diminished during the dry season due to the , lack of natural.underground storage capacity. 1 .Below Pahala, a large .volume of "high- level" ground water is located in a com- partment or compartments, most likely formed by an underground fault. This ` r . water stands at an elevation of 220 to 230 feet, or about 590 below Pahala. Other J • ' large- volume underground compartments may exist in the District, possibly near . Wood Valley, but they are yet to be discovered. , • . ' ' . (` Irrigation Water Systems ' J , Overview , . Most farmers in Ka'u rely on rainfall for watering their crops. But.irrigation • water is heeded during droughts and in lower - elevation areas-where rainfall. is insufficient to water crops. However, irrigation water is not available in many areas of Ka'u, including most of the fields that were formerly planted in sugarcane. In other areas, water is - available but it is expensive. •cl . J . . 0 o 2 -10 AGRICULTURE AND RELATED PRODUCTS Groundwater Wells for Crops 3 A small number of groundwater wells have been drilled or dug to supply irri- gation water in Ka'u. The Pahala Factory Shaft was pumped at the rate of 6.4 mgd in the early 1990s, and has a maximum capacity of 7.2 mgd.J Three wells above Honu'apo can supply about 5 mgd of irrigation water. Water from the Palima and Sisal wells are used to irrigate macadamia nut orchards. The Department of Hawaiian Home Lands (DHHL) has drilled a well in the — South Point area having an estimated capacity of between 176,000 and 610,000 gal- lons per day.J One of the farmers along the upper South Point Road is drilling his own well ti because the supply from the County system is inadequate for his needs. Water Tunnels L Before the 1940s, about 40 tunnels were dug between Na'alehu and Wood Val- ley to capture perched water. The tunnels, which were dug at the contact of the ash and lava and follow the ash layer surface, are usually about 4 feet high and 3 feet wide and range in length from less than 100 feet to over a mile. Water from the tunnels was used originally for Ruining sugarcane to the mills. But after the introduction of cane -haul trucks and the development of the Pahala n Factory Shaft —which supplied water to wash cane at the mill — fluming was no ( J longer used, and most of the tunnels were abandoned. In the late 1940s, about 20 of the tunnels supplied about 6.7 mgd.L Currently, only a few tunnels are being used for agriculture, supplying less than 1 mgd. The tunnels are a major resource which could be developed to supply high -ele- vation water to nearby fields delivered by gravity flow. For example, a restored flume and new pipeline will deliver water from Noguchi Tunnel above Wood Val- ley to the Keaiwa Agricultural Park. Water from this tunnel is already piped to farmers in Wood Valley. r` Additional perched water and spring water may become available for agricul- ture from Alili tunnel (0.7 mgd) above Pahala, New Mountain House tunnel (about — 1.2 mgd) above Wai'ohinu, and Ha'ao Spring above Wai ohinu.I This water is now used by the County Department of Water Supply (DWS) to supply homes and businesses in Pahala, Na'alehu, Wai'ohinu and South Point. However, the Federal %- Safe Drinking Water Act mandates treatment of surface water which, by definition, 0 0 AGRICULTURE AND RELATED PRODUCTS 2 -11 D includes water from tunnels and springs. To avoid treatment costs, the DWS may switch to groundwater wells. J County Water Most farmers in the upper South Point Road area and Wai'ohinu draw irriga- tion water from the County water system. The agricultural rate for County water �J for large - volume users is $1.70 per 1,000 gallonsJlll For comparison purposes, most farmers on O'ahu are on private or State - operated water systems and pay less than 35 cents per 1,000 gallons. However, the capacity of the County of Hawaii system is not great enough to J supply farmers with sufficient water during dry periods. • • J Hauled Water Ocean View has no developed water source, nor is the area served by the DWS. Consequently farmers in Ocean View rely on catchment systems, which they sup- - plement with water trucked in from standpipes in Na'alehu, Wai'ohinu, South Kona and beyond —a round -trip distance of more than 30 miles in many. cases. The commercial hauling charge is $25 to $30 per 1,000 gallons.S - Water Storage - Large water - storage reservoirs are impractical in Ka'u because of permeable soils, frequent earthquakes, and steep slopes in high - elevation areasil r - At one time, Ka'u had ten small dugout reservoirs with a total capacity of 20.2 ,c million gallons (mg).J These reservoirs were part of the old flume system used to transport sugarcane to the mill, and were not part of an irrigation system. None are currently in use. - - Some small farmers in those areas who are not served by the DWS use water J catchment systems to divert rainwater from roofs into storage tanks: Other Improvements The former sugarcane fields of Ka'u Ag are serviced by a network of plantation 0 roads which were built to accommodate large trucks. A mostly paved cane-haul WW spine system runs from the upper Na'alehu area to fields beyond Wood Valley. • � 0 0 0 2-12 AGRICULTURE AND RELATED PRODUCTS The roads are no longer maintained and have deteriorated badly since the planta- tion closed. C The recently closed sugar mill site is located in Pahala but —other than ware- houses, garages, base yards, and offices — little remains because the machinery was sold and shipped overseas. An exception is the repair -shop equipment which was purchased by a Pahala -based entrepreneur. Pest Problems Most farm areas in Hawai'i are troubled by pests which can reduce yields or cause the loss of crops. This is less of a problem on the mainland where many pests rTh are controlled by winter freezes. However, the upper elevations of Ocean View are reported to have few pests because of the comparatively high elevation and the limited number of hosts for pests in the surrounding area.I Also, farm areas in Ka'u are reported to have fewer problems with weeds than other farm areas in Hawai'i. j Land Tenure Lr The recently fallowed sugarcane fields are owned by: C. Brewer and Co. (C. Brewer) and its subsidiaries, Kamehameha Schools /Bishop Estate (KSBE), and the n State of Hawaiii U To aid its former employees, C. Brewer has made 230 acres of fallowed cane land available to former sugarcane workers in 5 -acre parcels, rent -free for a period of 5 years. A few hundred acres of additional lands have been made available to r , other farmers for lease periods which typically run about 10 years.I Other organizations and families own smaller amounts of good farmland near Pahala, Wai'ohinu and in the upper South Point Road area. fl The DHHL owns the land surrounding the lower part of South Point Road, and has awarded 1,750 acres of agriculture /pasture lots to native Hawaiians.I Enterprise Zone – The designation of most of Ka'u as an Enterprise Zone will provide tax incen- tives which may help attract agricultural activities and their associated support facilities, provided that they can satisfy hiring requirements (see Chapter 1). Note, however, that Ka'u will be competing for these agricultural activities against a Q O AGRICULTURE AND RELATED PRODUCTS S 2 -13 number of other agricultural areas on the Big Island and throughout.the State that also have•been designated as Enterprise Zones. (� RETA -H Program �j With funding from the U.S. Department of Defense, the Rural Economic Transi- D tion Assistance — Hawaii (RETA -H) program is providing grants to help finance the transition from sugarcane to new crops, and to introduce displaced sugar workers to diversified farming.J Grants have been awarded to projects in Ka'u as well as to other areas in the State where plantations have closed. (-1 J Shipping Ka'u is remote in terms of serving as a supplier to major produce markets. J Long trucking distances are required to deliver fresh produce to the large Hilo and Kona markets, to shipping terminals at Hilo Harbor or Kawaihae Harbor, or to air - • freight terminals at Kona International Airport or Hilo Airport. U For surface cargo destined for Honolulu, Young Brothers, Ltd. provides twice weekly barge service from Hilo and Kawaihae using 218 - cubic -foot and 1,120- - cubic -foot contaiinersJ Special lower rates apply for shipping agricultural • products. Delivery requires two transfers: one transfer on the Big Island from a truck to the barge, and one transfer on O'ahu from the barge to a delivery truck. Most surface cargo destined for the U.S. mainland is shipped by Matson Navi- J gation Company (Matson) via Honolulu Harbor. The freight travels interisland by barge, and then overseas by cargo ship. Matson provides'barge service twice weekly to the Big Island, while its mainland shipping service includes two trips a .week to Los Angeles and one trip a week each to Oakland and Seattle. Matson charges special lower rates for shipping agricultural products. Also, they charge a common rate Statewide; thus, there is no cost difference between shipping O'ahu produce to the mainland and shipping Neighbor Island produce to the mainland. i L That is, there is no extra charge for the interisland barge service or for transferring cargo on O'ahu from the barge to the ship. Both dry and refrigerated containers are available in lengths of 24 feet (1,046 to 1,598 cubic feet) and 48 feet (2,069 to, 2,686 cubic feet.) 0 Most airfreight destined for O'ahu is flown by Aloha Airlines at night on all - cargo flights in which they use their normal passenger planes, having removed the 9 " I 2-14 A 0 GRICULTURE AND RELATED PRODUCIS n seats. Aloha Airlines can accommodate small containers (340 to 380 cubic feet), pallet cargo, and bulk cargo. Special lower rates apply for agricultural products. n As with surface shipping, two cargo transfers are required. U Most airfreight destined to the mainland is flown by Aloha Airlines to O'ahu, 3 then transferred to overseas airlines which use containers of about 150 cubic feet. Special lower rates apply for agricultural products. American International Cargo (AIC) also carries freight from the Big Island to Honolulu for transfer to their overseas planes. The advantage of AIC is that their interisland all -cargo Boeing 727s use the same size containers as AIC uses on C their overseas and mainland planes. Thus, the cargo does not need to be trans- ferred from one container to another. — 1 On a space - available basis, United Airlines provides direct airfreight service between Kona International Airport and San Francisco. For small packages, such as flowers, Federal Express provides door -to -door ser- — vice from Hilo to the U.S. mainland and foreign countries. COMPETING FARM AREAS AND COMPARATIVE ADVANTAGES In supplying the produce markets in Hawai'i and overseas, the Ka'u farmers must compete against other farmers in Hawai'i and elsewhere. The discussion below addresses the availability of farmland in other parts of the State, the compar- ative advantages of various farm areas, and the resulting implications for Ka'u farmers. Q Supply of Farmland in Hawai'i As a result of the contraction of plantation agriculture in Hawai'i, an enormous supply of land is now available for diversified agriculture (i.e., for crops other than sugarcane and pineapple). Since 1968, acreage in plantation agriculture has declined by over 215,000 acres, from 305,000 acres down to about 94,000 acres in 1996. 118-201 This land area is about 17 times the amount of sugarcane land that was farmed by Ka'u Ag prior to its closing. Most of the 215,000 acres were released in recent years, and most still remain available for replacement crops. On the Big Island, former sugarcane lands include those of: Ka'u Ag, Puna Sugar Co., Ltd., Mauna Kea Sugar Co., the United Cane Planter's Coop, Hamakua Sugar Co., and Kohala Sugar Co. Other major growing areas on the island include L' farmlands in Waimea and the coffee belt in North and South Kona. 0 Cy • o AGRICULTURE AND RELATED PRODUCTS - 2-15 0 On O'ahu, three sugarcane plantations have closed, two of them in recent years: J O'ahu Sugar Co., Ltd., Waialua Sugar Company, Inc., and Kahuku Plantation Co. Additional farm areas on Oahu include: Waimanalo, Waianae, Waiahole Valley, 9 Waikane Valley and Punalu'u. On Kaua'i, two sugar plantations have closed: McBryde Sugar Co., Ltd. and erl Kilauea Sugar Plantation Co. Also Lihue Plantation has reduced its operations and U released thousand of acres. Additional lands are farmed in Hanalei. O On Maui, Wailuku Sugar Co. was closed. Additional land is farmed in Kula and Hana. Dole, Del Monte, and Libby closed all of the pineapple plantations on Lana'i, J Molokai and Kauai. U Comparative Advantages of Ka'u Farmers The Big Island Market . J Because of proximity, Ka'u farmers are in a position to supply Big Island mar - kets, although these markets are comparatively small and trucking distances from J Ka'u to Hilo and Kona are long. The Ka'u farmers must compete with farmers in Puna, North and South Hilo, 5 5 Hamakua, Waimea, Kohala, the coffee belt of North and South Kona, and other farm areas on the island.. 0 The Honolulu Market D Ka'u farmers can supply the Honolulu markets with certain crops requiring microclimates and other conditions that exist in Ka'u but do not exist in the agricul- tural areas on Oahu. Some of the higher - elevation fields in Ka'u do not have coun- terparts on Oahu. I In addition, Ka'u farmers can supply orchard crops to the Honolulu market. r Until recently, major landowners on O'ahu have been reluctant to plant or lease out land for orchard crops because these crops tie up land for long periods at low returns. Also, less competition for farmland in Ka'u may result in lower land rents than 0 the rents on O'ahu. Along the same lines, lower housing and other costs in Ka'u (J allow Ka'u farmers to manage with a smaller financial return than is the case with . farmers on O'ahu. i 0 . 0 0 2 -16 AGRICULTURE AND RELATED PRODUCTS But, for most low- elevation crops, the farmers on O'ahu enjoy major advantages over Neighbor Island farmers in supplying the large Honolulu market (see below). Overseas Markets r, Crops and agricultural products that are destined for mainland markets and that also have a long shelf -life can be grown in Ka'u as competitively as they can on O'ahu and elsewhere in Hawai'i because farmers throughout the State ship via Mat- son at the same shipping rate, and crops arrive on the mainland in about the same condition. But the Oahu farmers enjoy major advantages over their Neighbor Island coun- terparts when it comes to supplying overseas markets with low- elevation crops that must be delivered by airfreight due to their short shelf -lives (see below). In spite of this advantage held by farmers on Oahu, some low -value crops (such as r flowers) can be grown profitably on the Big Island and then airfreighted to over - J seas markets if (1) the shipping costs are small compared to the value of the prod- uct, and /or (2) climatic and other conditions required for these crops favor the Big Island. If the planned irradiation plant is built in Hilo and one is not built on O'ahu or on any of the other Neighbor Islands, this could provide an advantage to Big Island farmers. Although this facility is controversial, it will allow exports of additional El crops that have, up until now, been banned from U.S. markets because of the Hawai'i fruit flies. Also, an irradiation plant will allow the exportation of riper and better tasting fruit, and will extend the shelf -lives of fruits. But many consumers, particularly those in Japan, are unlikely to accept irradiated fruit. Ka'u farmers are in a position to participate in established marketing and distri- bution systems for such proven Big Island export crops as macadamia nuts, coffee, f 3 flowers and nursery products, and papaya. Comparative Advantages of O'ahu Farmers Farmers on Oahu enjoy major advantages over farmers in Ka'u and also over r most other farm areas in the State in supplying (1) the large Honolulu markets with — low- elevation crops, and (2) overseas markets with low- elevation crops that must be airfreighted due to their short shelf - lives. 9 n u O AGRICULTURE AND RELATED PRODUCTS 2 -17 • Agronomic Advantages 0 .With the recent closure of two sugar planations on Oahu (totalling 22,000+ . • ' acres), ample land and irrigation water are now available:to Oahu farmers, with D much of this acreage still to be leased or replanted '2 - Also lease rents • are reasonable — generally a few hundred dollars per, acre per year for large fields: Furthermore, most former, sugarcane lands on O'ahu are among the highest P-I J . quality in the State: soils' are deep and well- drained and have'comparatively few . stones and good machine tillability; fields are large and level;to gently sloping; and 9 'the climate is sunny. (21'22I . Irrigation water on O'ahu is comparatively inexpensive by Hawaii standards: 9 9 . 28 to 35 cents per 1,000 gallons for the farmers who are using former sugarcane ' Iand.t In Central O'ahu, the supply of available water may limit replanting . el " • because the State Water Commission reduced the flow into Waiahole Ditch. But on J the North Shore (12,000 acres), there is an ample supply of water: about 80 mgd, of . • • which about half is high- elevation ditch water and the remainder is groundwater. . • The Honolulu Market ' • ^ In supplying the large Honolulu market, O'ahu farmers also have major loca- tional advantages. First, they can harvest daily and deliver fresh produce to gro- cery stores and • distributors within hours. In contrast, Neighbor Island farmers us sur transportation must meet a set, twice- weekly shipping schedule and n their crop,iitust be picked greener by a few days to compensate for the transport . J time, storage, extra handling, etc. ,' , .Second, O'ahu farmers incur relatively low trucking costs to deliver their pro duce to market because they do not have to pay for.packing, inter - island shipping, . transfer from one mode of transportation to another, or a second delivery Q • Third, O'ahu farmers have considerable flexibility in choosing theirbuyers and their delivery times so as to obtain the best available prices, and are not dependent . '-' - - on freight forwarders and delivery schedules dictated by infrequent barge service. . (....) - Also, they have the option of selling directly to retailers. ' • • • ' ' . r Fourth, Oahu farmers have better access to farm supplies, services and research . ' — support. 'l In the case of orchard crops, however, major landowners on O'ahu until J recently have been reluctant to plant or lease out land for these crops because they tie up land for long periods at-low returns. . • . 0 0 0 2-18 AGRICULTURE AND RELATED PRODUCTS The advantages of farming on O'ahu and the opportunities provided by the availability of former sugarcane land are exemplified by recent developments on O'ahu. The State's largest farmer of diversified crops, who was previously located on Moloka'i, moved most of his operations to O'ahu, expanded them from a few hundred acres to a few thousand acres, and now grows a larger variety of crops. Another O'ahu farmer has planted a few hundred acres in Cavendish bananas to compete with imports, including those from the Big Island.I'n Dole is planting papaya to compete with Big Island growers; 2,000 acres have been designated for papaya and 1,000 acres are being planted. And land is being planted in orchard crops, including, avocado, coffee, grapefruit, Kukui nut, lychee, macadamia nut, and mango. Overseas Markets C For surface cargo destined for the U.S. mainland, Oahu farmers hold only a comparatively small advantage over Neighbor Island farmers. As previously men- tioned, both pay approximately the same shipping costs since Matson charges a r common fare, regardless of the island of origin. Shipping to the mainland from the Neighbor Islands adds a few days to the transit time, but this presents a problem only for crops having a short shelf -life. (� But thanks to, Hawaii's large visitor industry, O'ahu farmers hold a major advantage over their Neighbor Island and overseas counterparts when it comes to C airfreighting their produce to the U.S. mainland (including Alaska) and Canada: every day, major airlines fly many wide- bodied aircraft from Honolulu Interna- (" tional Airport to a large number of U.S. and Canadian cities and, in many cases, they charge relatively low backhaul rates for cargo. Comparable airfreight service to the U.S. mainland is not available to Neighbor -� Island farmers since there are only a limited number of direct flights through Kona International Airport and other Neighbor Island airports. Generally, Neighbor Island farmers sending their produce to the mainland must barge or fly it to Hono- r- . lulu, then have it transferred to another carrier for the overseas flight. The interis- _ land travel to Honolulu adds both time and costs for Neighbor Island farmers. Furthermore, no tropical or semi- tropical agricultural area in Central America, 0 the Caribbean, or elsewhere in the world has as good an airfreight service to the 0 ' O AGRICULTURE AND RELATED PRODUCTS 2 -19 c U.S. mainland and Canada as does Honolulu. This excellent airfreight service gives r O'ahu, farmers a unique competitive advantage over other tropical - agriculture areas worldwide for supplying certain crops to the U.S. mainland and Canada. In fact, the attractive.backhaul rates have been critical to the survival of the fresh-pin- L.,/ 'eapple and fresh - chill - pineapple operations on O'ahu, where Del Monte and Dole o grow premium - quality fresh pineapple and airfreight it to markets throughout the . U.S. mainland and Canada.J ' Airfreight service is also available from Honolulu to Japan and Korea, but farm- ers in other tropical.areas who are closer to these markets are also served with good • n airfreight services. J Finally, Dole and Del Monte are in strong positions to develop overseas mar - kets for diversified crops grown on Oahu: both control considerable land on ' Oahu; both have good reputations for supplying quality fruits and vegetables; and Y both have established marketing and distribution systems which extend across the 0 U.S. mainland and around the world. . . Comparative Advantages of Other Neighbor Island Farmers Lfr In general, other Neighbor Island farmers have the same comparative ad tages that Ka'u farmers have. However, some of the Neighbor Island farm areas are served with water systems to irrigate crops, including some areas on Kaua'i, o Molokai, Maui and on other parts of the Big Island. Also, some areas have climatic* or other conditions not found on O'ahu, such as the high elevations and cool tem- /1 peratures in Kula on Maui, Waimea on the Big Island, and the rain-forest .condi- tions in parts of Puna. . 9 Among the Neighbor Island farmers, those on the Big Island and Moloka'i have been the most successful in supplying the Oahu market. Comparative Advantages Overseas Farmers 9 In both the Hawai'i market and in the U.S. mainland and other overseas mar- kets, Hawai'i growers must compete against farmers on the U.S. mainland, and against farmers in Canada, Mexico, Central America, South America, the Carib- in J bean, Australia, New Zealand, Southeast Asia, etc. 9 . 0 0 r- 2-20 AGRICULTURE AND RELATED PRODUCTS L Agronomic Conditions and Farming Costs Farmers in many overseas farm areas incur significantly lower costs for land, water, labor, supplies, equipment, etc. Also, per -acre expenditures on fertilizer can be lower on mainland farms due to lower prices and lower application rates —most soils in Hawaii are low in nutrients and therefore require more fertilizer. In addi- tion, crop pests generally are easier and less expensive to control on the U.S. main- n land and in other high - latitude countries because cold winters kill many pests. Long summer days in the higher latitudes contribute to higher yields for many crops. Also, some crops require a cold winter to induce a dormant stage as is the C case, for example, with apples. Special hybrids have been adapted for certain crops and the agronomic conditions for certain regions on the mainland. Because hybrids for certain key crops have not been developed for Hawaii's agronomic conditions, these crops often produce lower yields in Hawai'i and are more susceptible to pests. L) A number of overseas farmers produce large volumes of produce and, as a result, benefit from economies of scale. For Hawai'i growers, consumption vol- umes are often too small to support a large, efficient farm. In addition, Mexico and the Central American and Caribbean countries can 4 deliver tropical crops to the U.S. mainland year- around, while countries south of the equator can deliver summer fruits to the U.S. mainland during the winter El months. Transportation Costs Many overseas farmers incur comparatively low transportation costs in deliver- ing produce to the U.S. market — either because they are comparatively close to the markets (such as Mexico), or because they can move freight on foreign ships (i.e., they are not bound by the Jones Act which requires that the United States use as.- built and U.S.- operated ships between U.S. ports). However, as discussed above, when it comes to airfreight service to the U.S. mainland and Canada, O'ahu has access to superior service over other tropical areas, which is an advantage. Delivery Cost to Hawaii Markets As a result of the above advantages, many crops can also be imported to f Hawai'i from the U.S. mainland and foreign countries at prices that are lower than lJ what it costs to produce them locally, particularly during the summer months. C AGRICULTURE AND RELATED PRODUCTS 2 -21 r ‘__, This is especially true of crops which require certain climatic conditions, such as winter freezes which do not occur in Hawaii's farm areas. • 9 Implications for Ka'u Farmers �j Opportunities exist for increased local production in Ka'u to supply the Big -- • Island markets with fresh produce, the O'ahu markets with certain specialized (niche) crops and orchard crops which are not grown on O'ahu (e.g., oranges), and 0 overseas markets with certain niche crops (e.g., tropical flowers). Also, the initial developer of a new export market can establish an advantage in supplying a premi- n . um- quality crop even though production costs may be lower elsewhere (e.g., mac- ' J adamia nuts). Although opportunities exist to supply these various markets, the potential is J limited. For the Big Island, it is limited by the small size of the market and by com- petition from other Hawai'i growers and from low -cost imports, especially during 9 the summer months. In the Honolulu market, the potential is limited by the avail- , ability of former sugarcane land on Oahu and the comparative advantages enjoyed r by O'ahu farmers. It is also limited by competition from other farmers in the State L • and from low -cost imports. In the overseas markets, the potential is limited by U competition from low -cost mainland and foreign growers. Also, the superior air - freight service from Honolulu gives Oahu growers an advantage over Big Island farmers in supplying tropical crops that must be airflown to overseas markets. n J . MARKET, POTENTIAL FOR PRODUCE GROWN FOR HAWAII . 9 Potential for Import Substitution A great many fruits and vegetables can be grown in Hawaii's year -round sub- ({ J j tropical climate. At the same time, large volumes of fruits and vegetables are imported to Hawai'i. This situation invariably causes people to question why Hawai'i is not growing more of its own produce rather than depending so heavily upon imports. Termed "import substitution," or increased "agricultural self- suffi- "i ciency," the displacement of imports does present opportunities to grow more --i fruits and vegetables in Hawai'i. G One of the best examples of successful import substitution is watermelons. In 1980, about 7 million pounds of watermelons were consumed in Hawai'i, of which n less than 20% were locally grown.i By 1995, locally produced watermelons con - J -, iJ 0 0 2 - 22 AGRICULTURE AND RELATED PRODUCTS t_ tributed to expanding the Hawai'i market to nearly 23 million pounds, of which about 90% were locally grown. Efforts to explore crops to displace imports have increased in recent years because of the closure of many sugarcane plantations and the release of land, (� water, and other resources. Recent examples of crops now being grown on former UU sugarcane lands include major plantings of potatoes, cantaloupe, and honeydew melons. — However, the potential for import substitution for certain crops and during cer- tain seasons is tempered by the previously discussed comparative advantages held by overseas farmers. For a number of crops — particularly during the summer months — highly efficient mainland and overseas farms can deliver produce to 9 Hawai'i more cheaply than can local growers. Furthermore, O'ahu farmers now have ample land and a strong comparative advantage over Ka'u and other Neigh- bor Island farmers in supplying the large Honolulu market (see above). Characteristics of Successful Crops The comparative advantages discussed in the previous section, and the experi- ences of successful and unsuccessful farms in Hawai'i, suggest that crops grown in Ka'u should have certain characteristics to be successful in the Big Island and r Honolulu markets. Crops Grown for the Big Island Market For the Big Island market, commercially successful crops in Ka'u would tend to be those which: — are well- suited to Hawaii's subtropical climate, yet are resistant to vari- ous diseases and pests; — grow well in the winter months when mainland produce supplies are scarce and prices are high; r — are profitable even when the market is small (i.e., economies of scale are not required); and r° — are protected from overseas competition because of some characteristic of the crop (e.g., the shelf -life is too short to allow imports from distant markets). , } 3 3 O O AGRICULTURE AND RELATED PRODUCTS 2-23 In supplying the Big Island market, farmers in Ka'u would compete with grow- _ ers'elsewhere on the Big Island who enjoy similar advantages.. n Crops Grown for the Honolulu Market For the Honolulu market, commercially successful crops in Ka'u would tend to (� be niche crops which have characteristics similar to those described above, but which generally are not grown on Oahu because of non - existent or inferior agro- D nomic conditions. Also, major landowners on O'ahu have made only a limited , ,(l commitment to orchard crops. • (J Produce Crops for the Honolulu Market For fruits and vegetables, the potential for import substitutions for the Hono- G lulu market is illustrated in Tables 2 -1 to 2 -5. The Honolulu market is analyzed first because of its large size and the availability of detailed market data. The anal- ysis applies to low- elevation crops which can be grown in most farm areas in the State, but the analysis does not apply to the high - elevation crops that are grown in v Kula on Maui, or in Waimea on the Big.lsland. Low- elevation crops which are grown, or could be grown, in Hawai'i for the Honolulu market in significant volumes are listed in each of the tables. The fact that nearly all of these crops have been produced at one time or another in Hawai'i 0 over a number of years indicates that some farmers believe they are profitable. The tables also include three crops which lack a recent history of profitability in Hawai'i, but still show promise: asparagus, canteloupes and honeydew melons. With regard to asparagus, the Hawai'i Agricultural Research Center has conducted field tests with it with good results. Cantaloupes and honeydew melons have been . • 9 unsuccessful in Hawai'i because they are vulnerable to local diseases and pests. However, the situation could change with (1) advancements in insect and disease [ 1 control, and (2) plantings in Ewa on O'ahu where the drier conditions make it eas- e ier to control diseases and pests. Excluded from the tables are locally -grown crops which have a history of being grown profitably in Hawai'i only at the cooler, higher elevations such as Kula on . Maui, and Waimea on the Big Island or, more generally, in areas having climatic v and agronomic conditions uncharacteristic of most low- elevation farm areas in Hawai'i. Such crops include: broccoli, burdock, Chinese cabbage, green (head) j . i 1 IL • 0 0 • 0 2 -24 AGRICULTURE AND RELATED PRODUCTS n L Table 2.1. HONOLULU PRODUCE MARKET: 1993 r Approximate Supply Approximate From Hawaii Farmers Consumption Inshipments Total Oahu' Neighbor _ Low-Elevation Crops Hawaii' Islands (1,000lbs) (1,000 lbs) (1,000 Ibs) (1,000 lbs) (1,000 lbs) _, Asparagus 956 955 1 (0 %) 0 (0 %) 1 Avocados 1,357 942 415 (31 %) 3 (1 %) 412 r'N Bananas, Apple 2,074 0 2,074 (100 %) 2,040 ' (98 %) 34 Bananas, Cavendish 20,529 15,743 4,786 (23 %) 101 (2%) 4,685 - Beans, Green (Bush, Green, Snap) 671 551 120 (18 %) 48 (40 %) 72 Bittermelon 95 26 69 (73 %) 69 (100 %) 0 Cabbage, Kai Choi (Mustard Cabbage) 719 21 698 (97 %) 116 (17 %) 582 Cabbage, Pak Choy 370 67 303 (82 %) 296 • (98 %) 7 Corn, Sweet 1,442 624 818 (57 %) 360 • (44 %) 458 Cucumbers 3,935 1,613 2,322 (59 %) 1,130 ' (49 %) 1,192 r Dalkon 2,486 72 2,414 (97 %) 554 (23 %) 1,860 Dasheen 179 80 99 (55 %) 1 (1 %) 98 Eggplant, Long 610 99 511 (84 %) 500 ' (98 %) 11 Eggplant, Round 471 342 129 (27 %) , 40 (31 %) 89 Ginger Root - 1,074 207 867 (81%) 10 (1 %) 857 Lettuce, Manoa 351 0 351 (100 %) 349 (100 %) 2 Limes 514 418 96 (19 %) 5 (5 %) 91 - Lotus Root 88 58 30 (34 %) 30 (100 %) 0 Lychee 6 0 6 (100 %) 0 (0 %) . 6 Mango 39 9 30 (77 %) 14 (47 %) 16 Melons, Cantaloupe 8,350 8,350 0 (0 %) 0 (0 %) 0 r� Melons, Honeydew - 5,153 5,153 0 (0 %) 0 (0 %) 0 Melons, Watermelons 12,904 3,340 9,564 (74 %) 70' (1 %) 9,494 V Onions, Dry 16,295 15,325 970 (6 %) 3 (0 %) 967 Onions, Green 1,277 108 1,169 (92 %) 1,160 ' (99 %) 9 Oranges 19,206 18,200 1,006 (5 %) - 0 (0 %) 1,006 Papaya 13,634 0 13,634 (100 %) 1,440' (11 %) 12,194 Parsley 161 41 120 (75 %) 36 (30 %) 84 r Peppers, Bell 3,636 1,656 1,980 (55 %) 0 (0%) 1,980 Pumpkins 1,454 1,314 140 (10 %) 1 (1 %) 139 Squash, Hyotan 180 61 119 (66 %) 112 (94 %) 7 Squash, Togan 88 48 40 (46 %) 34 (85 %) 6 Sweetpotatoes 2,350 1,153 1,197 (51 %) 50' (4 %) 1,147 Tangerines - 807 784 23 (3 %) 2 (9%) 21 Tomatoes 16,242 13,085 3,157 (20 %) 60' (2%) 3,097 C ' Based on production data rather than whdesaers' truck receipts. r 1. Percentage is she al Total Supply. • 2. Percentage is share of Total Hawaii. Sources: Honolulu Arrivals, 1993; and Statistics of Hawaii Agriculture, 1993. 3 1 0 O 0 J AGRICULTURE AND RELATED PRODUCTS 2 -25 • Table 2-2. HAWAII PRODUCTION TRENDS AND SEASONALITY • I N umber of months the J Trend: 1990 to 1995 Hawaii market share: Declining Plat or Increasing exceeds falls below Low- Elevation Crops Variable 75 percent 50 percent Asparagus x 0 12 Avocados • • - .x 0 12 - '{�I Bananas, Apple x _ 12 " 0 U Bananas, Cavendish x 0 • 12 - Beans, Green (Bush, Green, Snap) x 0 11 ' 7 ' Bittermelon x 6 2 I • Cabbage, Kai Choi (Mustard Cabbage) x • 12 •J Cabbage, Pak Choy x 12 0 • - - ' Corn, Sweet • x 11 1 , - - Cucumbers ' x - 10 1 ' Dalkon ` - x 12 0 Dasheen x '4 5 Eggplant, Long . x 8 1 J Eggplant, Round x .0 12 ,Uj Ginger Root x • 12 0 Lettuce, Manga • x " 12 0 D Limes x 0 12 Lotus Root x 1 7, Lychee - x 3: 0 Mango x 6 4 + Melons, Cantabupe x 0 • 12 . Melons, Honeydew.. • x 0 - 12 . • Melons, Watermelons x • '5 7 _ Onions, Dry • - x 0 12 Onions, Green x 12 0 J , Oranges k 0 ' 12 • Papaya x 12 0 Parsley x 7 1 Peppers, Bell • x • 3 5 . Pumpkins x 0 • 11 Squash, Hyotan - x Squash, Togan x . • Sweetpotatoes. x 1 • 4 Tangerines. x 0 8 - Tomatoes - x ,0 - � , . . L i . in • . • , 0 0 .0 2 -26 AGRICULTURE AND RELATED PRODUCTS r Table 2 PROJECTED HONOLULU PRODUCE MARKET: 2010 Approximate Supply 0 Approximate From Hawaii Farmers Consumption Inshipments Total Oahu' Neighbor Low - Elevation Crops Hawaii' • Islands r 1 (1,000 Ibs) (1,000 Ibs) (1,000Ibs) (1,000 Ibs) (1,000 Ibs) Asparagus 1,147 803 344 (30 %) 241 (70 %) 103 _. Avocados 1,628 1,058 570 (35 %) . 27 (5 %) 543 r .., Bananas, Apple 2,489 0 2,489 (100 %) 2,449 (99 %) 40 Bananas, Cavendish 24,635 14,781 9,854 (40 %) 4,925 (50 %) 4,929 Beans, Green (Bush, Green, Snap) 805 403 403 (50 %) 345 (86 %) 58 V Bittermelon 114 29 86 (75 %) 86 (100%) 0 r Cabbage, Kai Choi (Mustard Cabbage) 863 26 837 (97 %) 371, (44 %) 466 J Cabbage;PakChoy 444 80 364 (82%) 358(99 %)' 6 Corn, Sweet 1,730 606 1,125 (65 %) 758 (68 %) 366 , Cucumbers 4,722 1,653 3,069 (65 %) 2,116 (69 %) 954 Dalkon 2,983 89 2,894 (97 %) 1,406 (49 %) 1,488 Dasheen 215 86 - 129 (60 %) 50 (39 %) 78 Eggplant, Long 732 117 615 (84 %) 606 (99 %) 9 Eggplant, Round 565 367 198 (35 %) 127 (64 %) 71 Ginger Root 1,289 245 1,044 (81 %) 358 (34 %) 686 Lettuce, Manoa 421 0 421 (100 %) 420 (100 %) 2 Limes 617 463 154 (25 %) 16 (11 %) 138 Lotus Root 106 63 42(40 %) 42 (100 %) 0 r Lychee 7 0 7 (100 %) 0 (3 %) 7 Mango 47 9 37 (80 %) 18 (48 %) 19 Melons; Cantaloupe 10,020 5,010 5,010 (50 %) 5,010 (100 %) 0 Melons, Honeydew 6,184 3,092 3,092 (50 %) 3,092 (100 %) 0 Melons, Watermelons 15,485 3,871 11,614 (75 %) 9,240 (80 %) 2,374 Onions, Dry 19,554 16,621 2,933 (15 %) 2,160 (74 %) 774 Onions, Green 1,532 123 1,410 (92 %) 1,403 (100 %) 7 {"� Oranges 23,047 20,742 2,305 (10 %) 326 (14 %) 1,979 1 1 J I - - Papaya 16,361 0 16,361 (100 %) 8,232 (50 %) 8,129 Parsley 193 48 145 (75 %) 78 (54 %) 67 Peppers, Bell 4,363 1,745 2,618 (60 %) 1,034 (40 %) 1,584 r Pumpkins . 1,745 1,396 349 (20 %) 238 (66 %) 111 C Squash, Hyotan 216 65 151 (70 %) 146 (96 %) 6 Squash, Togan 106 42 63 (60 %) 59 (93 %) 5 r . • Sweetpotatoes 2,820 1,128 1,692 (60 %) 774 (46 %) 918 Tangerines 968 872 97 (10 %) 25 (26 %) 72 J Tomatoes 19,490 12,669 6,822 (35 %) 4,344 (64 %) 2,478 r J 1. Percentage is share of Total Supply. 2. Percentage is share of Total Hawaii. ^ r- 1..../ 9 0 o AGRICULTURE AND RELATED PRODUCTS 2 -27 D Table 2-4. YIELDS, WATER REQUIREMENTS AND PRICES OF PRODUCE CROPS ' r 1. / Average Yi eld per Crops Water per Farm-gate Harvested per Crop . Price - 1 Low - Elevation Crops_ • Acre Year (1 1993 ...1 000lbs) (acre- inches) (per pound) Asparagus 11.0 , 2 30 $1.500 ' r1 Avocados • _ • 7.0 1 60 $0.500 Bananas, Apple - 6.0 1 72 $0.495 J • Bananas, Cavendish 20.0. 1 72 $0.359 • Beans, Green (Bush, Green, Snap) 6.0 3 18 $1.050 9 . Bittermelon . • .10.0 2 30 - $0.970 Cabbage, Kai Choi (Mustard Cabbage) 10.0 6 20 $0.430 Cabbage, Pak Choy 17.0 3 30 $0232 Corn, Sweet • 3,0 3 • - 20 $0.810 1-1 - Cucumbers ' _ • 15.0 3 18 $0.527 . U - Daikon 15.0 5 18 $0.329 . Dasheen - 16.0 . 1 • 50 $0.960 • _ Eggplant Long 20.0 1 • 40 $0.081 cl U Eggplant, Round 25.0 1 40 $0.700 Ginger Root 49.0 0.9 60 $0.870 Lettuce, Manoa 12.0 3 18 $0.605 n Limes 10.0 1 60 , $0.423 ' ' ' I Lotus Root 7.5 1 60 $1.200 U Lychee . 10.0 1 60 $1.210 • . Mango 20.0 1 - 60 : $0.890 G ' Melons, Cantaloupe 15.0 1 • 21 $0.500 • • Melons, Honeydew " 15.0 1 • 21 '$0.500 Melons, Watermelons • 25.0 1 30 $0.150 ' • . Onions, Dry 12.0 1 18 $1.070 - 7 I Onions, Green 7.5 .3 20 $0.960 J - . Oranges 25.0 1 60 $0.250 Papaya 19.0 1 72 $0.470 • Parsley 12.0 1 60 $0.940 l - - Peppers, Bell 14.0 1 30 10.529 J Pumpkins 14.0 2 30 $0.250 Squash, Hyotan - ' 18.0 2 20 $0.460 Squash, Togan 18.0 2 . 20 - $0.460' ✓ Sweetpotatoes 11.0 2 30 $0.550 L. . Tangerines 20.0 1 60 ,$0.378 . Tomatoes • . 30.0 2 30 $0.520 • 9 . • - . J . O 0 - 2-28 AGRICULTURE AND RELATED PRODUCTS [ Table 2-5. POTENTIAL LAND AND WATER REQUIREMENTS, AND FARM REVENUES TO SUPPLY THE HONOLULU PRODUCE MARKET: 2010 Acreage For Projected Honolulu Produce Market Required Land Required Water Required Gross Farm Revenues at100% Oahu Neighbor Oahu Neighbor Oahu Neighbor Low - Elevation Crops Self- Islands Islands Islands r Sufficiency (acres) (acres) (mgd) (mgd) (per year) (per year) Asparagus 52 11 5 0.05 0.02 $ 361,368 $ 154,872 i Avocados 233 4 78 0.02 0.35 $ 13,597 $ 271,373 Bananas, Apple 415 408 7 2.19 0.04 $ 1,212,265 $ 19,691 ^` Bananas, Cavendish 1,232 246 246 122 1.32 $ 1,768,183 $ 1,769,375 Beans, Green (Bush, Green, Snap) 45 19 3 0.08 0.01 $ 362,250 $ 60,480 Bittermelon 6 4 0 0.02 - $ 82,935 $ Cabbage, Kai Choi (Mustard Cabbage) 14 6 8 0.06 0.07 $ 159,666 $ 200,208 1 Cabbage, Pak Choy 9 7 0 0.05 0.00 $ 83,167 $ 1,299 Corn, Sweet 192 84 41 0.38 0.18 $ 614,272 $ 296,784 Cucumbers 105 47 21 0.19 0.09 $ 1,114,974 $ 502,547 1-'• Daikon 40 19 20 0.13 0.13 $ 462,477 $ 489,552 L Dasheen 13 3 5 0.01 0.02 $ 48,461 $ 75,264 Eggplant, Long 37 30 0 0.09 0.00 $ 49,153 $ 714 Eggplant, Round 23 5 3 0.02 0.01 $ 88,634 $ 49,840 (-' Ginger Root 29 8 16 0.03 0.06 $ 311,745 $ 596,472 ll.. Lettuce, Manoa 12 12 0 0.05 0.00 $ 253,858 $ 968 Limes 62 2 14 0.01 0.06 $ 6,898 $ 58,329 Lotus Root 14 6 0 0.03 - $ 50,688 $ - Lychee 1 0 1 0.00 0,00 $ 218 $ 8,494 Mango 2 1 1 0.00 0.00 $ 16,080 $ 17242 Melons, Cantaloupe 668 334 0 0.52 - $ 2,505,000 $ - Melons, Honeydew 412 206 0 0.32 - $ 1,545,900 $ - Melons, Watermelons 619 370 95 0.82 0.21 $ 1,386,015 $ 356,025 Onions, Dry 1,630 180 64 0.24 0.09 $ 2,310,665 $ 827,752 Onions, Green 68 62 0 0.28 0.00 $ 1,346,504 $ 6,912 r1 Oranges 922 13 79 0.06 0.35 $ 81,414 $ 494,766 J . Papaya 861 433 428 2.32 2.29 $ 3,869,171 $ 3,820,405 Parsley 16 6 6 0.03 0.02 $ 73,038 $ 63,168 Peppers, Bell 312 74 113 0.16 025 $ 546,944 $ 837,936 (" Pumpkins 62 8 4 0.04 0.02 $ 59,440 $ 27,800 Il... Squash, Hyotan 6 4 0 0.01 0.00 $ 66,976 $ 2,576 Squash, Togan 3 2 0 0.00 0.00 $ 26,938 $ 2,208 Sweetpotatoes 128 35 42 0.16 0.19 $ 425,920 $ 504,680 Tangerines 48 1 4 0.01 0.02 $ 9,575 $ 27,030 Tomatoes 325 72 41 0.32 0.18 $ 2,258,901 $ 1,288,352 Land In Crop 8,615 2,724 1,344 Fallowed Land' 1,225 404 125 Total Land Used for Farming 9,840 3,128 1,469 9.99 5.99 $ 23,573,287 $ 12,833,115 J 1. Land 'allowed between annual plantings, estimated at 25% for fields crops. C C r 0 O AGRICULTURE AND RELATED PRODUCTS 2 -29 cabbage, carrots, cauliflower, celery, dasheen, head lettuce, Romaine lettuce, per- J simmons,.radishes and Italian squash (zucchini). Crops having no recent history of successful commercial production in Hawai'i o and which are imported in large quantities are also excluded: apples, apricots, arti- chokes, cherries, endive, garlic, table grapes, kiwi, leeks, mushrooms, nectarines, peaches, pears, plums and potatoes. For a few years in the mid- 1990s, Del Monte grew potatoes for the potato chip r • market on 600 acres of land on O'ahu. The operation was discontinued due to pests, soil problems, and low yields. • Honolulu Produce Market: 1993 J Table 2 -1 provides a 1993 summary of the Honolulu produce market for the previously mentioned crops. It should be noted that some quantities may be underreported due to inconsistencies in the data. ( The second column of Table 2 -1 gives the total quantity of each product, or sim- 1 ilar products, supplied to Honolulu markets. The third column gives the quanti- ties of the products that arrived in Honolulu from overseas — either via ship or air , J transport. The last three columns give supplies from Hawaii farmers broken out , by O'ahu and the Neighbor Islands. In the case of O'ahu, supplies are based on LJ local production when data are available— indicated by an asterisk( *). Otherwise, supplies are based on wholesalers' truck receipts. In this latter case, the supplies U are underestimated since some- farmers deliver their produce directly to stores, thereby bypassing the wholesalers. Supplies from the Neighbor Islands are based on arrivals via barge or air transport. • The two columns showing percentages give two market shares: the percentage share of Total Supply furnished by all Hawaii farmers, and the percentage share of • Total Hawai'i furnished by O'ahu farmers. For example, in 1993, 23% of the Cavendish bananas supplied to Honolulu markets came from Hawaii farmers. Of the Hawai'i supply, 2% came from Oahu farmers, and 98% from Neighbor Island farmers (mostly on the Big Island). The quantities in the table provide only a crude estimate of the demand for crops that can be grown in Hawai'i because similar products are aggregated in the original data. For example, the category "dry onions" includes all types of bulb on ions: sweet and pungent; small to large; white, yellow and red; fresh and storage; r 2-30 0 0 AGRICULTURE AND RELATED PRODUCTS high -value and low- value; etc. Most of the onions that are imported to Hawaii are the inexpensive storage varieties which would be unprofitable for Hawai'i farmers to grow except in the winter months when mainland supplies are comparatively scarce, more expensive, and lower in quality. On the other hand, the locally grown onions (i.e., Maui and Moloka'i onions) are sweeter, have a shorter storage life, and sell at a premium price. r Similarly, the category "cucumbers" includes both the Oriental and American types of cucumbers. "Tomatoes" includes the expensive beef -steak variety, cheap tomatoes, Italian (plum) tomatoes, cherry tomatoes, etc. And "bell peppers" includes the thick- and thin - skinned varieties, as well as green, yellow and red pep- pers. 1 Regarding locally -grown oranges from Ka'u, this premium - priced orange lacks the appearance of a typical mainland orange (skins of local oranges tend to be more mottled and partially greenish), and it is more difficult to peel. The quantities of oranges shown in Column 2 therefore overestimate the demand for the crops which (' can be grown in Hawaii since locally -grown crops are not identical to their corre- sponding imports. r The eight low- elevation crops listed in Table 1 that are in the greatest demand in the Honolulu market (i.e., the demand amounts to approximately 5 million pounds or more) are bananas, cantaloupes, honeydew melons, watermelons, dry o onions, oranges, papayas and tomatoes. Of these, papayas and watermelons are the only crops for which Hawaii production dominates. Most or all of the demand 9 for the other six low- elevation crops is now being met by imports. Production Trends of Hawai'i Crops Production trends often indicate which crops are profitable and which crops r-% yield low profits or are unprofitable, at least for some farmers. Farmers will natu- rally gravitate to the more profitable crops (thereby causing production trends to — increase), while they will abandon low- profit crops or unprofitable crops (thereby --- causing production trends to decline). Table 2 -2 provides information on production trends in Hawaii for the period 1990 to 1995. The data include production delivered to markets Statewide, not r just to Honolulu. As indicated in the table, production has been declining for six crops, increasing for seven crops, and remaining flat or variable for 22 crops. r a . AGRICULTURE AND RELATED PRODUCTS 2 -31 ^ The trends for a number of crops are expected to change and become positive now that a large amount of high - quality former sugarcane land on Oahu is avail- able to farmers. The size and superior agronomic and locational advantages of these lands will allow higher yields, greater economies of scale, lower, production and delivery costs, and higher profits than has been the case in the recent past. For these same reasons, additional crops may become profitable in Hawaii (i.e., aspara- gus, canteloupes, honeydew melons, etc.). Hawaii's Seasonal Market Shares Information on seasonal market shares from Hawai'i farmers is provided in the last two columns of Table 2- 2.f� Column 5 gives the number of months that J Hawai'i farmers supplied over 75 percent of the total Honolulu market, while Col- umn 6 gives the number of months that these farmers supplied less than 50 percent_ of the market. For example, in 1993, bell peppers from Molokai nearly satisfied the . • Honolulu market for 3 months of the year (in the spring when imports are scarce and more expensive), but for 5 months of the year, a majority of the bell peppers were imported (in summer and fall when imports are plentiful and less expensive). Thus; it would be advisable to target production of bell peppers in the spring, and n avoid production in late summer and fall. J In general, in cases where production or demand is seasonal, and local produc- tion dominates the market in some months, farmers run the risk of depressing prices if they increase their production during these months. In turn, a drop in prices will depress earnings for both existing plantings and new plantings of that •. crop, and will discourage farmers from initiating further plantings. Gluts on the market and resulting low prices occur easily in Hawai'i due to the comparatively n small population and the lack of nearby markets to absorb excess production. • L. • For many crops; Hawai'i farmers already dominate the market during certain 0 months (usually winter) when imports are low and prices are high, but they may , be displaced by imports in other months (usually summer) when overseas produc- tion is high and prices are low. - U Seasonality -is often a major consideration even for crops where the market share is low, and where the level of local production has little impact on prices. For (- . example, more tomatoes can be produced for a profit if they are marketed in the "off- season" when imports from the mainland and Mexico are minimal and expen- - r- • I L / 0 0 n 2-32 AGRICULTURE AND RELATED PRODUCTS r-, sive. When imports are plentiful and cheap, however, it becomes difficult to pro- duce tomatoes competitively in Hawai'i. There is room for expansion in the pro- 3 duction of tomatoes if the crop is managed so that it is produced during the non - summer months. Production on Moloka'i and Maui currently follows this pattern. However, large -scale production on fields recently released from sugar operations will extend the period when local tomatoes are competitive with mainland imports. The same is true of cucumbers and most fruits. For crops such as these, plant- ings are best managed so that the locally produced crops do not appear on the mar- ket at the same time that seasonally cheap imports are available. -, — Also, the demand for some products is seasonal. An obvious example is pump- kins. Consumption averages less than 70,000 pounds per month, except in October 3 when it increases tenfold. Note that the orange gourds used for Jack -o'- lanterns are different from the locally- produced pumpkins which are eaten. In other cases, the supply of certain crops is seasonal. Some Hawaiian crops (e.g., avocados, lychees, mangoes) can be produced economically only during cer- tain times of the year. r Honolulu Produce Market: 2010 Table 2 -3 provides an estimate of the potential market in 2010 for selected pro- duce crops supplied to the Honolulu market. This table is similar in concept to Table 2 -1, covering the same crops with the same qualifiers and limitations. In addition, the projections should be interpreted as rough estimates inasmuch as con- siderable uncertainty exists regarding future markets. For example, increased local production of certain crops may result in lower prices, higher quality, and increased availability, particularly during the winter months; in turn, this may lead ` to higher levels of consumption. For each crop, the year 2010 consumption levels (Column 2) are estimated by increasing the 1993 levels by 20 %. This percentage increase reflects growth in both r the resident and visitor populations, and slightly greater per- capita consumption of locally -grown produce.t It is assumed that local consumption of the produce will rise with greater availability, fresher produce, and possibly lower prices. For each crop, the percentage market share provided by Hawai'i farmers (Col- umn 4, in parentheses) is based on the consultant's judgments of potential domestic C production based on discussions with UH experts on various crops. These market N Q J AGRICULTURE AND RELATED PRODUCTS 2 -33 • ' shares are used, in turn, to calculate the volumes of inshipments (Column'3) and, , total production from Hawaii farmers .(Column 4). Market shares for Hawai i . growers are limited•by the following: (1) local varieties are not perfect substitutes • • for all imports, (2) some crops cannot be produced profitably in the summer due to • competition from low -cost imports, and (3) over - production must be avoided in n • order to maintain profitable price levels. J With regard to the production on Oahu versus the Neighbor Islands for the n Honolulu produce market, it generally is assumed that farmers on Oahu will dis- • J place about 33% of the supplies that once came from the Neighbor Islands. Com- bind with the growth in demand, the net effect is that farm sales by Neighbor cli fl Island farmers in the Honolulu market will decline by about 20% from 1993 levels (1993 production less 33% = 67% of 1993 production '+ 20% growth in demand = 7 80% of 1993 production). , J . An exception to this is slow - growing tree crops, which are fixed investments, . J • and which are less likely to be planted on O'ahu. It is anticipated that Neighbor Island farmers will continue to supply tree crops to the Honolulu market at vol- umes similar to or higher than 1993 levels plus they will receive a market share . • . applied to new growth that is 15% less than their 1993 market share. A second exception is asparagus, which would be a new crop, and a third j • exception is waterinelon,.most of which has shifted to O'ahu from Moloka'i. A fourth exception is Cavendish bananas and papaya for which an even split between U O'ahu and the Neighbor Islands is assumed. • - . The anticipated increases in market share for O'ahu farmers reflects the compet -, itive advantages which certain farmers will derive from farming the high - quality, • ' , favorably- located lands on O'ahu (see above). '. • .. J Yields, -Water Requirements and Prices for Produce Crops . Ta 2 -4 shows', for each crop, the average yield per harvested acre, the num= ' ber of crops per year, the water requirements per -acre, and average farm -gate 1 prices.h These items —which are used to calculate the information in Table , 2 -5—are estimates based on 1994 conditions, and are subject to considerable change • over time. If the supply of land is ample and rents are low, it may be best the J perspective of optimal farm management to farm sufficient land to allow fields to be fallowed between crops. , To account for these additional land, requirements in � r 1 1 L • 2 -34 A 0 GRICULTURE AND RELATED PRODUCTS Table 2 -5, acreages of land in crop are increased 25% for field crops, but not for tree crops. -� Potential Land and Water Requirements to Supply the Honolulu Produce Market: 2010 For selected produce crops, Table 2 -5 gives the approximate potential land and water resources required by farmers on O'ahu and the Neighbor Islands to supply r the Honolulu market in the year 2010. Table 2 -5 is based on the market projection given in Table 2 -3 and on the yield and water requirements given in Table 2 -4. The r potential gross revenues to farmers are also given in Table 2 -5. These projections should be viewed as rough estimates inasmuch as consider- fl able uncertainty exists regarding future markets, yields, water requirements for a given area, and prices. Also, not all farm production and sales in Hawai'i are reported reliably. For some individual crops, actual acreage undoubtedly will differ — greatly from projections: some crops will use much more land, while some will use — much less. Nevertheless, the projections of, total acreage are sufficiently accurate to draw conclusions about the amount of land that will be needed by Hawai'i farmers r to allow them to grow produce in order to accomplish import substitution for the Honolulu market. The second column of Table 5 gives the acreage required for each crop under r the (unrealistic) assumption that the entire Honolulu market is supplied from Hawaii. This table reflects total import replacement (i.e., 100% self - sufficiency with no inshipments from overseas). The land requirement is for acreage in crop, not harvested acreage as is typically reported in government publications. For ex- ample, 192 acres of sweet corn corresponds to 576 harvested acres since the land would provide three crops per year (192 x 3 = 576). C Although 100% self- sufficiency is unrealistic, the calculated acreage figure serves to provide an approximate upper bound on the amount of land required to supply the entire Honolulu market for the low - elevation crops listed. Even under the assumption of 100% self- sufficiency, total land required would_amount to only about 10,000 acres. As indicated, most crops would require less than 100 acres. The entire 10,000 acres could be located on Oahu; no land shortage on O'ahu would force production to the Neighbor Islands. C C 0 0 . AGRICULTURE AND RELATED PRODUCTS • 2-35 • For the produce market as projected in Table 2 -3, the corresponding land requirements for each crop —for both O'ahu and for the Neighbor Islands —are • shown in the third and fourth columns of Table 2 -5. Water requirements and G0 approximate revenues are also shown in the table. As indicated, realistic land requirements to supply the 2010 Honolulu produce -- market with the low- elevation crops listed would amount to approximately 3;100+ acres for O'ahu and 1,500 acres for the Neighbor Islands, for a Statewide total of less than 5,000 acres. Ka'u and other Big Island farmers would share in the 1;500 �1. acres for the Neighbor Islands. Corresponding water requirements would amount J to about 10 mgd for O'ahu and 6 mgd for the Neighbor Islands. In 1993 purchasing l power, gross farm revenues would amount to about $24 million for Oahu and $13 U million for the Neighbor Islands. u • Potential Land and Water Requirements to Supply the - - Big Island Produce Market: 2010 J For low- elevation crops grown for the Big Island produce markets, land and • , water requirements can be extrapolated from the above analysis. By the year 2010, the Big Island is projected to have a resident -plus- visitor population that is about 19% of Oahu's. . Applying this percentage to the figures in Table 2 -5 results in -- about 1,900 acres being required to achieve 100% self - sufficiency in the listed crops, and a realistic estimate of about 900 acres being needed, with a corresponding 3 ' mgd of water needed. • . J A 2,000 -bed prison, which has been proposed for the Big Island; would increase the size of the Big Island produce market by about 1 %. . Total Big Island Land and Water Requirements for the ,.., Hawai'i Produce Market: 2010 t An estimated 2,000 acres of farmland on the Big Island and about 7 mgd of water will be ,required to supply the Big Island and Honolulu produce markets u - with the low- elevation crops listed in the tables. This is based on the above requirements for the Big Island (900 acres and? mgd) plus an optimistically esti- L m ated two- thirds of the Neighbor Island production to supply the Honolulu market (2/3 of 1,500 acres and 6 mgd). Ka'u would share this market with existing and new Big Island farmers in -- Puna, North and South Hilo, Hamakua, North Kohala, and other low- elevation 7 --1 farm areas. J • f J 2 -36 O AGRICULTURE AND RELATED PRODUCTS r -, These acreage figures do not include export crops and feed crops, which are discussed below. Even though considerable error could exist in the data and the assumptions, the analysis supports the conclusion that the market for growing crops in Ka'u to sup- ply Honolulu and the Big Island is limited. MARKET POTENTIAL FOR SPECIALTY CROPS Statewide and Big Island Production: 1995 Speciality crops are produced for the Hawaii market in relatively small vol- umes, and the available data on this production are insufficient for inclusion in the analysis presented in the previous section — generally because the necessary infor- mation has been aggregated or withheld by the State to avoid disclosing informa- tion about individual operations. In most cases, only Statewide data are available. As indicated in Table 2 -6, Statewide plantings in specialty crops amounted to about 900 acres in 1995. Poi and Chinese taro required the largest portion of this land (350 acres and 200 acres, respectively), while specialty tropical fruits used the second largest portion (about 305 acres). For the crops listed, production totaled C about 9.6 million pounds (4.8 tons), and generated gross revenues of about $6.6 million to farmers. r - Most of the acreage for specialty crops was located on the Big Island, including about 275 acres in tropical fruits, 65 acres in poi taro (mostly in Waipio Valley), and 190 acres in Chinese taro.J However, production of specialty tropical fruits and taro on the Big Island amounted to only about 1.9 million pounds and about $900,000 in revenues. Potential for Specialty Crops Grown in Ka'u Opportunities are available to grow specialty crops in Ka'u but, for most crops, the potentials are limited and will depend upon success with import substitution, higher levels of per- capita consumption, population growth, the development of exports, and success in competing against other farm areas. A promising opportunity for highly skilled farmers is to grow premium- quality organic and other produce for the many luxury hotels, high -end restaurants, gour- met outlets and health -food stores which have developed on the Big Island, O'ahu, and the other islands. This opportunity includes the herbs, fruits and vegetables 0 O AGRICULTURE AND RELATED PRODUCTS 2 -37 J r . Table 2 -6. HAWAII'S SPECIALTY CROPS, STATE OF HAWAII AND BIG ISLAND: 1995 J • P Land in Crop Production Farm Value — Crop (acres) (pounds) ($ millions) • STATE OF HAWAII n Herbs . Basil, Asian ., n.a. 240,000 $ 0.204 Basil, Sweet (Italian) n.a. 390,000 $ 0.761 Cilantro . n.a. 60,000 $ 0.102 • • Other Herbs n.a. . 200,000 $ 0.520 Specialty Tropical Fruits _, Atemoya (1992 data) 60 31,000 $ 0.034 . Cherimoya 30 8,600 $ 0.013 • • J Passion Fruit (1992) • 5 70,000 $ . 0.010 Rarhbutan (1993) 60 5,000 1 0.020 1 • Specialty Pineapple 25 319,100 $ 0.160 J Starfruit 40 419,700 $ 0.076 Other Specialty Fruits . 85 87,800 $ 0.239 Vegetables Chinese peas 5 H 25,000 $ 0.045 J Taro 6,800,000 $ . 3.264 • • • Poi Taro 350 —) Chinese Taro • • 200 J Watercress 40 1,200,000 $ 1.380 . TOTAL, State of Hawaii 900 9,616,200 $ 6.623 Q BIG ISLAND Herbs . . n.a. n.a. n.a. r Specialty Tropical Fruits 275 518,500 $ , 0.251 t Tiro 1,400,000 $ 0.657 Poi Taro 65 Chinesei Taro 190 TOTAL, Big Island 530 1,918,500 $ . 0.908 0 n.a.: not available, but relatively small. H: harvested acres. Source: Statistics of Hawaiian Agriculture: 1995. 2-38 AGRICULTURE AND RELATED PRODUCTS listed in Table 2 -6 as well as the premium - quality fruits and vegetables listed in Tables 2 -1 through 2 -5. Farms catering to high -end niche markets tend to be small, labor- intensive operations which allow better control of the quality, while many tend to be organic farms which do not use chemical pest control and chemical fertilizers. — Regarding poi taro, the demand is strong and supplies are rationed on O'ahu -. and in other places in the State. But a problem for water -short Ka'u is the fact that wetland taro requires access to an abundant supply of high - quality, low -cost water: over 20,000 allons of water per acre g p e per day are required. Regarding table taro, q g g less than 25 acres would be required to replace all the imports from Samoa, Fiji and the Cook Islands (based on imports of 469,00 pounds per year in 1995, and an aver- age yield of 20,000 pounds per acre per year).J The greatest potential for specialty crops will come from developing one or more of them into a major export crop. This potential is discussed in the following section. MARKET POTENTIAL FOR EXPORT CROPS r- Major Export Crops: 1995 Table 2 -7 lists the State's major export crops, along with 1995 data for the amount of land planted in these crops, tons of production, and the farm value of the crop. Data are shown for both the State and, if available, the Big Island; the — Big Island market shares are shown in parentheses. The crops are ranked accord - — ing to farm value, which excludes the value added by processing. The data cover production for both the export market and the local market. Also, the data for sug- arcane have been adjusted to remove plantations which have closed since 1995. As can be seen from the table, in 1995 the two major export crops from Hawai'i 0 were still sugarcane and pineapple, followed closely by flowers and nursery prod- ucts. The table also reveals that the Big Island is the State's dominant producer of diversified crops grown for export. In terms of dollar value, the Big Island pro - duces 48% of the flowers and nursery products, most of the macadamia nuts, 92% of the papayas, 71% of the coffee, most of the ginger root, and 44% of the guavas. -- Export crops are grown on the Big Island because of (1) favorable agronomic conditions (e.g., coffee is grown in the mountains above Kona; papayas are grown r ' . AGRICULTURE AND RELATED PRODUCTS 2-39 Table 2 -7. HAWAII EXPORT CROPS: 1995 . • r J Land in Crop (acres) Production (tons) Farm Value ($ millions) Crop State Big Island State Big Island State Big Island Sugarcane • 83,800 2,400 3,953,000 430,000 $ 127.70 $ .12.20 Sugarcane, excluding closed plantations 73,400 0 2,814,000 0 $ 94.40 $ 0 Big Island share • , • (0.0 %) (0.0 %) (0.0 %) Pineapple 20,800 0 345,000 0 $ • 87.36 $ 0 Big Island share (0.0 %) (0.0 %) (0.0 %) Flowers and nursery products 2,698 1,630 n.a. n.a. $ 67.70 $ 32.47 . _, Big Island share (60.4 %) (most) (48.0 %) ' Macadamia nuts' 20,300 25,000 n.a.' $ 37.00 n.a.' J J i Big Island share , (most) _ (most) (most) • • Papayas 2,435 2,280 25,400 24,058 $ 18.49 $ 17.01 fl Big Island share (93.6 %) (94.7 %) (92.0 %) J Coffee 6,700 1,780 2,700 1,250 $ 16.20 $ 11.50 Big Island share (26.6 %) i (46.3 %) (71.0 %) J • Seed crops 1,700 n.a. 1,525 n.a. $ 12.23 n.a. ' Big Island share ' (small) (small) (small) 0 Ginger root' 135 n.a' 2,900 - n.a.' $ 5.05 n.a.' Big Island share - (most) (most) (most) Guavas ' 870 430 8,200 3,600 $ 2.38 $ 1.04 Big Island share (49.4 %) (43.9 %) (43.9 %) 1. Most of Hawaii's macadamia nut and ginger root operations are located on the Big Island. ' 7, i n.a.: not available. . . ' • Source: Statistics of Hawaiian Agriculture: 1995. !J. . 1 J • 2 -40 O O AGRICULTURE AND RELATED PRODUCTS r in areas where, until recently, the ring -spot virus was more easily controlled; and tropical flowers are grown near Hilo because of the favorable climate for certain species); and (2) the availability of land at lease rents and prices that are low com- pared to those on O'ahu and the other Neighbor Islands. Characteristics of Promising Export Crops Grown in Ka'u For the U.S. mainland and other export markets, promising export crops from " Ka'u would tend to be those which: —have an established history of profitability on the Big Island, and the farmer — can take advantage of established markets and distribution networks (e.g., for flowers, macadamia nuts, papayas, coffee, ginger root and guavas); —grow well in Hawaii's subtropical climate to produce a premium product and /or unusually high yields; —are high in value relative to the cost of transporting them; and — —are free of fruit flies, at least for the mainland -U.S. market and the Japanese markets. — As direct flights increase to the U.S. mainland and Japan to carry more visitors to and from the Big Island, opportunities will be created to supply winter fruits and — vegetables to these markets using a portion of the holds of the aircraft involved. L Appropriate crops would be those which grow well in Hawaii's subtropical climate during the winter months when mainland fruit and vegetable prices are high, but which cannot be grown well in northern latitudes during the winter months. Also, u crops which have short -shelf lives will provide an advantage to Big Island farmers over competitors in Mexico and other subtropical and tropical areas. -J Potential for Increased Production of Existing Export Crops Opportunities exist for Ka'u farmers to participate in established export mar- kets supplied from the Big Island, including coffee, flowers and nursery products, — macadamia nuts, papaya, ginger root, etc. Markets for these exports are large but, in certain cases, it may be necessary to develop the market further in order to sell — additional quantities inasmuch as existing farmers are already supplying the mar- kets. Also, local and foreign competition is strong and growing. O O AGRICULTURE AND RELATED PRODUCTS 2 -41 Regarding coffee, Kona farmers have been successful in selling a quality prod- uct at a premium. price. A large mechanized coffee plantation has been planted on Kaua'i, and smaller farms are planted on Maui and Moloka'i. In spite of this, Kona coffee prices remain high.. ' ' • _I Regarding papaya, production in Puna has been hurt by the ring -spot virus . which may create opportunities to grow papaya on lower - elevation fields in Ka'u. , However, papaya is also being planted on former sugarcane lands along the Hilo- Hamakua coast. Also, a new virus - resistent variety has been developed sug- gests that the ring -spot virus will become less of a problem once this new variety is introduced. On Oahu, Dole has embarked on a plan to become a major producer of J p a paya to supply both the Honolulu market and the export market.i About 1,000 acres will be in production, with an additional 1,000+ acres'being used for the prep- aration cycle. To control the ring -spot virus, papaya fields will be separated from - one another with field's of other crops. . ' Macadamia, nuts continue to command a premium price, but strong competi- , J • tion has developed over; the years. Major suppliers include growers in Australia and in various South American and African countries. Significant marketing 'efforts will be required to absorb increased production. ' v Flower exporters also face strong competition from throughout the world. The J seriousness of the competition is punctuated by the fact that some tropical flowers . -- - from Southeast Asia even undersell locally grown flowers in Hawaii! Potential New Export Markets and Crops • In ' Markets exist on the mainland for a great many speciality crops, as shown in ' _ _ Table 2 -8. Some of these crops may be grown profitably in Ka'u. n The crops which can be shipped to the U.S. mainland, however, are limited by –, the presence of fruit flies. Crops currently approved by the U. S. Department of ' Agriculture for shipment to the contiguous 48 states and Alaska are listed in Tables 2 -9 ancf 2 -10; respectively.J If the fruit irradiation facility is built on the Big Island , as planned, and consumers accept irradiated fruits, then the list of approved crops J J will be much longer.. • Although direct flights between Kona and the U.S. mainland have limited cargo . capacity, they will create new opportunities to sell off - season fruits and vegeta- 1 ` • bles— assuming the fruit -fly problems are addressed. , ,- r_ - .. L_ 3 -42 AGRICULTURE AND RELATED PRODUCTS — TABLE 2 -8. SPECIALTY CROPS IN THE U.S. MAINLAND MARKETS - n FRUITS VEGETABLES — Annatto Green gooseberries Prickly pear Amaranth Apple Guava Pulusan Arrowroot crab Pummelo Arugula — lady Jaboticaba Artichoke, Chinese . Malay Jackfruit Quince, perfumed Asparagus, white star Jujube — sugar Rambutan Beets, gold Atemoya Kavamelon Bell pepper, Mexican Avocado, cocktail Kiwano Salsify Bitter melon ,_ Kumquats Sapodilla Black -eyed peas _ Babaco Shamouti Bok choy - Banana Lavender gem Sharon fruit - Boniato -- burro Lemon, sweet Soursop Broccoli, Chinese mazano Lime, Spanish • red Longan Tomatillo Cabbage, Chinese Black sapote Loquat Cactus leaves Boniato Lychee Ugli fruit Calabaza Breadfruit- Cardoni — Bullocks heart Mamey sapote White sapote Carrettes Mangosteen Celery root Calabaza Melon, Chinese cinnabar ' Celtuce Calamondin Monstera deliciosa Chinese bean ^ Canistel, - Choysum Carambola Orange Cipollines Chayote blood Corn husk Cherry, Barbados Chinese navel Cucumber • Cherimoya Seville Armenian Clementine hot house Coconut Passion fruit Japanese Coquito nut Pear ' lemon Currant Asian pickling — . black red bartlett Chilis red Anaheim Pepino melon arbol — Feijoa Persimmon Armenian wax pepper Fig fuyu California dry v back mission hachiya Fresno -- calimyrna Physalis jalapeno French butter pear Pineapple, quince Grapes, champagne Pomegranate AGRICULTURE AND RELATED PRODUCTS 3 -43 TABLE 2 -8. SPECIALTY CROPS IN THE U.S. MAINLAND MARKETS • (continued) . . . BABY VEGETABLES . Chili (continued) Mushrooms (continued) Artichokes . • Nev Mexico golden mountain oyster Avocados • • pasilla, dry hedgehog . pasilla, fresh hon shimeji i ' Beets -- . 'serrano lobster Black radishes • yellow morel Bok choy oyster . — r paikon . porn pom Carrots ' , . Eggplant, Japanese woodear Celery . Endive, Belgian Corn . .- Okra, Chinese ' . Fave bean Onion _ Eggplant • . Fiddlehead fern apaz Frisee boiler Green onions Maui - Garbanzo beans pearl Haricots verts (green v Garlic, elephant Oyster plant beans) Ginger root - • Gobo root Parsley root Lettuce . Gui choy ' ' Potato, yellow finish • , . Radicchio Pear tomatoes Horseradish Radish, black . . • Rapini Scallopini — . Jicama Ramps Squash ' r Rhubarb Kohlrabi Zucchini ' Salad savoy 1 Le rouge -royal Shallots J Lillyroot Spinach, New Zealand - . _ Lo bok Squash, chayote _ Sunchokes — i Mache Sun -dried tomatoes ' Melange Taro root . — Mushrooms turmeric . , black chanterelle . Source: The Packer. • chanterelle Watercress Vance Publishing Com- pang. Overland Park, Kan- . chicken of the woods • . ' sas. Annual. • Yucca root 3 -44 TGRICULTURE AND RELATED PRODUCT — TABLE 2 -9. PRODUCE APPROVED FOR SHIPMENT FROM HAWAII TO THE U.S. MAINLAND . — Aechmea bracteata (fruit Corn Mahogany fruit Rhubarb — bearing panicle) ' Corn -on- the -cob Malabar spinach Rosemary (leaf, stem) — Allium spp. (bulb) Marigold (flower, head) Alokon (inflorescence) Dandelion Sage (leaf) — Anise (leaf, stem, seed) Dill (leaf, stem, seed) Marjoram (, O ) ut jute ( spp. (leaf, innfloflo y Salu (leaf, stem, in- Arrowhead Dropwort, water florescence) Arrowroot Mint (leaf, stem) Drumstick (leaf, inflores- Mugwort Sausage fruit — Artichoke, globe cence) Mushroom Savory (leaf, stem) Artichoke, Jerusalem Mustard greens Screwpine (leaf) Asiatic pennywort (leaf, Eggplant' T106(b) Sorrel (leaf, stem) Rumex -- stem) Eryngo (leaf) spp. Asparagus Oregano (teat) Origanum Spinach Avocado, T102(a) or T110 Fennel (leaf, stem) vulgate Squash, T106 _, (c 1) and T108(a) Avocado, Sharwil, p. 6.9 Foxhead Palm hearts (stem) peeled Sweet potato, T101(b or trimmed (white to off - Galanga (rhizome) white) Taro (root, shoot, stalk) Bamboo shoots Garden rocket (leaf, stem) Papaya, T103(b) or Tarragon (leaf, stem) Basil (leaf) Garland chrysanthemum T106(b) Thyme (leaf, stem) Bay laurel (leaf, stem) Ginger bracts Parsley Tomato' T106(b) .. Bean sprout, mung, soy Ginger root Pepper' T106(b) Beet Peppermint Turmeric (rhizome) Gow -kee pp mint (leaf, stem) Turnip Borage (leaf, stem) Perilla Broccoli Heckerea umbellata (leaf) Pineapple' T106(b) Water chestnut Brussels sprouts Honewort Pineapple, smooth • Watercress ^ Burdock Honewort, Japanese, cayenne and hybrids with _. Burnet (leaf, stem) Cryptotaenia japonica 50% or more smooth Butterbur cayenne parentage. Yam --1 Houttuynia cordata (leaf, stem) Piper spp. (leaf) except Cabbage Piper beteP Carambola, 1107(1) Jicama Pohole fem (leaf, stem) Carrot Knotweed Athyrium spp. Poreleaf (leaf, stem) Cassava Kudzu Potato Cauliflower — Celery (root, top) Lambsquarter (leaf, stem) Radish (leaf, stem) Chervil (leaf, stem) . Lemon balm (leaf) Radish, Oriental — Chinese amaranth Lemongrass (leaf, stem) — Chinese cabbage Lettuce 2. Other than smooth cay- Chinese chives (leaf, stem) Limnophila gratissima, enne and more smooth with — (leaf, stem) 50% or more smooth Chinese water chestnut ( l ) cayee nne. Source: U.S. Department --. Cilantro (leaf coriander) Lotus root 3. Piper betel (betel pepper of Agriculture, 1996. Coconut (unrestricted) leaf) is prohibited by the FDA since it appears to 1. Prohibit movement if contain poisonous or grown on Oahu. deleterious substances. u • AGRICULTURE AND RELATED PRODUCTS 3 -45 _ TABLE 2 -10. PRODUCE APPROVED FOR SHIPMENT FROM HAWAII TO ALASKA ONLY Banana, green • _ Chayote Chinese pea Cucumber, p. 6.10 Lima bean Long eggplant, p. 6.10 Okra • Onion, green • Pea• Pumpkin , String bean • Tomato, p. 6.10 Watermelon Winged bean Winter melon 3 Yard long bean Zucchini • • • J i J Source: U.S. Department of Agriculture, 1996. 2 -46 O .AGRICULTURE AND RELATED PRODUCTS r Direct flights to Canada also would increase opportunities for exporting pro- – duce. The major advantage of the Canadian market is that there are no restrictions – on shipments due to fruit flies, and the large Asian population presents a market – for "Oriental vegetables." Japan is a more difficult market for Hawai'i growers because of Japan's formid- _ able entry requirements; the high cost of airfreight from Hawaii to Japan; and the _ competition from Okinawa, Taiwan, and other tropical areas in Asia. In spite of these difficulties, fresh papaya and macadamia nuts are exported from Hawai'i to • Japan. Also, Japanese imports. of U.S. agricultural products have been increasing at – a rate of about $1 billion per year, reaching $11.8 billion in 1994. Japan is now the largest importer of U.S. agricultural products. The increased imports by Japan – make up for the declining agricultural production there, which has occurred �. because of high costs, inefficient farms, excessive regulations, and archaic land -use – laws which effectively prevent the transfer of farmland to larger and more efficient farmers. U.S. -to -Japan export "stars" include beef, pork, ice cream, broccoli, aspar- agus, lettuce, carrots, celery, frozen vegetables, cherries, and processed snack foods. Outlook for New Export Crops The many entrepreneurial agricultural efforts occurring now throughout Hawai'i on former plantation lands may lead to one or more major new export – crops over the next 20+ years. The history of agricultural efforts in Hawai'i reveals, – however, that it is quite difficult to develop major new export crops, and it is even more difficult to identify in advance which ones will become the major successes and at what level of magnitude this will occur. For example, over the past 50 years in Hawai'i, numerous export crops have been explored, but for only two diversified crops has the market been developed sufficiently to require more than 3,000 acres: coffee (6,800 acres) and macadamia nuts (20,200 acres). The macadamia nut r industry in Hawaii is no longer expanding rapidly due to competition from over- seas, while uncertainty exists regarding the size of the premium- priced coffee mar- ket. Even though history has shown that the development of major export crops is – difficult, major successes do occur. And the greater the number of entrepreneurial undertakings there are—such as those that are occurring now on former plantation _ lands —the higher the probability that a major new export crop will be identified and developed. - - .o AGRICULTURE AND RELATED PRODUCTS 2-47 The potential of a new export crop and the potential resources required to . r develop it are illustrated in Table 2 -11 based on the following assumptions: (1) the primary markets will be the United States, Canada and Japan; (2) consumption by . .U.S. and Canadian residents will average about 1 pound per person per year (the equivalent of four 'quarter-pound servings consumed over a 4 -month winter, ' — period), and will average 1/2 -pound for Japanese consumers; (3) yields will aver- - age about 20,000 pounds per acre per year; and (4) water requirements will average about 4,000 gallons per acre per day. Under these assumptions, exports of a new crop could reach nearly 200,000 tons per year, and require nearly 20,000 acres of land and nearly 80 mgd of water. . Even though land requirements would be substantial, the acreage is small rela- ' J tive to the supplyof available land. Farmers in growing areas throughout the State 1 would be in competition with one another for such a new export crop. Unless spe- cial agronomic conditions are required, the most likely location for the initial devel- 1 opment of a new crop would be O'ahu given its comparative advantages. B • Tattle 2 -11. ILLUSTRATIVE PRODUCTION AND RESOURCE • .REQUIREMENTS FOR A NEW EXPORT • • CROP GROWN IN HAWAII: 2020 1 . . J United Rem States Canada Japan TOTAL D Projected population, 2020 294,364,000 33,128,000 124,232,000 451,724,000 _ - Per - capita crop consumption (Ibs /yr) 1.0 1.0 0.5 — Potential crop demand (tons) 147,182 16,564 31,058 194,804 • 9 Land requirements'. (acres) 14,718 1,656 3,106 19,480 — • Water requirements (mgd) . 58.9 6.6 , 12.4 77.9 J 1. Based on an average yield of 20,000 pounds per acre 2. Based on water requirements of 4,000 gallons per day. r • • 2-48 O AGRICULTURE AND RELATED PRODUCTS MARKET POTENTIAL FOR OTHER CROPS — Feed Crops Feed Imports — Large volumes of grains and hay are imported to feed Hawaii's dairy cattle, chickens, and other livestock. In 1995, Neighbor Island dairy cows and chickens consumed nearly 47,000 tons of animal feed, most of which was imported. This estimate is based on: (1) 43 million gallons of milk produced from 3,300 cows and a — milk-to-feed ratio of 1.67, and (2) 35.4 million eggs produced from 164,00 layers, where an average of 7.3 pounds of feed were consumed to produce a dozen eggs.I About 60% of the cows and 75% of the layers were on the Big Island.i For Oahu, over 128,000 tons of animal feed were consumed in 1995, based on (1) 99 million gallons of milk from 7,100 cows, and (2) 149.2 million eggs produced from 613,0001ayers.I191 - Hawaii's Experiences with Feed Crops If feed could be grown in Hawaii and priced competitively against mainland imports, it could replace a portion of the large volumes of grains and hay that are now being imported to the State. In an attempt to take advantage of this potential, UH developed a special hybrid feed -corn having tight ears that protect the corn from worms. UH has also conducted research on other feed crops. Test plots of feed corn and other grains in Hawaii have produced high yields. Unfortunately, a number of commercial attempts in Hawaii to grow grains and alfalfa have been unsuccessful thus far. The major problems have been (1) pests, particularly birds that eat grains before they are harvested; (2) humidity that is too high for drying hay properly; and (3) high production costs compared to those of mainland farms. Regarding this last point, alfalfa production in Hawai'i will yield 8 tons per acre but requires as many as eleven cuttings per year; in northern California, which experiences cooler nights and longer summer days, alfalfa fields will yield 7 tons per acre in just three cuttings. _ In the early 1980s, feed corn was grown in Kahuku on the north shore of O'ahu _ to provide green chop for a nearby dairy operation 121' Birds did not eat the corn because it was harvested before the grain hardened. The green chop was placed in O AGRICULTURE AND RELATED PRODUCTS 2 -49 large-sheds to allow, it to, ferment into silage, which was then fed to the cows. The resulting corn silage is considered to be a good feed for dairy cows which•results in — higher milk production .than most other types of dairy feed. But the Kahuku feed- ' corn operation was marginally unprofitable because of (1) low winter yields due to • 0 • seasonal rains and wind; (2) harvesting problems due to winter rains, poor drain- . . • age, and slippery clay soils;' (3) underpayment by the-dairy for the feed corn — because of inaccurate weighing; and (4) high lease rents. ' . In spite of all this, the prospects for growing feed crops have improved -with the . recent closure of the sugar plantations because higher quality lands are now avail- ," • able in the more desirable dryer areas., On Oahu, considerable land is already U being planted in various feed crops (see below). , 0 ' Potential for Feed Crops Grown in Ka'u for the Big Island Market `Assuming that a m ix of corn silage and alfalfa hay is produced in Ka'u to feed 1,000.dairy cows on the Big Island (about half, the dairy market), then about 440 ' . acres of land and about 2.9 mgd of water would be required to grow the feed. . - Annual gross revenues for the feed would amount to about $2.6 million, and, Production would amount to about 10,400 tons.. . . • . This is based on: (1) 12 pounds of alfalfa per cow'per day, a yield of 8 tons of , alfalfa per acre per year, and an average of about 8,000 gallons of water per acre per ' day; (2) 45 pounds of feed corn pet' cow per day to produce corn, silage, a yield of 0 . 50 tons of feed per acre per year, and an average of about 4,000 gallons of water pe L] acre per day; and (3) a price of about $250 per ton for the feed mix. _J . .. . • . . . . . . P o t ential for Feed Crops Grown in Ka'u for the O'ahu Market , ' . . It is unlikely that growing feed corn in Ka'u and shipping it to Oahu would be profitable'inasmuch asfeed corn is _a bulky and heavy crop, which it expert- ' sive to transport. ' • - ' - , Furthermore; O'ahu farmers have planted feed on lands recently released from sugar operations. , In Ewa, which is a dry area, the U.S. Navy in 1997 leased • , 0 about 1,000'acres to ,a farmer to grow feed corn (321 The land is leased 'at.favorable " '. terms: $30 per acre per year, with improvements applied - towards' the lease rent. {� Also, water is available for the cost of pumping from an on -site well; and govern- iJ ment subsidies were provided for water distribution. 0 0 2-50 AGRICULTURE AND RELATED PRODUCTS 0 Also on O'ahu on the north shore, Dole has embarked on a plan to plant consid- erable acreage in feed corn, sorghum and alfalfa.[ Energy Crops Crops can be grown to produce biomass to fuel a boiler, or as feedstock to pro- duce fuels. Examples of the latter include sugarcane and corn used to produce eth- anol. While the potential market for such crops is huge, subsidies generally are required to achieve viable operations. A technological breakthrough and /or much higher energy prices will be required to sustain unsubsidized operation's. The more common practice is to produce biomass as a by- product of some prin- cipal crop. For example, the sugarcane by- product bagasse was burned by Ka'u Agribusiness to fuel the energy plant at its Pahala mill. Although this energy plant L has been sold, an energy plant at the former Hilo Coast Processing Co. remains in operation. As new crops develop in Ka'u (including forestry),'the volume of biom- ass will increase, but it may prove to be too expensive to truck the biomass to Hilo. Crops Grown for Extracts Crops grown to provide extracts are another promising but largely unexplored potential for Hawai'i. Such extracts are used by companies to produce health foods, vitamin and mineral supplements, medicines, cosmetics, etc. In particular, kawa shows considerable promise for Hawai'i in that it is a high - value plant for which the demand appears to be large and growing rapidly, and the plant grows well in Hawali. Furthermore, some varieties grow well in certain parts'of Ka'u. The extract from the root and stump of the kava plant is being sold successfully by a great many herbal companies as a "natural" herbal remedy for anxiety. Also, at Hakalau, 13 miles north of Hilo, C. Brewer is constructing a modern extraction factory which will be only the second of its kind in the world. Plants to be processed include kawa, the "seconds" from papaya and ginger, and pepper. This operation will offer Big Island farmers an entirely new market for a number of existing and new crops. L J _ o o . .. AGRICULTURE AND RELATED PRODUCTS 2 -51 r J EXISTING AND PLANNED CROPS IN KA'U 1-1 . , i . The crops currently being grown in Ka'u, or which are being planted or will • soon -be planted, are discussed below. For the most -part, plans for crops to replant • 9 the former sugarcane lands are only partially developed by the major landowners. r Macadamia Nuts - Background ' - n, 'Through its subsidiary, Mauna Loa Macadamia Nut Corporation (Mauna Loa . • —, Mac Nuts), C. Brewer helped pioneer the development of the world's macadamia . nut industry. The effort spanned decades and involved the development of culti- - vation practices, harvesting techniques, and new nut varieties that would grow . U well in Hawai'i. The effort also required extensive market development for this • 9 premium- quality nut. Mauna Loa Mac Nuts is now the world's largest grower, processor and marketer of macadamia nuts, with sales amounting to about $100 B million per year.« " . Most of Hawaii's macadamia nut orchards were planted on the Big Island, fl ' including ones in Ka'u on fields that had been converted from sugarcane product tion. The yields from these- orchards are among the highest in the world. C. Brewer's profits were derived from selling some orchards at attractive prices, . combined with contract management of the orchards, processing the nuts and mar - keting,them.J Before changes were made in the Federal tax code in 1986, Hawaii 3 macadamia nut farms offered an attractive investment for high: income investors because they provided an opportunity for favorable tax write -offs. . fl In the early years, international competition in selling macadamia nuts was • weak because Hawai'i growers pioneered market development and because the tree takes about 8 years before it bears a commercial harvest of nuts. Eventually, however, the high prices received for the nuts attracted competition from Australia, . Guatemala, Costa Rica, Brazil, South Africa, Kenya, China and other countries. . 9 . By the end of the 1980s, the new international competition depressed nut prices . and slowed expansion of Hawaii's macadamia nut industry. But, with the closure 13 of the sugarcane plantations, additional orchards are being planted in Hawaii, and new markets are being developed to absorb the production, including markets in • I Japan and China. In late 1996, Mauna Loa Mac Nuts signed ari agreement with - -J China International Trust and Investment Corporation to distribute and market macadamia nuts to Northern China, a market of about 300 million people.J - I9 0 0 2-52 AGRICULTURE AND RELATED PRODUCTS Cultivation, Yields and Revenues A native of Australia, the macadamia tree grows well under limited agronomic conditions. It grows in subtropical areas having no frost, no heavy winds, about 40 to 60 inches of rain per year, and temperatures in the 60 °s Fahrenheit to induce flowering. In order to provide water during droughts, macadamia nut fields in Ka'u generally are irrigated. n The plant cycle depends on the variety of the tree and its location. Typically, the tree bears fruit in year 7, bears a commercial harvest in year 8 or 9, reaches its prime at about year 15, and continues to produce until about year 45 to 50. Mature nuts are allowed to fall to the ground and can be harvested by a mechanical sweeper. Mature trees in Ka'u can yield about 6,000 to 7,000 pounds of nuts per acre per year, among the highest yields in the world.J At a farm value of about 50 to 70 3 cents per pound, gross returns are on the order of about $4,000 per acre per year. After the nuts are shelled, roasted, possibly salted or coated with chocolate or some (� other covering, and packed in an attractive can or jar, they sell for substantially I CJ more. Acreages in Macadamia Nuts By the mid- 1990s, about 5,300 gross acres of macadamia nuts had been planted in Ka'u, for a net of about 3,600 acres in trees.I Most of the orchards surround Pahala, and are managed by Mauna Loa Mac Nuts. 9 Orchards also are located on various farms in Wai'ohinu, in the upper South Point Road area, along Kama'oa Road and in nearby areas of the Belt Road. A number of these independent growers truck their nuts to South Kona to be processed by MacFarms of Hawai'i, which expanded its processing facilities by 25% '(`} in 1997. New macadamia nut orchards will add about 800 acres to the inventory in Ka'u, with about 450 acres being in Pahala and 350 acres in the upper South Point Road area.I With the new plantings, macadamia nut orchards in Ka'u will total (-- about 6,100 acres. With the demise of sugar, macadamia nuts are now the dominant crop in Ka'u, covering far more land than other crops. 3 2 0 0 AGRICULTURE AND RELATED PRODUCTS 2 -53 D Employment - . J The macadamia nut industry also provides the most agricultural employment . in Ka'u. In 1997, Mauna Loa Mac Nuts provided about 240 jobs in Ka'u, including a • full -time, intermittent and seasonal workers during the 10 -month harvesting peri- od. This employment figure reflects the fact that fields are laid out so as to allow , — mechanized harvesters that sweep fallen nuts from the ground. - •.. - Additional jobs in the macadamia nut industry are provided by other growers in-the District. Also, an estimated 40 regular workers and 220 seasonal workers liv- ing in Ka'u commute to MacFarms of Hawaii located in South Kona [141 To help its employees, MacFarms provides commuter bus service from Pahala. 0 New macadamia nut orchards are expected to add about 30 new jobs in Ka'u once the trees reach maturity. Support for Research In terms of farm value —which excludes the value added from process ing— macadamia nuts are now Hawaii's fourth largest export crop (see Table 2 -7). r1 However, support for research is needed if this important industry is to remain competitive with overseas growers. One of Hawaii's biggest competitors isAustra- l' lia which is investing heavily in macadamia nut research: about $1.5 million per year, of which half comes from the industry and half from the Australian govern- ment.1141 • L . I- Iawai'i growers need this support for research to: (1) help develop new variet- ies that are hardier and produce higher yields, (2) improve farming practices, and 9 (3) control pests. A particular problem for wet areas in Hawai'i is a disease called Macadamia Quick Decline, thought to be a fungus, which spreads quickly and can 0 kill an older, weak macadamia tree within weeks.� Also, the tropical nut bore is a �} problem in some areas of Kona. This insect bores into nuts left on the ground too th long before harvesting. J The recent retirement of a respected macadamia nut researcher at the UH Col- . lege of Tropical Agriculture and Human Resources has left a gap in research sup - port for the industry which should be filled. A positive new development comes from an inventor in Ka'u who researched, developed, and patented a macadamia nut cracker based on a new and innovative approach. Advantages include a much higher recovery rate of whole nut kernels, J . 1 . a 0 2 -54 AGRICULTURE AND RELATED PRODUCTS and lower capital and operating costs. A portion of the cost savings is due to the fact that the cracker does not require the nuts to be sorted or dried. Coffee Coffee Plantings in Ka'u Coffee is well on its way to becoming a significant crop in Ka'u, and possibly — the second largest crop in the District. Existing and planned fields total about 700 acres, and additional plantings are possib1e. At 700 acres, the coffee industry in Ka'u will be about half the size of the industry in North and South Kona. In Wood Valley, three growers farm about 60 acres of coffee. Above Pahala, C. Brewer has leased 180 acres to an experienced coffee farmer, and an additional 9 300 acres are proposed. - 131 Another experienced grower is cultivating about 20+ acres and plans to expand to about 60 acres. These farmers grow premium - grade coffee and have established relationships with buyers in Kona, the U.S. main- JJ land, Japan and elsewhere. -. In upper Moa'ula above Pahala, C. Brewer leased 18 parcels of about 5 acres — each to former sugarcane workers for a period of 15 years, with the first 5 years rent- free. Coffee has been planted on most of the land, interspersed with dry - land taro to provide a short -term return. For the most part, these workers were for- merly employed as mill workers and heavy- equipment operators, and had little or no experience with farming. They are being helped by the experienced coffee growers. Also, a coffee cooperative has been formed as a vehicle to negotiate leases, obtain water, obtain insurance, share information, reduce costs, lobby, etc. To help with the coffee ventures, funds have been provided by the RETA -H program to help finance or reimburse a portion of the approximate $2,000 - per -acre cost to clear land, purchase seedlings and supplies, and plant the land.113,151 fl Coffee Yields and Farm Revenues Coffee orchards in Ka'u are being planted at elevations of 1,500 feet to 2,000 feet in areas which are regarded as being highly favorable for coffee growing. Once the trees reach maturity, three and possibly four rounds per year of harvesting are anticipated, versus one or two rounds in Kona, depending upon elevation. At about 500 trees per acre and over 20 pounds per tree, yields in Ka'u are expected to 0 exceed 10,000 pounds of coffee cherries per acre. 0 0 0 AGRICULTURE AND RELATED PRODUCTS 2 -55 G Like Kona coffee, coffee grown in Ka'u is expected to be a premium grade and '-' therefore to command corresponding prices. - Once the coffee trees mature, farm revenues are expected to exceed $10,000 per r- acre per year. 1 _ . - ,--, Harvesting, Processing and Added Value J Coffee trees in Hawai'i are generally harvested from late summer to early winter, with the "cherries" being hand - picked in hilly areas, or mechanically har- Cl vested on the flatter fields. In recent years, high- quality red cherries have had a value of Si or more per pound.I 9 9 A pulping machine pulps the cherries to remove the red and green fleshy pulp, yielding the coffee bean.It The beans are then allowed to ferment for about 12 f hours, after which they are washed and then dried to produce "parchment," which (j has a value of about $5 or more per pound. Next, a hulling machine removes the parchment to produce green beans which weigh about 20 %' less than the parch- ment. The green beans are graded by the buyer, who pays $7 or more per pound, depending upon quality.. A coffee roaster roasts the green beans until they become G shiny, deep -brown beans; these are then valued at about $14 to $30 per pound, depending upon their grade. The last step is the grinding process, where the 1 brown beans are ground into coffee. The various steps in processing coffee not only increase the value of the coffee, 1 but also reduce both weight and shipping costs proportionally. To take advantage of the value added in processing coffee, two mills for pro- f- ducing green coffee beans are being pursued for Ka'u. A mill costs from $50,000 L to $100,000, plus the cost of the land and the building to house it. One Ka'u entre- • preneur has purchased a coffee mill and plans to install it on family -owned land u near the coffee field's. Another Ka'u coffee organization is exploring the possibility of purchasing and installing a mill, but the site for it, the form -of ownership, and the financing are yet to be determined. The need and timing for the second coffee ` mill remain to be evaluated. , Irrigation Water Coffee growers rely on afternoon .rain showers to water their orchards. But in most areas, supplemental irrigation water is needed for the occasional drought. A -1 water project to support coffee growers is discussed below. J . 0 2 -56 AGRICULTURE AND RELATED PRODUCTS Employment Off - season, coffee orchards require 7 or 8 workers per 100 acres to prune the trees and maintain the orchards.E During the harvesting of hand - picked fields, employment increases to about 20 pickers per 100 acres. Mechanical harvesting on —' the more gently sloping fields requires fewer workers —about 10 workers per 100 acres. Assuming that at least 600 new acres of coffee will be planted in Ka'u and assuming that the coffee will be hand - picked, new employment will amount to about 45 jobs in the off - season and about 120 jobs during harvest. A coffee mill would add a few additional jobs. Coffee pickers earn about $30 to $40 per 132 -pound bag of cherries, or about 1 $75 to $200 or more per day.' Fruit Trees Citrus Ka'u is known throughout the State for its oranges for two reasons. First, most Hawai'i -grown oranges are known to come from Ka'u. Second, the Ka'u orange is recognized as a premium - quality, full- flavored and sweet orange. The fruit is one of the few crops in Hawai'i where quality is associated with a specific region —the others being Kona coffee and Maui onions. Ka'u oranges are grown on a farm of about 150 acres which is located off the • upper South Point Road below the Belt Road. The farmer uses no chemicals, dyes or waxes, and the oranges are hand - picked by a crew of about 20 employees during the November -to -April season. Because of the warm winter temperatures 0 in Hawai'i, the skins of Ka'u oranges are thinner than those from California and Florida. Also, the skin tends to be more mottled and partially greenish rather than the consistently bright orange of the imports — mainland oranges are artificially enhanced to a bright orange color in order to add to their appeal. L The Ka'u orange producer credits part of his success to delivering consistent, high - quality fruit when promised." However, no new plantings of oranges are — planned because the fruit is quite difficult to grow. Problems include wind, pests, an inadequate supply of irrigation water during droughts, and the lack of an exten- — sion agent skilled in citrus. C v ' O AGRICULTURE AND RELATED PRODUCTS 2 -57 Ka'u oranges were explored and test - marketed by C. Brewer, but commercial , 0 production did not proceed . , . About 75 acres of other types of citrus may be added in Ka'u, including such c fruits as as seedless tangerines, lemons and /or limes. Additional . would be on the order of about 10 jobs. Also, a possible processing plant to produce juices would increase /revenues and add jobs1131 - Water and other infrastructure problems are discussed below. 0 Papaya 9 Papaya cultivation is possible on lower - elevation fields in Pahala, proyided that water is available. Papaya producers are looking for about 2,000 acres of suitable j farmland to replace fields lost to the ring -spot virus in Puna, and to allow an • 9 , increase in production: This, virus currently is not a problem in Pahala because a • - 0 . community -wide effort was successful in eliminating the.virus. Also, C. Brewer - • has two test plots below the mill planted in papaya. F • • However, lands are also available in Hamakua, and new competition is coming - L from Dole on Oahu :. This company plans to have 1,000 acres in production on the C - former Waialua Sugar Co: sugarcane lands, with an additional 1,000+ acres being . • used for the preparation cycle. a . Mangoes • • • , ' 'Since the early 1990s, C. Brewer has explored producing mangoes commercially ' L on lands below Pahala. About 10 acres have been planted to test various varlet- ies of mangoes to find an attractive variety that will ripen in the off - season winter # • r l months. ,If plans call for expanding to about 100 acres for commercial operations. Additional employment would amount to about a dozen -jobs, based .,on about 1 job per 7 acres. • - , Other Fruits Small volumes of 'other fruits are grown commercially in Ka'u, including 1 0 1 bananas, guava, persimmons, atemoya and cherimoya. Guava is grown on , • U about7 acres in Wood Valley. r 0 2-58 AGRICULTURE AND RELATED PRODUCTS Value -Added Products Fruit production lends itself to a number of value -added activities, including 3 fresh - chilled fruit, canned fruit, jams, jellies, juices, purees, flavorings, etc.. In some cases, the fruit will be grown primarily for the resulting value -added product. In n other cases, the fruit will be grown for the fresh market, with any excess fruit pro- U duction and seconds being processed so as to salvage value from what would oth- erwise become waste. Production of jams and jellies is proposed under the Ka'u Entrepreneurial Youth (KEY) Program, with marketing through the "Food from the 'Hood" pro- gram based in California.E A recipe contest was held in 1997, and production is to begin in 1998 using locally grown fruits such as guava, lilikoi, mango and pineap- ple. Marketing will be part of the "Food from the 'Hood" advertising budget, and shelf space has been donated by major retailers which will provide access to about ry 6,000 grocery stores across the U.S. Marketing is planned for Europe in 1999 and for Japan in 2000. A marketing study, which was not reviewed by the consultant, indicates sales averaging half a case per month per store, with 12 -oz jars selling for $3.95 each.I This translates into annual production of about 36,000 cases, 432,000 jars, and 324,000 pounds of jams and jellies. Revenues would amount to about $1.7 million per year, with profits of about $250,000 based on 15% of revenues. Profits will be used to fund scholarships. Land requirements for the fruit would amount to about 16 acres, based on about 1 pound of fresh fruit yielding about 1 pound of jam, with an average crop yield of about 20,000 pounds of fruit per acre. Bottling is to be done in the off -hours by a company in Hilo until volume exceeds the company's capacity. In the longer term, a bottling plant is planned for Ka'u at an estimated cost of about $250,000. It would employ about 6 people. 1 Cocoa u Cocoa is a promising new crop which has been under development on the Big Island since the late 1980s.I Through research and cross - breeding, Hawaiian Vin - tage Chocolate has developed a unique premium - quality Hawaiian cocoa bean, making it one of only four varieties of cocoa beans in the world. El 0 v 0 AGRICULTURE AND RELATED PRODUCTS 2 -59 About 250,000 cacao trees have been planted on the east side of the Big Island which, because of the agronomic conditions there, produce high yields of cocoa beans.I After harvesting, the beans are fermented in Hawai'i, then shipped to San 0 Francisco where they are roasted, shelled, and ground to produce chocolate. Hawaiian Vintage Chocolate is considering planting about.120 acres of cacao , trees in a high - rainfall area near Wood Va11ey.J If low -cost irrigation water were • available in Ka'u, then a few hundred acres could be planted in cacao trees, prefera- ' bly at lower elevations in areas that are better suited for cacao trees because of the 0 sunnier conditions. • . Hawaiian"Vintage Chocolate.invests the capital to clear land, plant the cacao , 0 0 - trees, and nurture them for about 2 years until they begin to produce cocoa beans.I Orchard plots of 5 or 10 acres each are then turned over to independent farmers who take care of the trees and sell their harvests to Hawaiian Vintage Chocolate. Mature trees provide a yield of about 4,000 pounds per acre per year r^ valued at $2 per pound,. with a net return to farmers of about $6,000 to $7,000 per .J acre per year. , . ' A few hundred acres of cacao trees could employ approximately 30 farm fami- y lies. r Vegetables and Melons.. Wood Valley, Pahala and Na'alehu ' • n 1 u Before the Ka' Ag sugar operations were closed down, only a few farmers in V Wood Valley and Na'alehu grew vegetable crops commercially, including taro, Q avocado, ginger root, broccoli, green beans, and sweet corn.J Considerable expansion of vegetable farming is now underway on former sug- arcane lands.. As mentioned above, some of the coffee farmers grow taro between 0 their coffee trees as a short -term crop. Between Pahala and Wood Valley, a demonstration vegetable farm has been . established, including 11 lots of % acre each.1 Also, C. Brewer provided 5 -acre lots for a period of 5 years, the first 6 months of which are at no rent. A temporary . water line was installed to irrigate the fields. Land is being cleared, and farmers have planted such crops as string beans, long beans, bok choi, cabbage, canteloupe, , O nambas, Chinese' peas, sweet potatoes, pumpkin, radish, squash and zucchini. However, many of the farmers lack farming experience and such basic equipment as shovels and tillers. J . 0 0 2 -60 AGRICULTURE AND RELATED PRODUCTS 0 For some farmers, the planting of new crops is being partially subsidized by the RETA -H program. Farmers associated with Huliau 0 Ka'u, Inc., a non - profit organization, have made modest requests for financial assistance for farm training, the purchase of farm supplies and equipment, installation of irrigation lines, maintenance of a greenhouse, the purchase of items needed to operate the weekly Ka'u Farmers' Market in Pahala, liability insurance, and business support services. Some new farmers in Ka'u will benefit from being affiliated with an experi- enced and knowledgable farmer who owns and operates a fertilizer supply com- pany in Hilo, and who received substantial matching funding from the RETA -H program to serve as a "coordinating entrepreneur" to help establish farm opera- tions in Ka'u. 113,401 This farmer is working with some of the new farmers in Pahala to: (1) identify which crops to grow based on his knowledge of crops, agronomic (� and seasonal conditions in Ka'u, and on his on -going market research of seasonal (� production trends, import trends, and produce prices to identify periods when sup- -, plies are short and prices higher; (2) advise on how to conduct variety trials to iden- tify the species of plants for Ka'u and how best to grow the plants; (3) clear the land for planting; (4) provide seeds, fertilizer, pesticides if needed, and access to equip- ff ment; (5) advise on when and how to plant, how to nurture plants and how to solve problems which may arise; and (6) market the resulting produce to buyers on the Big Island, O'ahu and overseas. In exchange for his services, this farmer expects to use a portion of the land for the first crop, and expects a share of the E gross revenues. For beginning farmers, this kind of a service can be invaluable and, if it is suc- cessful, may give them an advantage over other beginning farmers who are farm- — ing former sugarcane lands elsewhere in Hawai'i. Most new farmers do not know which crops to plant, when to plant, how to farm, or how to solve pest problems and other problems; nor do they know how to market the products of their labor. The expectation is that about 10% of the new farmers will stick with the hard work of farming and become successfu1. The vision is eventually that 12 to 15 farm operations will cultivate about 600 acres at different elevations to grow pro- duce crops. Assuming that water is available to irrigate crops, such a vision is 'consistent with potential markets. 0 17 0 , AND RELATED PRODU S 2-61 . Upper South Point Road Area , j0 Watermelons have been considered for the upper South Point Road area. The (� area is sunny and dry, and watermelons have been grown there in the past 113 The watermelons would be grown for the Big Island market following the example of successful watermelon operations on O'ahu for the local market. A watermelon operation would require access to low -cost irrigation water. n Ocean View . , Eve though the agricultural lots in Ocean View are carved out of 'a lava, and lack topsoil and water, a number of vegetable farms operate in the areai O 0 A small farmer has established a lettuce farm to supply luxury hotels and qual -. • en ity restaurants in North Kona and South Kohala with about two dozen varieties of premium - quality lettuce, three varieties of cherry tomatoes, the herb French tarra- U gon, and baby spinach. They also ship to hotels and restaurants on O'ahu. Located at an elevation of about 2,800 feet, the farm is in an area that has a con- ~ sistent microclimate that is well- suited for lettuce and is free of most pests [131 To 0 establish the operation, the farmer had to truck in material to produce topsoil., A greenhouse is envisioned to improve consistency and protect the lettuce from the ' '-- occasional downpour. This farmer has helped establish other farmers in the area who grow specified 0 varieties of lettuce and tomatoes which he then markets. Other farmers in Ocean View grow lettuce, tomatoes and green beans. A number of other attempts have -, been made to establish vegetable farms in Ocean View, but they were unsuccessful. • -- Vegetable farming in Ocean View could be expanded somewhat to supply the premium market on Maui and O'ahu in competition with growers elsewhere on the n . l J Big Island and Maui. A major problem for farmers in Ocean View is the lack of water to irrigate _, crops.112,131 " Many farmers must have their water delivered weekly at a cost of about $140 . per truckload ($25 to $30 per 1,000 gallons), or haul it themselves from D Na'alehu or Wai ohinu -a round -trip distance of up to 30 miles or more. During droughts, deliveries can be delayed by weeks, which can result in the loss of an entire crop. H j '. 0 2-62 O AGRICULTURE AND RELATED PRODU Employment a Assuming that an additional 700 acres are used to grow vegetables and melons in Ka'u to supply markets on the Big Island, O'ahu and, to a limited extent, the U.S. mainland and, on average, 60% is farmed during the year (40% is fallowed), then 3 the resulting increase in employment could amount to about 50 jobs. This is based on about 1 job per 8 acres of farmed land. For vegetables and melons, this level of activity in Ka'u would be ambitious but — achievable given the size of the markets. The processing of some crops to add value would provide additional employ- ment. Flowers and Nursery Products Wood Valley Ka'u is the home of a number of flower and nursery farms. In Wood Valley, .� about a half -dozen farmers work about 15 acres, including a half -acre green - house. Because of the microclimate, farmers in the Valley are able to grow cer- tain temperate - climate flowers to supply the Big Island and Honolulu markets in 9 competition with imports from the U.S. mainland and South America. These flow- ers include gladiolas, sunflowers, asters, roses, carnations, chrysanthemums and ornamentals. Nursery plants are also grown in the valley. Two savings result from growing temperate - climate flowers in Hawaii for the local market compared to importing them: overseas suppliers must pay costs to airfreight flowers to Hawai'i, and suppliers in South America must pay tariffs on — flowers sold in the United States. The existing irrigation line is inadequate to supply sufficient water during n droughts. t J Na'alehu A few flower and nursery farms are located in Na'alehu. Products include: anthuriums, orchids, exotic flowers, foliage, dwarf coconut, fruit trees, vegetable plants, and seedlings for various trees.i 0 Q • • AGRICULTURE AND RELATED PRODUCTS 2 -63 • n J Ocean View [ 1 About a half -dozen flower and nursery farms are located in Ocean View, � i including a nursery, a cut -flower farm, and two protea farms which cover a total of about 14 acres." • . A supply of water is needed to maintain operations during droughts. The lack ' of water caused the closure of a third protea farm in Ocean View. D Employment - The flower and nursery farms in Ka'u provide an estimated 30 to 40 jobs.I n Water projects would help preserve these jobs during droughts; and may possi- bly allow an expansion of operations and a modest increase in employment. ' a Appropriate water projects are discussed below. • D Feed Corn A major feed -corn operation of a few thousand acres was explored for Ka'u in 1997, but the project did not proceed." 0 . Also, about 200 acres of land near Na'alehu could be planted in feed corn for silage to be fed to dairy cows. Plantings would depend upon the development of the Waiabuta Dairy which, in turn, depends upon a State milk -quota allocation for milk shipment to Oahu (see Chapter 4). ' • Energy Crops - [ In the mid- 1990s, C. Brewer, other major owners of agricultural. land in Ka'u, and Hawaii Electric Light Company, Inc. (HELCO) explored the possibility of con - 9 verting most of the former sugar plantation into an energy plantation.i Corn was to be grown as the feed stock in producing ethanol and generating electrical energy. However, the project did not proceed. n - Tea U In the early 1990s, C. Brewer explored the possibility•of growing tea, but com- 9 mercial planting did not proceed."'" U e • I — • 0 0 AGRICULTURE AND RELATED PRODUC E. Marijuana and Hemp In addition to the previously mentioned crops, marijuana is cultivated illegally 0 in Ka'u as well as in other areas of the Big Island and the State. The extent of the activity and its overall impact on the economy is large but cannot be quantified 3 accurately. It is known, however, that in 1994, the marijuana plants that were located and destroyed by authorities had an estimated value of $671 million for the State as a whole, and $423 million for the Big Island (63% of the State total). A _ rule of thumb cited by law enforcement officials at the national level is that only 10% to 15% of the drug flow is discovered and seized.I These values exceeded the value of all legal agricultural activities in Hawai'i in the same year: $491 million for the State as a whole, and $145 million for the Big r, Island, including the value of all sugarcane, pineapples, vegetables, melons, fruits, coffee, macadamia nuts, flowers and nursery products, milk, eggs, cattle, hogs, (� chickens, etc. (1 Some legal farming activities probably exist only as a result of their having some connection with marijuana activities. The legal activities maybe used to pro- vide "fronts" for illegal operations to explain, falsely, the source of income, pur- chases of farm supplies, and off - island shipments. The illegal income from mari- juana can also be "laundered" by recording it as the sale of legal farm produce. r Furthermore, profits from marijuana may provide the seed capital for a farm, and /or may help subsidize legal agricultural activities. Authorities continue to discover and close down both small and sophisticated Q marijuana operations in Ka'u and elsewhere on the Big Island and throughout the State. n Hemp, the bamboo -like non - intoxicating relative of marijuana, is harvested worldwide for its durable fibers and oil. But its close biological relationship to marijuana and its trace amounts of the psychoactive chemical THC prompted the U.S. government to outlaw its cultivation in 1972 except under strict research con - ditions.j If marijuana and /or hemp were to be legalized throughout the U.S., increased production and competition would combine to lower the price and undermine the profitability of the crop. Marijuana is a hardy plant which can be grown in many areas, including areas having lower production costs and which are closer to con- 3 sumer markets. [ 3 `/ - O AGRICULTURE AND RELATED PRODUCTS - 2 -65 Summary Outlook for Agriculture 0 0 , Role of Key Entrepreneurs Most of the agricultural development in Ka'u is being driven by a relatively 1 small number of key farmers /entrepreneurs, where generally just one or two pri- • mary entrepreneurs are associated with each of the crops discussed above. To a -- great extent, their successes will determine the success of agricultural development — in Ka'u in that they provide models of what works to other farmers. . This is likely to continue into the future, although additional farmers / 9 entrepreneurs may provide even more models of profitable crops. Land Requirements Assuming that agricultural development occurs as described above for macad- 9 amia nuts, coffee, fruit trees, cocoa, and vegetable and melon crops, land require- • ments for new plantings will be significant:, about 2,500 acres total by 2010, the n majority of which willbe on former sugarcane land. ' ' Li However, ample land will remain• available in Ka'u to accommodate a great J . • . many additional crops. and farming approaches, ranging from small farms to large ' mechanized ones. If crops cannot be identified for the remaining fallow sugarcane O • lands, then these lands are likely to be placed in comparatively. lower -value uses such as forestry and /or cattle grazing. 0 - Water Requirements To realize the agricultural potential described above, peak water requirements [ . would be on the order of 9 mgd, based on 4,000 gallons per acre per day, excluding fallowed land. . - . n A number of water projects will be required to realize the agricultural potential (see below): ' u Employment . Consistent with the described development of the listed crops; agricultural x (� • employment during peak operations could reach about 250, additional' workers by 2010, including entrepreneurial farmers and seasonal hires. Gross payroll would 0 be on the' order of about $6.3 million per year, based on an average of about $25,000 0 per job, excluding benefits. • . * ' • O 0 2 -66 AGRICULTURE AND RELATED PRODUCTS r Gross Revenues _ Also consistent with the described development of the listed crops, gross reve- • nues would be on the order of $18 million per year based on an average of $4,000 per acre per year for macadamia nuts, $8,000 per acre per year for for cocoa, and $10,000 per acre per year for other crops, excluding fallowed land. (� Interpretations of Projected Agricultural Development C The above figures should not be viewed as precise projections of future agricul- tural development in Ka'u. Rather, they are meant to convey an order -of- magni- 3 tude estimate of possible agricultural development, based on known intentions of farmers /entrepreneurs which are judged to be consistent with market potentials. j � The figures can be used in evaluating related agricultural support facilities and U services (e.g., water projects, processing facilities, etc.). Long -Term Evolution of Agriculture The above potential may require the greater part of a decade to realize. Over the long -term, however, agriculture in Ka'u is likely to undergo many changes, many of which cannot be foreseen at this time. This evolution will be based upon: the land practices of the major landowners (both State and private), water develop- ments in the District which will expand the potential, the development of process- ing and support facilities which will also expand the potential, the crops and prod- ucts which prove to be profitable, and those farmers who prove to be successful. r. As agriculture develops, a number of false starts and failures must be expected before successful crops and practices are identified. SUPPORT FACILITIES AND SERVICES The Ka'u farmers would benefit greatly from a variety of support facilities and Il services which would contribute to the success of diversified agriculture in the Dis- trict, add value to certain products, and contribute additional jobs. Possible sup- port facilities and services are discussed below. Processing and Support Facilities Subject to technical studies to determine market need and feasibility, the D County is seeking approximately $800,000 to fund the "Ka'u Food Processing and Visitor Facility" to provide processing and other facilities to support farmers in El Q G O 0 AGRICULTURE AND RELATED PRODUCTS 2 • Ka'u. Potential near- and long -term projects are discussed below. Related tourism J components are discussed on pages 7 -28 and 7 -29 in the section on "Pahala." I- . Near -Term In the near term, farmers will need: (1) one or more designated areas to wash -- their crops, along with the necessary water; (2) secure space in warehouses to store J supplies safely; and (3) one or more garages to maintain farm equipment. One or more coffee mills would add value to the coffee that is being planted on L the nearly 700 acres in Ka'u.J As discussed previously, a mill costs $50,000 to $100,000, plus the cost of the land and the building to house the mill. Coffee dyers 9 and roasters will also be needed. Introduction• of the recently developed macadamia nutcracker would help 0 farmers in the macadamia nut industry by increasing the recovery rate of whole nut kernels while decreasing operating costs. Finally, a certified kitchen could serve as an incubator for entrepreneurs who 0 wish to develop businesses based on locally grown fruits and vegetables (see Chap- ter 9). Long -Term - D Depending upon which crops prove to be successful, additional support facili- t ies will eventually be needed, possibly including: p — processing plants to cut and puree fruit, extract juice, dry or dehydrate (J . products, process taro into poi and /or chips, etc.; O =a bottling plan for jams, jellies, etc. (about $250,000); — packing plants to box items for local sale and for shipment overseas; — a vacuum cooling plant and refrigerated storage to extend the shelf -lives of J . . fruits;.vegetables, flowers, etc. (about $1 million); and — a facility to eradicate fruit flies in crops that are bound for the U.S. main - . 11 -•q land or Japan (this could be used by farmers who choose not to use the irra- J - diction plant planned for Hilo, possibly because Japan is unlikely to buy irradiated fruit). 9 The development of these facilities should be postponed until it is clear which crops will be successful, in what volumes, and how soon; what specific facilities will be needed for the various crops, markets, and packaging requirements; and what will be the appropriate sizes of the facilities. 0 . I 0 0 2 -68 AGRICULTURE AND RELATED PRODUCTS In the meantime, facilities in Hilo and Kona generally will have sufficient capacity to handle new production from Ka'u. In some cases, it will be more eco- nomical to continue to use existing facilities in Hilo or Kona if excess capacity is available, or to locate new facilities in Hilo or Kona if economies of scale can be r? achieved by combining production with that from other farm areas (e.g., macad- -- amia nut processing). Support Services Commercial Support Services As diversified agriculture develops in Ka'u, opportunities will increase for busi- nesses to supply a variety of support services to farmers, including: s_ —land clearing services; — installation and repair of irrigation systems; 9 — maintenance and repair of tractors, farm trucks and related equipment; — rental of specialized farm equipment; L —sale of fertilizers and pesticides to farmers; — marketing services to sell fruits, vegetables, flowers, etc. (see below for additional marketing support); and — trucking services to transport fruits, vegetables, and flowers to market; etc. Marketing Support A number of organizations are helping new farmers in Ka'u with marketing their crops. As previously discussed, new coffee growers are being helped by experienced Ka'u coffee growers.Ii New vegetable and melon farmers are being 9 helped by an experienced farmer from Hilo who is also providing incubator ser- vices to new farmers. Also, KTA Super Stores features locally grown food prod- D ucts, pays the cost of all labels for its Mountain Apple Brand, and does not charge vendors for shelf space.I In addition, the community-based non - profit organization Huliau 0 Ka'u has sought modest funding to sponsor the weekly Ka'u Farmers' Market in Pahala to sell locally grown produce.I This organization also helps with farm and business training for new farmers. With funding from the State, the community -based non- profit organization Na'alehu Main Street established in early 1998 the Vegenet Agricultural Marketing 9 • RICULTURE AND RELATED PRODUCT 2 -69 Project (Vegenet), which uses web pages on the Internet to market farm products ( (nuts, coffee, flowers, fruits, vegetables, etc.), farm supplies (fertilizer, soil amend- ments, etc.), and farm services (trucking, land clearing, pest treatment) to 0 throughout the Big Island and beyond.I Users can post, information daily or obtain information about any items they wish to sell or purchase, possibly the vol- umes to be sold or purchased, the asking prices, and contact information. J For the most part, farm products, supplies and services are traded based on established relationships which have been built on trust and /or which allow inspection of the quality of the goods before purchase. Vegenet will be an interest- ing experiment to see if marketing these items via the internet is effective. It may (� be most effective with overseas sales of tropical flowers and tropical fruit baskets, U or for business people who are new to Ka'u and wish to learn quickly what goods and services are available. r Transportation Services for New Farmers Some beginning farmers have difficulty reaching their fields because . they do not own or have access to 4- wheel -drive vehicles which are better able to negotiate the rutted access. roads.I To help new farmers get to their fields, one approach would be to provide a 4- o wheel -drive vehicle to an appropriate organization who would, in turn, provide the necessary transportation services. Such an appropriate organization may be the U Pahala office of the Hawaii County Economic Opportunity Council. This office already works with farmers, and also provides transportation services to the handi- capped living in Ka'u. The estimated cost of a new 4- wheel -drive van is about �J $40,000 while a used vehicle would be less, depending upon its age and condition. Another approach would be to contract out transportation services to a farmer L-. or some other party in the community who owns a 4- wheel -drive vehicle. In either case, nominal fees could be charged to the users to prevent abuse of the service. O Research and Extension Support As discussed above, the macadamia nut industry would benefit from research' D support to improve farming practices, control pests, and help develop new nut varieties that are hardier and produce higher yields.I 9 • 2-70 O AGRICULTURE AND RELATED PRODUCTS Also, citrus growers would benefit from having the expertise of an extension agent skilled in cultivating citrus. r+ Location of Support Facilities and Services r-, Pahala is the logical location for most agricultural support facilities and services — for Ka'u, given its central location with respect to the majority of good farmland ,-- and new plantings, and because the old sugar plantation roads feed directly into Pahala town. Also, former mill facilities and other mill areas (e.g., warehouses, buildings, shops, yards, etc.) can be made available to house support activities. 0 However, a farmers' market in Na'alehu would be well - placed to serve nearby residents as well as visitors. 9 INFRASTRUCTURE 0 Water Projects Water Problems n The major infrastructure needed to support agricultural development in Ka'u concerns water. As discussed earlier in this chapter in the section entitled "Existing C and Planned Crops in Ka'u," water is a limiting factor for many crops and for many L areas of Ka'u. Farmers in the majority of the farm areas in the District rely on afternoon rain showers to irrigate their crops, and are not served with irrigation water. But when the occasional drought occurs, this can result in a major reduction in crop yields and even in the loss of an entire crop. Farmers in Wood Valley and in the upper South Point Road area have access to water, but the supply is inadequate to handle demand during droughts. In Ocean View, farmers must rely on expensive delivery of water trucked in from Na'alehu and Wai'ohinu. Projects to develop available water sources are discussed below. Ka'u River Basin Study To guide future water development, the U.S. Department of. Agriculture, Soil Conservation Service (SCS) prepared the Ka'u River Basin Study; this study was published in February 1994 before the Ka'u Ag sugar operations were closed r1 down. For the applicable scenario for intensive agricultural development, the 0 L "_, -A AGRICULTURE AND RELATED PRODU ' 2 -71 - 9 authors assumed that macadamia nut orchards would be planted on suitable sug- " arcane lands located below the 1,500 -foot elevation, and that eucalyptus trees . would be planted above 1,500 feet. The exception is Wood Valley where it was assumed that diversified crops would be planted. It was further assumed that any J remaining lands would, be used for grazing, or would revert to natural vegetation. — The SCS developed ten alternatives for water development, a summary of J which is provided in Table 2- 12. As indicated, two • of the alternatives are for Wood Valley, three are for the Pahala area, three are for the Na'alehu and J Wai'ohinu area and two for the Ocean View and Kahuku area. For each subarea, .. only one alternative is meant to be selected. hi all cases, the water sources would -be springs and /or tunnels designed to L capture high- elevation water that can be delivered to fields by gravity flow without 0 - expensive pumping.m Outside of Pahala, groundwater is generally unsuitable for agriculture because of high drilling costs, high pumping costs due to the high lift, 0 and low volumes due the thinness of the basal lens. The components of each alternative include: the water- collection system, the 0 _ main transmission line, water storage, a water treatment system if a portion of the water is intended for domestic consumption, and distribution lines to farm areasi For each alternative, Table 2 -12 includes information on the peak water use by In, type of use (crops, cattle, and homes on agricultural lots); the service provided (acres for existing and new crops, number of cattle, the number of existing and new 1 homes on agricultural lots); capital costs (total and per 1 mgd); debt service (annual J amount, per 1,000 gallons of water, and per acre per year); and land requirements 9 9 for the reservoirs and other components of the water systems. The debt service is . based on 100% bond financing paid over a 30 -year period at a tax -free interest rate of 5 %% J451 . . . , 0 As noted in the Table 2 -12, the Pahala Alternatives 1 and 3, and the Na'alehu/ Wai'ohinu Alternatives 2 and 3 would provide sufficient water to accommodate the J water requirements estimated in the section above in this report, "Existing and Planned Crops in Ka'u, Summary Outlook for Agriculture." However, the 0 Na'alehu /Wai'ohinui Alternatives 2 and 3 envision more land in crop than is cov- ered in the "Summary Outlook for Agriculture." 9 All of the alternatives summarized in Table 2 -12 are comparatively expensive. The capital costs are high, with the least expensive alternatives for each of the.four --) J , r . . I L 0 0 2 -72 AGRICULTURE AND RELATED PRODUCTS 0 Table 2-12. AGRICULTURE WATER PROJECTS FOR KA'U Ka'u River Basin Study [ n Wood Valley Pahala Na'alehu & Wai'ohinu OV & Kahuku -- Item Alt 1 Alt 2 Alt 1 Alt 2 Alt 3 Alt 1 Alt 2 Alt 3 Alt 1 , Alt 2 Peak Water Use (mgd) C Crops 0.14 0.43 9.0 3.0 12.0 2.6 8.0 10.5 - - Cattle - - .. - - 0.1 0.1 0.1 0.1 0.1 r Homes (Ag lots) 0.01 0.03 - - - - - - 0.6 0.9 Total 0.16 0,46 9.0 3.0 12.0 2.7 8.1 10.7 a7 1.0 Service r Crops (acres) ‘.....1 Existing crops 150 150 3,500 - 3,500 - .. - - Q New crops - 250 - 2,000 2,000 1,000 3,000 4,000 - Total crop acreage 150 , 400 3,500 2,000 5,500 1,000 3,000 4,000 - - Head of cattle, existing - - - - - 5,800 5,800 5,800 1,400 1,400 Homes (Ag lots) Existing homes 25 25 - - - - - - 1,060 1,060 New homes - 25 - - _ - - - - - Total homes 25 50 - - - - - - 1,060 1,060 Capital cost ($ millions) $ 3.0 $ 4.3 $ 75.1 $ 41.6 $ 93.1 $ 42.6 $ 51.1 $ 87.9 $ 7.9 $ 12.9 Per 1 mgd $ 18.9 $ 9.3 $ 8.3 $ 13.9 $ 7.8 $ 16.0 $ 63 $ 8.2 $ 11.0 $ 12.8 r, • Debt service (5 %, 30 years) Per year ($ millions) $ 0.20 $ 0.29 $ 5.03 $ 2.78 $ 6.23 $ 2.85 $ 3.42 $ 5.88 $ 0.53 $ 0.86 -- Per 1,000 gallons $ .3.47 $ 1.71 $ 1.53 $ 2.54 $ 1.42 $ 2.93 $ 1.16 $ 1.51 $ 2.01 $ 235 Per acre per year $ 1,338 $ 719 $ 1,436 $ 1,392 $ 1,133 $ 2,851 $ 1,140 $ 1,470 n.a. n.a. Land for water system (acres) _ 3 7 23 24 86 n,a. 31 58 n.a. n.a. 9 me-: not available or not applicable. Source: U.S. Department of Agriculture, Soil Conservation Service. Kau River Basin Study, Hawaii County, Hawaii. February 1994. Honolulu, Hawaii. >^ L� • C 0 0 • C 0 •o 0 . AGRICULTURE AND RELATED PRODUCTS 2 subareas - totaling' $95.1 . million and with debt service of about $6:36 million per year. This level of debt service represents about 35% of the $18 million in gross rev- enues estimated under the above "Summary Outlook for Agriculture." Further - 9 , more, the per - volume cost of the irrigation water (see Table 2 -12, "Debt service, per 1,000 gallons ") would be comparatively high: on Oahu, delivered water in the main agricultural areas is priced at 28 to 35 cents per 1,000 gallons. • - Funding may be easier to obtain for smaller, less expensive projects 'which will ." • — rl allow farmers to prove the potential of diversified crop production in Ka'u. Such . J ' projects are discussed below. Q Wood Valley , . Because of vulnerability to droughts, about a dozen farmers in Wood Valley (� formed the Wood Valley Water and Farm Co -op, the primary purpose of which is lJ to seek financing for (1) a new large- capacity pipe to bring more water from Nogu- en • , chi Tunnel down to Wood Valley, and (2) a 250,000- to 500,000- gallon reservoir. The cost is estimated at about $500,000, and acceptable financing would include a ' ' low- interest 10- Jo 15 -year loan. • - . Keaiwa and Pahala . J , _ Above Pahala, a water system is being installed to deliver about 1 mgd water to . • Keaiwa Agricultural Park where displaced sugar workers. are learning to grow • . J commercial truck crops On 5-acre plots. The water will come from Noguchi Tun- " nel above Wood Valley, and the delivery system will comprise a restored flume, a • C • " 4 -inch distribution pipeline, and a 1 -mg reservoir. The charge for the water will be 30 cents per 1,000 gallons, but for the displaced sugar workers, the charge will be 9 waived duririg th first 5 years of farming. (} " For fields below Pahala, improvements are planned to pump groundwater • ' `-, from Pahala Factory Shaft to irrigate orchard and other crops. Water will be' pumped from about 590 feet below Pahala to a 5 mg reservoir at about 800. feet, . flow down a pipeline to turn a hydro - electric generator located at an elevation of about 560 feet, - ihen distributed to fields below the Belt Highway. To reduce energy (J costs, the water will be pumped during off -peak hours when'electric rates are low, . and the hydro - electric generator will recover a portion of the energy used to. lift . ., groundwater to the reservoir. The system will have a capacity of about 5.7 mgd, '• ' 2-74 O AGRICULTURE AND RELATED PRODUL average use is yet to be determined. The charge for the water will be approx- imately 50 cents per 1,000 gallons. r The combined cost of the Keaiwa and Pahala wafer systems will be about $1.5 million; of which about 15% will be for Keaiwa and 85% for Pahala. The State is providing $500,000 administered through the County, while C. Brewer and others — will provide the remainder of the funds. Upper Moa'ula r . Farmers at upper Moa'ula are planting nearly 600 acres in coffee, dryland taro, and other crops on lands leased from C. Brewer. These farmers would be less vul- nerable to droughts if water from a spring located nearby on State land were to be transported down to their fields.J The water could also be used to dilute and apply chemicals to crops, and a portion of the available water could benefit farmers C on other nearby lands and ranches at lower elevations. The proposed system would have the capacity to deliver an estimated 325,000 to 450,000 gallons of water per day.I Farmers estimate that the system will cost ,- about $300,000, including: fees for a bulldozer to dig a 2- to 3- mililion- gallon reser- voir, the purchase of a liner for the reservoir, and the purchase and installation of surface pipelines which would run along the access road. The cost of the water would be comparatively inexpensive, less than 17 cents per 1,000 gallons (based on 100% bond financing paid over a 30 -year period at a tax -free interest rate of 5 % %). r Honu'apo Near Honu'apo, about 500,000 gallons of recycled water will be available for Q agriculture.t This will be recycled water from the Aquasearch, Inc. aquaculture operations (see Chapter 5). D Na'alehu /Wai'ohinu Farmers above and below the Belt Road in Na'alehu and Wai'ohinu are pursu- r` ing the development of a water system to supply a larger volume of water at a lower cost than that which is available from the DWS. The system would benefit three orchard farmers (macadamia nuts and coffee) who farm 30+ acres, a vegeta- ' ble farmer who cultivates 4 acres, a farmer who grows hay on about 100 acres, 9 cattle ranchers who manage about 4,800 acres, and one hog farmer. Additional O water at a low cost would allow more land to be cultivated. 9 a r � O AGRICULTURE AND RELATED PRODUCTS 2 -75 n J The proposed water system would have the capacity to deliver about 370,000 gallons of water per, day from the Kahilipali Iki Tunnel and Kobayashi Tunnel. The system would cost about $220,000, including the installation of about 3.5 miles of 4-, r inch pipeline and a 1- milllion- gallon reservoir. The cost of the water would be comparatively inexpensive, about 11 cents per 1,000 gallons (based on 100% bond financing paid over a 30 -year period at a tax -free interest rate of 5 % %). If a groundwater well is needed, one of the farmers would be willing to provide land to the County at no charge for a well that would be near an existing County water tank. • ' • South Point Road Farmers along South Point Road are served by the County Water Supply , Department with water from a nearby spring. However, the pipeline is too small to handle demands during droughts, or to accommodate the planting of more land. Furthermore the existing line has many leaks. A new and larger pipeline may be warranted. The cost of a buried 6- to 10- inch pipeline 5 miles long would cost about $2 million, based on a per -mile cost of $400,000. Ocean View - About three dozen farmers in Ocean View grow vegetables and flowers suc- J cessfully in spite of the fact that water must be trucked in at considerable cost. To • supplement rainfall, some farmers haul water weekly from Na'alehu and • Wai'ohinu, and some have it delivered at a cost of $25 to $30 per 1,000 gallonsP 0 During droughts, deliveries can be delayed by weeks, which can result in losses of • �} entire crops. J The volume of water trucked into Ocean View by farmers and other members' of the community averages about 50,000 gallons of water per day. To reduce water costs and insure the availability of water to farmers and the .community at large, various organizations funded a water study for Ocean ViewP The recommendation from this study is to drill a well at the Hawaiian U Ocean View Estates Community Center (2,150 foot elevation), install a pump which O will deliver 90,000 gallons of water per day to a reservoir that will hold 250,000 gal- , 0 0 7 2-76 AGRICULTURE AND RELATED PRODUCTS lops, install 1.7 miles of upgraded power lines to provide power to the well, and O install 2.2 miles of transmission pipeline to supply water to commercial areas along C the Belt Road. The volume of water to be pumped would be low because the underlying basal lens is thin. Farmers would obtain water from a standby pipe at Q the Community Center. Development costs would total $2.9 million, or $2 million without the transmis- sion line which is not needed by the farmers.I The cost of the water would be — comparatively expensive, about $8.23 per 1,000 gallons with the transmission line, and $6.39 without it. This is based on 100% bond financing paid over a 30 -year period at a tax -free interest rate of 5 % %, and operating costs of $2.32 per 1,000 gal- lons. Even though the water would be expensive, the project would be justified in that the water would cost far less than the $25 to $30 per 1,000 gallons for delivered water.I The capital outlay for this water project would be considerably lower than that for the alternatives for Ocean View shown in Table 2 -12. Farm Roads In the upper South Point Road area, some County roads cause problems to r farmers transporting fruit to market because the roads need paving or resurfacing. The bumpy rides damage fruit and also increase wear and tear on farmers' trucks.I The privately -owned plantation roads also are deteriorating rapidly.I To pre- fl serve access to farmlands, a mechanism to share road maintenance costs among landowners and farmers needs to be established. A logical lead is C. Brewer since 9 their subsidiaries already own the road - maintenance equipment. r Telephone Service As discussed in Chapter 1, a major problem affecting farmers in Ocean View and along the South Point Road has been inadequate telephone service.I How - " ever, as discussed in Chapter 10, new equipment has been installed. 0 r O AGRICULTURE AND RELATED PRODUCTS 2-77 0 LAND ISSUES • Issues Surrounding Leasing Farmland • Importance One of the most important factors in the success of agricultural development in Ka'u is the leasing of agricultural land. Lease terms must be agreeable to both landowners and lessees if economic development is to occur on agricultural land that is not farmed by landowners. The leasing of farmland' has become a divisive issue in Ka'u and carries signifi- cant social implications. The problems associated with this are exacerbated by the concentrated ownership of most good farmland by only three landowners —C. J Brewer, KSBE, and the State of Hawai'i. Furthermore, most major land -use deci- sions for these organizations are made by people who live and work outside the District. r The Farmer's Perspective From the perspective of the farmer, as well as from that of bankers who lend (� money to farmers, lease terms should be sufficiently long to justify the major U • investment of funds and effort into installing irrigation systems, preparing the land, planting and cultivating crops, etc. For orchard crops, the crop cycle can last J for decades. Farmers do not want to risk losing their investments as a result of their leases being too short. Also, lease rents should be specified so as to prevent J rent increases that could force farmers off the land. The rents also should be regarded as being fair. J But some farmers have had difficulty in initiating negotiations with some of the major landowners in Ka'u.E Leases have been offered that are too short for. some 0 0 _ farmers to risk investing in orchard crops. Furthermore, lease rents appear to be . high, and the bases upon which future rents will be renegotiated are not specified. Also, the terms appear to be especially unfair from the farmer's perspective in view of the fact that leases in other farm areas of the Big Island were offered to forestry - companies from outside the community for terms that exceed 50 years, and at rents that (because of the long wait until returns are generated) are far lower than what local farmers are being asked to pay. - J . The lease terms have adversely affected economic development in that some farmers . will not commit to lease the land or will not make long -term investments • -J 2-78 O AGRICULTURE AND RELATED PRODUCTS 0 for fear of losing their investments.D Furthermore, these lease problems have gen- erated considerable anxiety and some anger in Ka'u. To some, the lease terms are 9 viewed as being inconsistent, arbitrary, unfair and exploitative. Such a situation contributes to an unhealthy social environment that can have undesirable conse- quences. This, situation is not unique to Ka'u or even to Hawai'i. r The Landowner's Perspective _ From the perspective of many of the major landowners in Hawaii, leasing to a large number of small farmers may not be worth the management costs and risks. Farming can tie up considerable land for long periods at low rents. Many farmers are not successful, and so may not be able to pay their rent. Also, some farmers do 3 not live up to the terms of their leases, allowing nuisance activities on the land (e.g. animals without proper waste management, junked cars), make -shift homes with- out building permits, or activities that may be illegal (e.g., marijuana). The landowner's management costs and attorneys' fees to negotiate leases, collect rents, — insure proper management of the land, evict tenants for non - payment of rent, etc., can easily exceed revenues from lease rents. Furthermore, many farmers become emotionally connected to the land they farm, and may refuse to leave the land at the end of their lease periods. Eviction may entail considerable legal costs, as well as political problems, for the landowner. 9 Many of these difficulties can be avoided or reduced if the landowner leases to a few large -scale farmers who have track records of success and histories of not causing management problems. Furthermore, risks for the landowners are reduced if they keep their lease periods short. Resolution of Lease Problems The issues surrounding the leasing of farmland are difficult and not easily U resolved. Better communication would help the various parties understand one anothers' perspectives. For orchard crops or other farming activities which require investments that _, exceed the lease periods, rent formulas and renegotiation guidelines should be specified in the initial leases so as to avoid future problems and misunderstandings upon renegotiation. If leases are not renewed, then it may be appropriate to have provisions in the leases committing the landowner to pay the farmer the fair -mar- 0 r 0 ' AGRICULTURE AND RELATED PRODUCTS 2-79 . ket value of agreed -upon improvements, including the value of any trees and crops left in the ground. Farmland Program L As discussed in this chapter, land requirements to accommodate known plans for crop production, as well as to supply established markets, comprise only a por- _, tion of the former sugarcane lands in Ka'u. Thus considerable acreage is likely to remain available for other uses. If in fact considerable State and /or private farmland remains available, one approach to developing high -value agriculture on a portion of this land would be to establish a farmland program whereby land would be provided to qualifying farmers at below- market prices, conditioned upon the farmer successfully cultivat- ing the land within a certain time period. Upon satisfying the requirements, the land could be conveyed in fee or under a very long -term lease (30 years or more). Such a program would allow farmers to experiment with new crops and explore the potential of large export markets. • From an economic perspective, the best example in Hawai'i of a successful farmland program began in 1898 when about 1,300 acres of government land in Wahiawa in Central O'ahu were made available to a group of farmers.J At the time, Wahiawa had no significant agricultural activity; irrigation water was not available; and travel to Wahiawa from Honolulu took days via wagon over rutted dirt roads. After years of experimenting, a few farmers focused on pineapple which, until then, had been a minor speciality crop that was regarded as having lit- '– tle potential. Gradually, the farmers built the market until pineapple became a `– major new industry —not only in Hawai'i but worldwide. In land area and farm value, pineapple has been Hawaii's second largest crop since 1915. 0 A farmland program would be similar in concept to that of the State Agricul- tural Parks, except that larger parcels could be provided, and the farmer would be required to develop a viable farm before the farmer could obtain title to the land or a long -term lease. A farmland program would also be similar to the Department of D Hawaiian Homelands' homestead program, except that the farmland program • would be open to qualifying farmers only, and to all ethnic groups, while the title or a long -term lease would be conferred only after a successful farm is developed.. J 2-80 AGRICULTURE AND RELATED PRODUCT r Agricultural subdivision requirements on the Big Island are compatible with a Farmland Program in that large parcels can be subdivided into smaller ones at r' comparatively low cost, provided that no homes are built on the land. The applica- ble ordinance allows gravel roads rather than County- standard paved roads, sur- face water pipelines rather than buried water lines, and parcels without electrical power. The advantage of a subdivided property over licensed property is that it ,., can be mortgaged to provide working capital to the farmer. Farm lots that are part of a large parcel can still be made available to farmers for long periods of time using a license rather than a lease, but a licensed property cannot be mortgaged. r A farmland program for Ka'u may be a worthwhile gamble. As previously dis- cussed, it is difficult to develop successful export crops in Hawai'i, so only a small 9 probability exists that the effort will be successful. At the same time, however, if the program is successful the economic rewards could be great. If the program 9 fails, the land could be placed into a lower -value use such as forestry or cattle -graz- ing. The alternative would be to go with the sure bet of a lower -value use immedi- ately. — REFERENCES 0 r [1] U.S. Department of Agriculture, Soil Conservation Service, Honolulu, Hawai'i. Ka'u River Basin Study, Hawaii County, Hawaii. February 1994. [2] Harold L. Baker. Agricultural Lands of Importance in the State of Hawaii. Univer- r sity of Hawaii College of Tropical Agriculture and Human Resources, Honolu- lu, Hawai'i. 1977. [3] Land Study Bureau. Detailed Land Classification— Island of Hawaii. University of -J Hawaii. Honolulu, Hawaii. December 1972. [4] U.S. Department of Agriculture, Soil Conservation Service. Soil Survey of Island j of Hawaii, State of Hawaii. Washington, D.C. December 1973. [5] U.S. Geological Survey. Miloli'i, Manuka Bay, Na'alehu, Punalu'u, Pahala. Washington, D.C. 1981 and 1982. [6] Department of Business, Economic Development and Tourism. "Estimated Average Daily Insolation, Island of Hawai'i." Honolulu, Hawaii. January 1985. [7] Department of Geography, University of Hawaii. Atlas of Hawaii, Second Edi- tion, University Press. 1983. C r u U AGRICULTURE AND RELATED PRODUCTS 2 -8 • ' .. . ` [8] Department of Planning and Economic Development. "Assessments of Lands • , n for Aquaculture." 1978. . -1 [9] Harold T. Stearns.. Geology of the State of Hawaii. Pacific Books. Palo Alto, Cali- . forma. 1966. in [10] Waimea Water Services, Inc. [11] Hawaii Department of Water Supply. 7 [12] Waimea Water Services Inc. "Well Source Report for Ocean View at Kahuku, J • Hawaii." March 10, 1997. • [13] Discussions with farmers and landowners. . , — [14] C. Brewer, Ka'u Agribusiness Co., Inc., and /or Mauna Loa Macadamia Nut • Corporation: 9 [15] Hawaii Island Economic Development Board. "Rural Economic Transition Assistance - Hawaii, Annual Report 1995/1996." Hilo, Hawai'i. October 18, • 1996. . • fl [16] Decision• Analysts Hawaii, Inc. Hilo- Hamakua Coastal Region: Economic Environ- • i ment and Resources. Honolulu, Hawaii. August 1995. • . [17] Jeff McCulley: "The Long Haul." Hawaii • Business. " Honolulu,• Hawaii. • f September 1997. ' • ' , [18] Robert C. Schmitt: Historical Statistics of Hawaii. The University Press of , E - - Hawaii: Honolulu, Hawaii. 1977. . • Hawaii Agricultural Statistics Service. Statistics of Hawaiian. Agriculture: 1995. Hawaii Department of Agriculture. Honolulu, Hawaii. December 1996. • [20] Hawaiian Sugar Planters' Association. Hawaiian Sugar Manual, 1993 - 1994. ' J Honolulu; Hawaii. 1994. 7 [21] Decision Analysts Hawaii, Inc. Agricultural Lands of Kunia and Central Ewa: • J Agronomic and Locational Advantages; Potential Crops; and Crop Budgets. Hono - lulu, Hawaii. December 1993. • - [22] Decision Analysts Hawaii, Inc. "North Shore Planning District, Oahu: Agri- ` • cultural Resources, Situation, and Outlook." Honolulu, Hawaii. July 1997. [23] Decision Analysts Hawaii, Inc. Wahiawa Lands Master Plan: Impact on Agricul- 1 " ture. Honolulu, Hawaii. January 1993. [24] Haivaii Department of Agriculture.. "Honolulu Arrivals." Annual. • • [25] Department of Business, Economic Development & Tourism. The State of Hawaii Data Book : 1996. H onolulu, Hawaii. [26] Estimated by Decision Analysts Hawaii, Inc. . , • . [27] The Packer. Vance Publishing Company. Overland Park, Kansas. Annual. [28] U.S. Department of Agriculture. " 1996. - a • • • [ 29] U.S. Embassy Japan. FY 1996 Country Commercial Guide. July 5', 1995. [30] Decision Analysts Hawaii, Inc. Hawaii's Sugar Industry and Sugarcane Lands: Outlook, Issues and Options. Honolulu. Hawaii. April 1989. I . 2- 82 O AGRICULTURE AND RELATED PRODUCTS [31] "Island Fresh, Hawaii's Big Island." [32] U.S. Navy. [33] Andrea Peterson. "Kawa: The Making of an Herbal Superstar." The Wall Street Journal. February 1998. [34] Andrew Gomes. "Big Isle Eyes $12 billion Market." Pacific Business News. Jan- uary 19, 1998. [35] Insights, Inc. [36] Family Support Services of West Hawaii. — [37] Alison Frank. "How Sweet It Is." Island Business. June 1998. [38] Hawaiian Vintage Chocolate. [39] Huliau 0 Ka'u, Inc. [40] Small Business Development Center. 1 [41] The Washington Post, National Weekly Edition. Vol. 15, No. 10. January 5, 1998. [42] The Honolulu Advertiser. "Coalition Wants Hemp Ban Lifted." March 23, 1998. [43] KTA Super Stores. [44] Na'alehu Main Street. v — [45] Federal Reserve Bank of St. Louis, Research Division. "U.S. Financial Data." [46] Belt Collins Hawaii. ry C r r L 1 0 0 r 3. FORESTRY 1 . J COMMUNITY SUPPORT FOR FORESTRY , Surveys and discussions with Ka'u residents indicate that they strongly support forestry, although this support does not extend to all types of forestry.Fh For exam- . ple, some elements of the community oppose corporate monoculture of low -value eucalyptus trees grown for the pulp industry, primarily because of economic and _ environmental concerns. The economic concern is that the activity may provide - few jobs and other economic benefits compared to the potential from higher -value J forestry and farming.; The environmental concern is that monoculture forestry may . attract more pests and require more chemical" spraying than would more diverse • J forestry activities. (It should be noted, however, that some foresters strongly dis- . J agree with this assessment; and contend that monoculture forestry can generate considerable employment while being environmentally friendly. Furthermore, the cultivation of trees generates far fewer adverse environmental impacts than does • the cultivation of surgarcane or most other crops that require periodic plowing and, r-• replanting.) A number of Ka'u residents support small, family- operated agroforestry which can mix hardwoods, softwoods, native plants, bamboo, farm animals, farming, eco- - tourism (hiking and biking trails), etc. Koa forestry also receives broad support , because koa is a high -value tree that is uniquely Hawaiian and is used by many local artisans. A group of residents has formed the Ka'u Agroforestry Association, the pur- (� "pose of which is to establish a sustainable agroforestry industry by: (1) obtaining ll access to land; (2) improving and maintaining forestry resources; and (3) promoting cultural preservation,-self- sufficiency, health, education and research, and value added industries. • , J 3-1 • -- 3 -2 FORESTRY Although community preferences can affect the type of forestry that is devel- oped on public land, they generally do not have this same influence on privately owned land. Since forestry is a permitted use on privately -owned agricultural -- land, economic considerations, rather than community preferences, are more likely to dictate the type of forestry that will be developed there. LAND SUPPLY AND CONDITIONS FOR FORESTRY Supply of Land Available for Forestry The District of Ka'u has a large supply of land that would be suitable for for- estry, including former sugarcane land and higher - quality grazing land. The potential supply probably exceeds 30,000 acres, most of which is owned by the State of Hawai'i, Kamehameha Schools /Bishop Estate (KSBE), C. Brewer, and the S. M. Damon Estate. In practice, the supply of land available to forestry will depend upon (1) the profitability of forestry operations and their ability to pay higher rents in competi- tion with other potential users of the land, and (2) the amount of land required to supply various markets. As discussed in the next section, these two factors result in a hierarchy of land uses among the potential large -scale economic uses of the -- former sugarcane land in Ka'u. Barring the discovery of a major new export crop that can use an enormous amount of land profitably, forestry operations are likely to be the highest bidder on much of the available land in the District. Also, land may be made available for forestry for environmental reasons, such as for wind breaks, watershed protection and, with funding from electric utility companies, to mitigate carbon dioxide emissions. Agronomic Conditions Parts of Hawai'i are well- suited to forestry, as indicated by the reported growth rates for Hawaii -grown eucalyptus, which are about the same or higher than the growth rates in other parts of the world where the same or similar species are — grown commercially.J Areas suitable for forestry have the following general agronomic conditions: good soils, adequate solar radiation (an average of more than 300 calories per cm per day), mild temperatures, and adequate rainfall (over 60 inches per year).J The general quality of potential forestry land in Ka'u has been assessed as being r 0 0 FORESTRY 3-3 but not "exceptional. " 121 The higher - quality lands are found in parts of • Hamakua and Kohala. Various areas of Ka'u are well- suited to certain types of trees and species. 'l Wood Valley, for example, is regarded as being superior for growing koa. Also, the upper elevations of Ocean View are regarded as being well- suited for growing sandalwood.t J Other Conditions Other factors favorable to the development of a forestry industry in Ka'u include: the political stability of the United States (an important consideration for long -term investments such as forestry); a developed infrastructure (e.g., roads and nearby ports); and Hawaii's geographical proximity to the Asian and U.S. main - 0 land markets. Disadvantages for long -term forestry investments include risks associated with occasional lava flows from Mauna Loa and the rare hurricane which could hit Ka'u. Pahala andNa'alehu have a "3" rating for exposure risk to lava flows, where a - "1" rating is the highest risk and "9" is the lowest risk. Areas west of South Point r J Road are rated "2," while upper portions of Ocean View are rated "1." Since 1950, the Hawaiian Islands have experienced hurricanes or near misses J six times.. The only hurricane to hit the Big Island occurred in 1871 on the northern • end of the island. [81 J. THE PLACE OF LARGE -SCALE FORESTRY IN THE HIERARCHY 6F LAND USES Among the three potential large -scale economic uses for the former sugarcane land, forestry lies below crop farming and above cattle grazing in terms of profit - ability per acre. Most of the higher- quality land in Ka'u— particularly that which is irrigated —is likely to be reserved for crop production, since it can generate the highest return per acre among the three land uses. Also, farming gives the landowner the flexibil- ity to change from one crop to some other higher -value crop should such an oppor- - tunity present itself — possibly as a result of technological advances, new market ' opportunities, etc. However, as explained in Chapter 2, the amount of land in Ka'u that will be used for crop farming is limited by the size of the market for those crops which can be grown profitably in Ka'u, rather than by the amount of available agri- 1 , ' 3 -4 O FORESTRY cultural land. Thus, most of the fallow agricultural land in Ka'u is likely to remain available for uses other than farming. Forestry is a candidate for using much of this remaining land, since it is the next most profitable use of agricultural land, and one that is much more profitable than cattle grazing. However, a landowner's commitment to forestry must be a .._. carefully considered decision, since it can tie up land for 50 years or more, and can result in an "opportunity loss" of more profitable activities that might surface in the years after a commitment to forestry has been made. Any lands not committed to crop farming or forestry are likely to be used for grazing —the activity with the lowest per -acre financial return. The advantage of grazing, however, is that it keeps the landowner's options open so that he can make C a comparatively quick transition to growing a high -value crop if and when an opportunity arises. Thus, if a profitable crop or some other use of the land is antic- ipated within a decade or so, landowners may prefer to graze cattle rather than -- making the longer -term commitment to forestry. _, KOA Importance of Koa to Hawaiians, Pre - Contact Koa (Acacia koa) is a tree endemic to Hawai'i that is predominately found at ele- vations ranging from about 2,000 feet to 6,000 feet where rainfall is heavy (from 75 inches per year to more than 200 inches). The koa holds great cultural importance to Hawai'i. To the early Polynesians, L Hawai'i was blessed with abundant koa forests which provided mammoth tree trunks that were ideal for building canoes of all sizes —from the small outriggers used for near -shore fishing to the large ocean - voyaging double canoes that were as long as 75 feet. For the larger canoes, the favored tree trunks were straight, tall (40 to 80 feet), and more than 6 feet in diameter. Many of the largest and best koa trunks have come from forests in Ka'u. The large koa tree trunks enabled Hawaiians to build strong, durable canoes without peer in the Pacific. The hull of a Hawaiian canoe was formed from a sin- — gle piece of wood as opposed to building a canoe from planking as is the custom on — other Pacific islands. Certain parts of the koa tree were also used to make paddles, spears and surfboards. r L. O O J FORESTRY . 3 -5 7 J ' Current Use, Production and Revenues of Koa Currently, Hawaii's commercial forest industry is based primarily on harves- tirig koa for the woodcrafts industry.J It is a very attractive wood which is used ^ now primarily to make high - quality furniture, cabinets, wood panelling, bowls, and other woodcrafts. Since the mid- 1800s, koa has been the wood of choice among many, Hawaiian artists and crafters who depend upon it for their livelihoods. J About half of the woodworkers are on Oahu near major markets.t ' To supply this market, approximately 1 million board feet of koa are harvested • ~ annually, of which 20% to 30% is wastage. This level of production has been main - tained since the early 1980s. Gross revenues of the.forestry component of the koa industry amounted to under $3 million in 1995. -The value of koa woodcrafts, however, is far higher. - • If forestry plantings were to increase the supply of koa greatly, it is likely that a sizable export market could be developed with proper marketing of the wood and ' its value -added products. Currently, less than 1% of the koa production is -J exported2 r- - Koa Supply .-- The supply of koa is limited due to the fact that much of the original forest has J been lost. Hawaiians felled many of the large trees to build their canoes, particu- larly the large fleets assembled by Kamehameha I. The devastation of the forest • began in 1793 and 1794 with a well - intentioned gift to Hawaii of cattle and sheep • from Captain George Vancouver who made stops in the Islands during his explora- tions of the Pacific. Unfortunately; cattle and sheep eat the bark and juvenile seed -' lings of koa trees, and sheep also eat the roots, thereby killing the trees. Additional . losses of koa forests came from logging, land clearing for ranches, wild pigs rooting around saplings, endemic and exotic pests which attacked koa trees, and, the intro- duction of exotic plants and trees which competed with koa for space. Now, most of the koa used for crafts, etc., comes from salvage- harvesting of old and diseased trees that have many defects.t Furthermore, most of the koa harvest J comes from private lands on the Big Island. KSBE has about 5;000 acres of mature koa in Honaunau, but is not harvesting it t7.1 °1 Additional supplies are available on State lands, but the government does not permit harvesting from its lands. • • t o board foot is 1 foot x 1 foot x 1 inch. 1^ O 0 3 -6 FORESTRY About 10 acres of koa have been planted in Wood Valley for future commercial harvests. — Koa Prices — Koa is considered to be a high -value wood for which 1995 stumpage feest were $1,000 to $3,000 per 1,000 board feet.i Premium - quality koa can sell for consider- ably more. Prices have increased by a factor of 10 since 1980 when the stumpage fee was -, $100 to $225 per 1,000 board feet. This price increase indicates that demand is out- — stripping the available supply. r Profitability of Koa _ A well- researched and careful analysis conducted in 1996 indicates that a com- paratively small koa farm could be profitable.i The analysis assumes a 10 -acre operation in Wood Valley or a similar area, and spans a period of 24 years from ini- tial site work to final harvest. In terms of 1995 purchasing power (i.e., no adjustment was made for inflation), costs would amount to about $15,900 per acre, most of which would be incurred in — the initial years of operation for site work and for planting and nurturing the — young trees. This dollar figure also includes the cost of leasing agricultural land at $250 per acre per year. From Year 20 to Year 24, an estimated 76 trees per acre would be harvested, yielding 34,227 board feet per acre worth $5.23 per board -foot, or a total of $179,000 per acre. This price projection may be high, however, since it reflects continued — price increases and a value that corresponds to that of "old growth" trees. Under the given assumptions, the operation would yield a return of 15% per year on the investment, and a net present value of $11,406 per acre based on a dis- count rate of 10 %. Profitability would be enhanced with government subsidies which are available (see below). The 1996 analysis is available from the County and could serve as a component of a business plan. $ The price of standing timber. - 0 O . FORESTRY 37 • Improved Cultivation Practices - . Further research.is needed to determine how best to grow koa to obtain a large _ volume of high - quality Wood in as short a time period as possible. , . `- • Currently, four State agencies and the Hawai'i Agricultural Research Center -- working to develop methods to grow koa trees for reforestation and commercial , use. The effort is focused on finding varieties that will (1) produce the valuable „_ • •"curly" grain koa,• (2) grow quickly at low elevations (below the •1,800-foot eleva don), on lands which have been released from sugarcane, cultivation and (3) resist J ' insects.' Research also is being conducted on ferns and mushrooms that could be grown 9 and harvested beneath the koa trees as' "uriderstory," thereby generating additional u income while waiting for the trees to reach maturity. • - . Outlook and Economic Benefits of Koa . - A 10 -acre koa -farm wou be suitable for a part -time family operation and also . • � would serve as a long term investment. , . , . ., • • ' Larger koa operations may be appropriate for corporate farming. However, . ' ' J • large landowners.who own native forests where koa is growing are more likely to - place their emphasis on managing their existing forests rather than planting new. J• . areas in kod. ' ` • An increase in Hawaii's supply of koa could result in an increase in the number ' J of artisans who make wood _products, including some who may work in Ka'u. J• SANDALWOOD i - Historical Importance of Sandalwood . . • Hawaii's first major. export industry was 'shipping sandalwood ('iliahi) to China. In fact, a former Chinese name for Hawaii was Tahn Heung Shan, which J means "Saridalwood•Islands. " 121 The trees were harvested in the mountains; the • . • . logs were then carried to the shoreline, from whence they were shipped by traders r-- to to the Port of Canton, China, where the highly prized wood was sold at premium prices. The exportation of sandalwood from Hawai'i began in 1790 with the', . . , fur traders; increased to sizable proportions by 1810, and peaked in 1821 at 30,000 .. • - piculs (2,000 tons). Some of this sandalwood came from Ka'u.J' . I . II . 3 -8 O FOR O • FORESTRY Sandalwood —which was bartered in Hawai'i for ships, guns, and various'prac- tical and luxury items —is partially credited for the military and economic success — of Kamehatheha I, who controlled the trade tightly until his death in 1819 . [13,14,15,16j — After Kamehameha I, Hawaiian chiefs directed the commoners to harvest the san- dalwood trees to such an extent that the mountain forests were eventually depleted —a fate which befell other Pacific islands as well. Trade declined steeply _ during the early 1830s and, except for occasional small shipments, finally ended around 1840. — — Captain James Hunnewell, founder of C. Brewer —which is now a major land- owner in Ka'u and the parent company of Ka'u Ag —began his commercial career in Hawai'i in the sandalwood trade. This was in 1817 during the reign of Kame- (^ hameha I. tt�_ A small volume of sandalwood is still harvested occasionally on the Big Island and shipped to Hong Kong where it continues to command premium prices. Sandalwood Markets and Uses _ Export markets already exist for sandalwood products in the United States (267 -- million people), China (1.2 billion people), Taiwan (21 million), and countries in the Middle East and other regions. In fact, sandalwood and its products have been used since about 2,000 B.C. in India , and since 500 B.C. in China and Egypt. The heartwood of the sandalwood tree and products made from the heartwood " are considered to be sacred and treasured.[ The heartwood is highly prized for — woodcarving and for its fragrant aroma which persists for years.. In fact, the fine - grained sandalwood is second in volume only to ivory as a material used in intri- cate and delicate carvings. The wood is carved into decorative items, furniture, — ornamental boxes and chests, and statues of deities. Oil distilled from sandalwood (about 132 pounds of oil per ton of sandalwood) is also highly prized and is used for making perfumes, soaps and incense.J10 — Because of its high fixative quality, sandalwood oil blends well with rose, orange — blossom and benzoin (gum benjamin). Exports to the United States are primarily used as a base for making high -grade perfumes.J191 — Sandalwood also plays an important role as a ceremonial burning material, as an oil, or as a paste during religious rites, worships, and funeral ceremonies of -, Hindus, Buddhists, Parsis and Moslems.J H I 0 0 • FORESTRY • 3 - 9 • In the Middle East, sandalwood is among the few scents that are approved in the Islamic religion. Saudi Arabia is the biggest importer of sandalwood in the — . Persian Gulf where the wood is used to make about 1 million pounds of perfume " — per year having a value of about $670 million. _ Some species of sandalwood, of which there are about 30, produce, edible nuts, _ while some species are used for coloring and dyeing1 • Finally, sandalwood is believed by some to have medicinal properties and is used t� treat bronchitis, urinary tract infections, burns, migraine headaches, rashes 9 and complexion problems. If local supplies of sandalwood were available, it is likely that local artisans 7 • would use sandalwood in woodcrafts, similar to the way koa is used — Sandalwood Prices — Because of the high demand for sandalwood, its many high -value uses, and the — scarcity of the trees (see below), sandalwood prices are relatively high. The Hawai'i — price of sandalwood is $1.50 per pound for low- quality wood, and as much as $10 . to $30 per pound for the rare, high - quality woodPl Sandalwood prices are .. J expected to increase over time as natural supplies worldwide become depleted. • In India; supply shortages have resulted in rapid price increases: from 31,000 J rupees per ton in 1980 to 160,000 rupees per ton in 1990 (about $4.20 per pound). The high and increasing prices of sandalwood led one of the major crime syndi- , - cates in India to switch from the illegal ivory trade to the more lucrative sandal - .--1 wood trade. An estimated $60 million in sandalwood has been smuggled over the course of a few years. _ In Indonesia, high- quality sandalwood sells for $11.50 per poundl� In western Australia, the price is-about $5 per pound. In Saudi Arabia,,. sandalwood sells for $6 or more per pound, the perfume sells for about $670 per pound, and oil extract costs between $400 to $1,000 per via11 In addition to the wood and oil, Hawai'i farm prices for edible sandalwood — nuts is estimated at about $1.80 per poundJ " . • i • — Sandalwood Suppliers , r • , About 70% of the world's supply of sandalwood comes from India where the L industry is operated as a government monopoly1 However, annual production .of heartwood has fallen to about 50% of the production levels in the 1950s.1191 3-10 O O — FORESTRY Additional supplies come from other countries including western Australia (exports of $14 million), Cambodia, Malaysia, Indonesia, Vietnam, Burma, Thai- — land, and some Pacific islands. Sandalwood supplies are limited because the tree is difficult to germinate and — takes a long time to mature (at least 20 years under ideal conditions and as long as — 90 years in some regions). Also, some forests are being depleted due to unsus- tainable harvesting, which is what happened in Hawai'i in the early 1830s. Until _ recently, Indonesia was a major supplier, but few trees remain. • Afforestation Projects In order to compensate for dwindling supplies, India has made a strong effort to create sandalwood plantations that can be harvested continually.i In Australia, the high value of sandalwood and its oil, combined with a steady decline of native sandalwood trees, have led to increasing efforts to establish san- dalwood plantations. To this end, the Australian government:121,221 - - purchased pastoral lands in order to conserve and regenerate sandalwood trees; — —has been planting sandalwood trees since 1983; — — hired a full-time agronomist in 1992 to research sandalwood cultivation; — —has encouraged entrepreneurs to cultivate sandalwood; and — worked with entrepreneurs to establish sandalwood plantations, including at least one irrigated planation. In South Kona, two varieties of sandalwood have been planted to explore the potential. [231 - Cultivation of Sandalwood The upper elevations of Ocean View are regarded as being well- suited for san- J dalwood.t This land is subdivided into 1 -acre lots, and existing roads provide access. However, upper Ocean View is a high hazard area for potential lava flows.J The sandalwood tree can also be grown in other areas of Ka'u at elevations as low as 1,400 feet and as high as 6,500 feet.J The sandalwood tree is a parasite which attaches to and intertwines with the — root system of a host tree, but it does little or no harm to the host tree The range of potential hosts appears to be wide, offering the possibility of growing sandalwood • O 0 3 11 FORESTRY in combination with other trees such as koa. These other trees could provide income while the sandalwood matures. The sandalwood tree is reported to be difficult to germinate. Once started, - n however, the tree requires comparatively little maintenance. Furthermore, the bit- - ter taste of the wood wards off most insects. Under favorable conditions, the native tree takes about 30 years to mature. Valuable products include an edible nut; the heartwood of the tree, and the roots . • which also contain sandalwood oil. The branches and outer layer of the tree, called sapwood, contain little or no essential oils and are usually discarded. n J Profitability of Sandalwood • Preliminary and partially verified figures indicate that a • small sandalwood farm in Ka'u could be a profitable operation.J The initial costs of site preparation, planting, and nurturing of saplings are likely to be similar to the cost of establish- , ing koa. However, more trees would be planted: about 300 to 400 trees per acre, with subsequent thinning to about 250 to 300 trees per acre. Starting in about Year 6 and continuing to about Year 17, each tree would pro- -- vide edible nuts, with a mature tree providing about 70 pounds per year valued at about $1.80 per pound —which translates to about $35,000 per acre per year for a mature tree. This yield is regarded by some foresters as high, and the market for the nut would have to be developed. In Year 30, about 10% of the sandalwood would be harvested, with harvesting repeated about every fifth year thereafter. Gross returns per acre would amount to about $50,000 to $100,000 every 5 years after harvest begins. Research on Commercial Sandalwood Production Potential profits from commercial sandalwood production look promising. Preliminary information indicates that the existing market is large, world supplies are dwindling, competition is limited, and prices are high and increasing. The fact — that sandalwood is 'difficult to germinate is a potential advantage in that it limits ' competition.. , This promise merits investigation to verify the size of the market, prices of the • wood, yields, costs, profitability, optimum cultivation practices, etc. The cost of a market and economic analysis would be about $15,000. • 312 0 FORESTRY 0 If results of the analysis show promise, it is likely that further research will be needed to determine where and how best to grow sandalwood to obtain a large volume of high - quality wood in as short a period as possible. �} Outlook and Economic Benefits of Sandalwood — A sandalwood farm of a few acres would be suitable as a long -term investment for a part -time family operation. Larger sandalwood operations may be appropriate for corporate farming. As with koa, however, large landowners who own native forests where sandalwood is growing are more likely to place their emphasis on managing their existing forests rather than planting new areas in sandalwood. A local supply of sandalwood could result in a number of artisans using the wood to make ornamental boxes and chests, decorations, and furniture, and some of these artisans could work in Ka'u. EUCALYPTUS AND RELATED FORESTRY OPERATIONS L Current Eucalyptus Operations Over 3,400 acres on the Big Island have been planted in commercial eucalyptus of various species. About 2,000 acres are located on State lands above Waiakea. C Depending upon the species, eucalyptus can be used to make pulp for paper, structural timber, utility timber, veneer, fiberboard, furniture, cabinets, panelling, �(1 flooring and woodcrafts. Certain species are fast - growing and wind - resistant, and �{ produce an attractive wood. Some species are rot - resistant and termite - resistant. c Eucalyptus and Related Forestry Plans Proposed Big Island Afforestation and Milling Poyry Limited In 1994, Groome Poyry Limited of New Zealand submitted a Forestry Invest- ment Memorandum to the State of Hawai'i which recommended that approxi- mately 59,000 additional acres of commercial forests be planted on the Big Island, a portion of which could be located in Ka'u.J Sustainable yields would reach about 830,000 cubic meters of wood per year, the bulk of which would be supplied by one or more varieties of eucalyptus trees. The wood would be trucked to a chipping mill to supply pulp companies, a medium - density fiberboard mill or an oriented L D O O FORESTRY 3-13 strand -board (OSB)'mill, a veneer mill, and a sawmill for making lumber. After g local markets are supplied and imports partially replaced, most of the product , would be shipped to overseas markets. (State foresters believe that import replace- r-, _ , ment of veneer and plywood offers significant potential.) The total private investment required to implement the eucalyptus afforestation and milling plan would amount to about $230 million: $146 million for planting 0 . (about $2,577 per acre) and $85 million for the mills. For each type of mill, the estimated land, wood, and capital requirements are 0 shown in Table 4 -1. • • 0 •. Table 3 -1— Forestry Land, Wood and Capital Requirements, by Type of Mill • Land Wood Capital (millions) --n Mill (acres) (cu. m.) Field Mill t Chipping mill 30,000 500,000 $ 71.31 $ 25.20 —, Medium- density u . fiberboard mill 10,000 180,000 , 23.77. 42.87 . 0 Veneer mill 15,000 , 12030,000 000 40.29 15.00 Sawmill. 4000 , 10.75 2.00 0 • Total 59,000 830,000 $ 146.12 $ 85.07 D To give some perspective on how much land this is, 59,000 acres is 4.7 times the 12,535 acres that were cultivated in sugarcane by Ka'u Ag in 19932 U . Within approximately 12 years, Groome estimated that employment could g row to 452 - jobs, of which 217 jobs would involve forest growing and harvesting (3.7 jobs per 1,000 acres), and 235 jobs would be in the various processing mi11s. D The estimate of indirect jobs is not provided in this report since some jobs were inadvertently double- counted. PruTimber Afforestation, KSBE Lands in Hamakua and Ka'u 7 Major new forestry initiatives have been explored on -the Big Island, most of J which have focused on former sugarcane lands of Hamakua Sugar Co.,'Inc. KSBE • I9 3-14 O FORESTRY 0 leased out 24,000 acres of land in Hamakua, 15,800 acres of which are usable, to Hamakua Timber, a subsidiary of Prudential Timber Investments, Inc. (PruTim- ber).' Nursery operations, planting and initial cultivation of the first 5,200 acres of trees have employed about 80 workers. In 1998, PruTimber leased an additional 5,000 acres in Ka'u to expand their Big Island forestry operations. Approximately 30 to 40 jobs will be provided during planting and initial cultivation.E Hamakua Timber is planting hybrid eucalyptus (E.urophylla x E.grandis), which is a fast - growing tree suitable for producing fiber for the pulp and paper industry, [` but which can also be used for some higher -value products." Trees are to be har- vested about every 6 to 8 years, producing about 60 to 70 tons per acre, and having a value of about $108 to $112 per ton (1997 prices). This translates to gross reve- nues �( of about $1,000 per acre per year. Proposed Oji- Marubeni Afforestation, State and County Lands in Hamakua r ~ Both the State of Hawaii and the County of Hawaii explored the leasing out of L 5,100 acres and 4,400 acres, respectively, of former sugarcane lands in Hamakua for a planned forestry operation. This leasing of the State land was not approved due 0 to community opposition, while the use of the County land remains undecided. The land was to be leased for a period of 55 years to Oji Paper Co. and its part- ner trading company Marubeni Corporation (the joint venture is referred to as Oji- Marubeni).[ Oji is the third largest pulp and paper producer in the world, and the largest in Japan. Fast - growing varieties of eucalyptus were to be planted and the harvested trees were to be chipped in Hawai'i and shipped to Japan for the pulp and paper industry.' Approximately 10% of the lands were to have been planted in high - value commercial hardwoods that would have been owned by the State and C County governments. Species of both the fast - growing eucalyptus and the high - value commercial hardwoods had not been determined. C Annual land rent per acre of usable land was to have been started at $10 per acre for the first 4 years, increasing to $40 thereafter, plus a royalty of 500 per cubic meter of wood harvested was to have been paid for use of the land. jJ Oji- Marubeni had planned to build a chipping plant in Kawaihae to support the new forestry operations once the volume was great enough to justify a chipping plant. In the meantime, field chipping was to have been carried out.3261 D O O 3 15 FORESTRY Hawaiian Mahogany Afforestation, Kauai Another forest initiative which could affect the potential for forestry on the Big ` Island is the planting by Hawaiian Mahogany Co., Inc. of about 800 acres in com- , - mercial -trees on former sugarcane lands of McBryde Sugar Co., Ltd., Kaua'i. Two species of eucalyptus are being planted on 680'acres: Eucalyptus deglupta, 0 also known as kamarere, or rainbow eucalyptus because of its multi - colore smooth bark, is one of several Philippine trees which is marketed as Iauan mahog any. This is a fast - growing tree that produces a reddish wood that does not • warp or crack and can be used for furniture, framing lumber, veneer or plywood. The second species to be planted, Eucalyptus microcorys, or tallowwood, has a 0 heartwood that is very heavy and hard and does not warp or crack. It is resis- . ". tant to rot; termites do not eat it; and there are indications -that it is toxic to insects. 0 - It makes excellent flooring and can be used for applications that require wood to be in contact with the soil. - ' The eucalyptus will be ready for harvest in about 15 years, and it is expected to sell for about $3;000 per 1,000 board feet 1271 ' The remaining 120 acres will be planted in high -value hardwoods which take 9 longer td mature, including koa, mahogany, Brazilian rosewood, Queensland • Maple, and silk oak. ( The long -term goal is to expand to as much as 3,000 -acres. Employment will amount to 15 or fewer workers to grow and harvest the trees. 2 7 1 Milling will add n additional employment. J • Market for Eucalyptus and Other General - Purpose Woods . J Demand The Hawai'i market is too small to support the large forestry operations, mills, 9 ' and volumes envisioned by the Groome plan described above. However, overseas markets for forest products are large and growing — particularly. the Asian markets I where Hawaii would be most likely to export its forestry products. This is par - • � (' tially indicated by production and trade data assembled by Groome: U —Logs Nearly 54 million cubic meters of logs were imported by Asian coun- tries in 1990. The countries that were the major purchasers included Japan (63 %), Korea (16 %), China (9 %), Taiwan (8 %), Thailand (4 %), and the Phil- ippines (1%). • ' 1 0 . 3 -16 FORESTRY O Imports are projected to grow at 5% per year, with China accounting for 88% of -the increase in demand. —Sawn Timber The global production of sawn timber was 457 million cubic meters in 1992, and production has been growing at a rate of about 1% per year. — Wood -based Panels, Plywood, and Medium - Density Fiberboard The global production of wood -based panels was 122 million cubic meters in 1992, and has been growing at a rate of about 1% per year. Exports of plywood to Japan totaled 1.8 million cubic meters in 1993. The global production of medium - density fiberboard was 9 million cubic meters in 1993, and has been growing at a rate of about 13% per year. 0' —Wood Chips and Pulpwood The global production of wood chips for the pulp- and -paper industry has been growing at 2% per year, while trade has been growing at 3 %. The hardwood component of the wood -chip market comprises 32% of the total /j 1 market, and has been growing at 3.2% per year. The eucalyptus to be 1 J grown in Hawaii is categorized as a hardwood. In 1990, 11.4 million cubic meters of wood chips were exported to Japan, 0 which accounted for 35% of global trade. Other major Asian importers include Taiwan and South Korea, which imported 900,000 tons and 300,000 ,? tons of wood chips, respectively. As indicated above, most of the international trade appears to be in logs, wood C chips, and pulpwood. The study prepared for the State makes no distinction between high -value forestry products and low -value ones. Thus it is not clear how C much of the market would be comprised of high -value products. With regard to tropical hardwoods, Japan imported 11 to 13 million cubic 0 meters of these hardwoods in the early 1990s, of which 90% was supplied by Malaysia.i Over 75% of this hardwood ends up as construction -grade plywood f7 which is used primarily to make disposable forms for molding concrete. Other �} uses include disposable chopsticks and chips for making paperP Thus, even though tropical hardwood can be a high -value wood, it is put to a low -value use. These low -value uses are profitable because of the low cost of the imported hardwood. It is cheaper for Japanese companies to import hardwoods from Malay- sia and other countries than it is for them to harvest domestic supplies from the 11+ 0 O FORESTRY • 3-17 million acres of mature cedar (Cryptomeria japonica) which were planted in Japan in 0 the late 1950s. 0 Supply The major exporters of logs who supplied the Asian market in 1990 included Q Malaysia (37 %), the western United States (28 %), eastern Russia (14 %), New Zeal- and (6 %), Chile (3 %), Papua New Guinea (3 %), western Canada (1 %), and Myan- mar (1 %). While the Asian market for forest products is large and growing, the supply of logs available from these countries is projected to decrease: from 50.1 million cubic 0 meters in 1990 to 37.1 million cubic meters in 2002 =a drop of 2.5% per year.i The projected decrease in supply reflects the loss of natural forests in Malaysia and else - c,_.,\ where, and also reflects the restrictions on logging due to environmental consider - lrJ ations.i In the United States, more than 300 sawmills have - closed in recent [ years.1321 • . pf To supply the demand for wood chips in Japan, Japanese companies have invested in forest plantations in Chile, China, Australia, New Zealand and Thai- C ' land.121 Note, however, that Siberia has vast forests 'of softwoods which could be (? logged at a higher rate to supply the Asian markets, although the' woods . are suit- L � Y able only for certain uses. `- Prices of Eucalyptus and Other General - Purpose Woods The Hawai'i stumpage price of eucalyptus grown for the chip market is Do $50 per ton, although cream - colored chips command higher prices because they require less processing. Also, higher - quality timber for other markets command higher prices. As mentioned above, Hawaiian Mahogany expects to sell their trees at $3,000 per 1,000 board feet. . 0 The increasing demand and decreasing supply of timber should cause the price of forestry products to rise, depending upon the availability of products which can , U substitute for-wood. Outlook and Economic Benefits of Eucalyptus and Related Operations in Ka'u S Forestry hold considerable promise of becoming a significant economic activity in Ka'u, where most of the trees are likely to be varieties of high -value eucalyptus. • 3 -18 FORESTRY 0 Given the supply of agricultural land in Ka'u that will remain after the higher -value crops are accommodated, as much as 10,000 acres or more could be planted in eucalyptus trees, possibly including some land which has been used for grazing. Potential Forestry Scenario Eucalyptus and related forestry operations in Ka'u are likely to be fairly com- plex operations that will evolve over the years. Initial efforts will entail identi- fying varieties of eucalyptus and other types of trees that are well- suited for the agronomic conditions found in Ka'u, are resistant to diseases and pests, grow quickly, and produce high -value wood. Nurseries would have to be established to provide planting - material from seeds and, once better trees are identified, addi- U tional planting material would be provided from clones. Land would be cleared and prepared, and the trees planted with fairly close spacing. The young trees would be nurtured during the early years, and then left to grow. After a number of years, the forest would be thinned to remove the �J least desirable trees, the remaining trees pruned to achieve good branch growth, and the harvested wood chipped. After a few more years, the forest would be - thinned again to remove the less desirable trees, while the remaining higher -value trees would be pruned again to achieve good branch growth. The harvested trees would be milled to produce medium - density fiberboard, oriented strand- board, and /or veneer, and the residual wood chipped. This process could be repeated after a few more years. Eventually, large trees would'be harvested for high -value saw -logs, and the residual wood chipped. The cycle, which could span about 30 years, could be repeated on the cleared land. The operation is unlikely to entail monoculture forestry. Instead, more than one variety of high -value eucalyptus is likely to be grown, as well as other higher - value trees. Depending upon market projections and agronomic conditions, a por- tion of the forest could be planted in such trees as koa, mahogany, Brazilian rose- 3 wood, Queensland maple, silk oak, red cedar, teak, tropical ash, etc. �} As indicated, financial returns would be enhanced by manufacturing multiple and progressively higher -value wood products using different types of woods. After local markets are supplied and imports to Hawai'i are partially replaced, most of the wood products would be shipped to overseas markets. u 0 0 FORESTRY ' 3 -19, Employment Benefits 0 Assuming about 10,000 acres of land in Ka'u will be planted in eucalyptus for -. est, approximately 50 workers would be required to grow and harvest the trees . j`j once sustainable operations are achieved, which could take 12 or more years. U Employment would be higher during the early years for nursery operations, and n for planting and nurturing the young trees. 3 Additional employment could be provided by: servicing forestry equipment D and trucks, delivering residual forestry -based mulch to various users, and in -field chipping (it is easier to haul chips from Ka'u to Hilo Harbor than it is to haul logs to Kawaihae for chipping). 0 Mills and the jobs they provide are likely to be located outside the District, such as near Hilo Harbor, Kawaihae Harbor, and /or Hamakua. These are better loca- 0 tions for the mills, given that most of the good forestry lands that are being planted are located in Hamakua. ` - PAULOWNIA Plans for a Commercial•Paulownia Forest . C International Forestry, Inc. (IFI) an Arizona investment group, is negotiating to r lease 5,000 acres of land in Ka'u from C. Brewer to grow paulownia trees, and expects to invest $12 million to produce the first harvest.i In addition, C. Brewer is discussing a plan with them to build a processing plant on the site of the old 11 Hutchinson Sugar Mill at Honu'apo. Although some of the wood will be sold in Hawaii, most of it will be exported. The Paulownia Tree 0 Paulownia —which comes from China and is named after Princess Anna Paulovna (1795- 1865), Russian princess and queen of William II of the Nether- lands -is also known as the "empress tree," the "princess tree" and, in Japan, Kiri (the sapphire dragon tree). It is a fast - growing tree which, for the cloned variety that is to be planted in 0 Ka'u, can be harvested in 3 to 5 years?' After harvesting, trees sprout from the stump and roots, and produce a harder wood. 0 Paulownia is a temperate - climate tree which requires a dormant season. The tree reproduces in the wild in areas on the east coast of the United States between Georgia and New York, and is grown commercially in Australia. 1-1 3 -20 FORESTRY In view of the climatic requirements of paulownia, commercial forest produc- tion in Hawaii's subtropical climate remains to be proven, particularly in view of 3 the fact that previous attempts to grow the tree on Kauai were not encouraging for commercial success.IB Also, windbreaks will be required in Ka'u since the tree is vulnerable to wind damage. Commercial Uses of Paulownia Paulownia wood is attractive, blond in color, light- weight, is classified as a hardwood (although it is soft compared to most other hardwoods), dries quickly, and does not split or warp.? ?' Furthermore, it is a high -value wood used for making "fine" furniture, hope chests, boxes, musical instruments, etc. Wood from the first C harvest is softer and lower in value, but can be used for molding and fiberboard. Employment Benefits Paulownia cultivation requires extensive management, including regular prun- ing. As a result, employment is expected to be comparatively high for a commer- cial forest: about 100 field and processing jobs.? ?' n OTHER TYPES OF FORESTRY OPERATIONS High -Value Hardwoods 1 � Other species of high -value hardwoods which are planned for the Big Island or already have been planted include: Chinese tallow, mahogany, monkeypod, Queensland maple, red cedar, rosewood, teak, and tropical ash. 110 ' 11231 KSBE has 2,000 acres in exotic hardwoods in Honaunau. Landowners continue to explore potential forestry activities which may result in extensive forestry plantings and substantial economic benefits. Bamboo A few Big Island farmers in Hilo and Hamakua have planted about 70 species of bamboo on about 200 acres to explore its use as structural material for buildings, and for making furniture, decorative wall coverings, and paper pulp t35 -371 Bamboo can also serve as a windbreak, and shoots can be used as food for both human con- sumption and for livestock (horses, pigs, cows, goats). O FORESTRY O 3 -21 Asa structural material, bamboo is light, strong and flexible. But in order for 0 it to be used as structural material in Hawaii, the counties would have to change their Uniform Building codes. Also, bamboo is vulnerable to decay and damage fl by rain, moisture and wind. A further problem is competition from imitation bamboo made of vinyl. It is imported from Japan and sold in Hawaii for use in fences, benches, gates, screens, carport covers, etcJ It retails for about double the G price of natural bamboo, but the imitation bamboo lasts much longer. Existing bamboo operations in Hilo and Hamakua merit monitoring. If they 4 prove to be profitable and market acceptance grows, then similar operations should be explored for Ka'u. Because of their small size, such operations lend themselves to being family enterprises.• O Christmas Trees About 11 acres located mauka of Kona International Airport are planted in . Monterey pines and Virginia pines which are sold for Christmas treesi A similar G operation is located on Maui. Also, Norfolk pines are grown in Hawai'i to supply Christmas trees. - A w ith the bamboo operations, the Christmas tree operations'merit monitor- --‘''.. , ing. If they prove to be profitable and market acceptance grows, then similar oper- (� ations should be explored for Ka'u. Again, such operations lend themselves to (S being family enterprises. • fl Neem Trees On 5 acres in Hilo, C. Brewer is experimenting with neem trees, which are com- m on in India and Pakistan. The tree has been planted in hedgerows for easy harvesting. Products from the oil and leaves include: cosmetics; soap;. toothpaste; 0 acne medicine; birth - control products; and insecticide used against termites, mos- quitoes, and nematodes. f Operations should be monitored with possible expansion in Ka'u. Agroforestry Small farmers may combine forestry, crop farming, and livestock on their prop- erties. For example, coffee grown under koa trees is a viable option for some mauka areas of Ka'u. • n 3 -22 0 FORESTRY 0 ECOTOURISM A further benefit of forestry is that it can provide an environment for ecotour- 1 ism that would add to the appeal of Ka'u to visitors. Scenic trails, could be pro- vided for hiking, mountain biking, and horseback riding. Good signage and per- sonal guides could provide interesting background information while also serving to protect the environment. In order to gain access to private property, commercial tour operators and /or individuals would have to agree in writing to liability provisions set by landown- ers. GOVERNMENT SUPPORT Stewardship Programs The Hawai'i State Forest Stewardship Program and the Federal Stewardship Incentive Programs provide technical and financial assistance to owners of nonin- dustrial private forestland committed to the stewardship, enhancement and conser- L vation of their forest resources.«' Applicants (including joint applicants) must own or lease for 10 or more years 3 at least 5 acres of contiguous forested land or land that was formerly forested. The Federal program excludes: those who derive more than 50% of their income from the primary processing of forest products or from commercial recre- ation, and those owning more than 1,000 acres. For a period of 10 to 30 years, up to $10,000 per year is available under the Fed- eral program and up to $75,000 per year is available under the State program to pay half the cost of establishing and managing a forest. A few landowners in Wood Valley participate in the stewardship programs. Other State Forestry Programs The State conducts research on various trees, and operates a Forestry and Wild- life tree nursery in Kamuela to supply seedlings to landowners who want to forest their land. County Property Tax Code In 1996, the County rewrote its property tax code to allow landowners and long -term lessees to dedicate their land to "native forest" use for a period of 20 o O. FORESTRY 3 -23 years.m A " hative forest" is defined as a land area in which at least 60% of the `- land is covered with treesind plants that are indigenous to the Hawaiian Islands, with at least255 of the forest being comprised of trees. . 0 • - 'The native forest land must: (1) consist of at least 5 intact or contiguous acres of • native forest; (2) lie within agricultural, intensive agricultural, open or unplanned zoned districts; and (3) be according to an approved plan. . Dedicated land is assessed at 50% of the normal assessment If the terms and • conditions for having .dedicated_ "native forest" land are not followed, then a 10% • . penalty and retroactive tax assessments are imposed. . REFERENCES, . 0 [1] Na'alehu Main Street. Strategic Planning Survey, Na'alehu, Big Island of Hawaii, 1995. Na'alehu, Hawaii. 1995. • f [2] Groome Poyry, Limited. . "Hawai'i Forestry Investment Memorandum" (includ . ing Appendices). •August'1994. • . , [3] Decision Analysts Hawaii, Inc. Hawaii's Sugar Industry and Sugarcane Lands; . • .Outlook, Issues and Options. April 1989. J [4] State-of Hawaii Department of Agriculture and U.S. Department of Agricul- •---1• ture, Soil Conservation Service. "Agricultural Lands of Importance to the State j of Hawaii." June:1979. . , [5] Department of Planning & Economic Development, State of Hawaii. "Esti- . • • mated Average Daily Insolation, Island of Hawaii." January 1985. . . [6] Thomas A. Loudat. "The Economics of Commercial Koa Culture in Hawaii." ' The County of Hawaii, Department of Research and Development March 18, . 1996. ' [7] Discussions with Big Island. foresters and landowners.' 0 " [8] A.A. Smyser. "Hawaii's'Vulnerability to Hurricanes. "'Honolulu Star Bulletin: ' Honolulu, Hawai'i. October 21, 1997. [9] Tommy Holmes. The Hawaiian Canoe. Editions, Limited, Honolulu, Hawai'i. . • - • 1993. � • ' [10] Jeff McCulley: " " Forestry Take Root on the Big Island ?" Hawaii Business. November 1997. • . . , . [11] State of Hawaii, Department of Land and Natural Resources. [12] Russell K. LeBaron: "Hawaii's Sandalwoods" Department of Land and Nat- 3 . ural Resources, Honolulu, Hawaii. • --1 . . u .. 3-24 FORESTRY O . [13] Ralph S. Kuykendall. The Hawaiian Kingdom, Volume I, 1778 -1854, Foundation and Transformation. The University Press of Hawaii. Honolulu, Hawai'i. 1978. [14] Thomas Kemper Hitch. Islands in Transition: The Past, Present, and Future of Hawaii's Economy. First Hawaiian Bank. 1992. [15] Robert C. Schmitt. Historical Statistics of Hawaii. The University Press of Hawaii, Honolulu. 1977. [16] Encyclopedia Britannica. [17] S.M. Kamakau. Ruling Chiefs of Hawaii, Revised Edition. The Kamehameha Schools Press. Honolulu, Hawaii. 1992. [18] Scott C. S. Stone. The Story of C. Brewer and Company,,Limited. Island Heritage 1 Th Publishing. Honolulu, Hawai'i. 1991. 1-, [19] Cindy Ramanathan. "Indian Sandalwood Trade." Trade & Environment Data Base, Case Studies. American University. Washington, D.C. April 1997. [20] Electronic Newt. 1995. [21] "The Australian New Crops Newsletter." Issue No. 2. July 1994. [22] NetTrade. 1996. [23] EB Cravens. "An Agroforestry Vision." Ka 'u Landing. Ocean View, Hawaii. July 27, 1997. LI [24] Institute of Pacific Islands Forestry, USDA Forest Service. Hawaii's Forests —A Bridge to the Future, 1993 Forestry Symposium Proceedings. Honolulu, Hawai'i. February 1994. [25] Hawaiian Sugar Planters' Association. "Hawaiian Sugar Manual." Annual. [26] Press releases. ' fl [27] Sandi M. Skousen. "Agriculturalist Sewing Future for Timber Industry." Pacific Business News. Honolulu, Hawaii. January 12, 1998. [28] Jan TenBruggencate. "Forestry to Claim Former Caneland." The Honolulu Advertiser. Honolulu, Hawaii. November 30, 1996. [29] Nik Balanakura. "Malaysian Raw Wood Export Ban." Trade & Environment Data Base, Case Studies. American University. Washington, D.C. [30] Jay A. Schmidt. "Chopsticks and Trade." Trade & Environment Data Base, Case Studies. American University. Washington, D.C. [31] Yoko Fujiki. "Japan and Cedars." Trade & Environment Data Base, Case Studies. American University. Washington, D.C. [32] "Managing the Forests, Paths through the Wilderness." The Economist. Octo- ber 18, 1997. [33] The American Heritage Dictionary. [34] Jan TenBruggencate. "Timber Enterprise Takes Root." The Honolulu Advertiser. Honolulu, Hawai'i. May 9, 1998. [35] Hugh Clark. "Bamboo Industry Starting to Take Root on Big 'Island." The 1--. Honolulu Advertiser. September 8, 1997. 0 L 0 0• ' FORESTRY 3 -25 ,� . V [36] EBWCravens. "We're Talking Bamboo." Ka'u Landing. Ocean View, Hawaii: 0 May 1997. [37] EB Cravens. "Bamboo Farming is Compatible with Low Income Housing. Ka'u Landing. Ocean View, Hawai'i. August 1997. B [38] Jerry Tune. "Shoots! So Plastic." Honolulu Star Bulletin. Honolulu, Hawai'i. November 21,1997. B [39] Beverly Creamer. "Island Trees Find Christmas Market." The Honolulu Adver- tiser. Honolulu, Hawaii. December 16, 1996. [40] Hugh Clark. "Versatile Neem Tree Gets Tryout as Isle Crop." The Honolulu U ( Advertiser. Honolulu, Hawaii. May 18, 1995. [41] Rod Thompson. "Neem Tree Rooted in Big Isle's Future ?" Honolulu Star Bulle- • • tin. Honolulu, Hawai'i. May 19, 1995. [42] Department of Land and Natural Resources, Forestry Division. "State of Hawai'i,Forest Stewardship Handbook: 1996- 1997." Honolulu; Hawaii. • • [43] Hawaii Forest Industry Association. "Big Island's Native Forest Dedication." 11 , . Woods: Volume 4, Number 3. Hilo Hawai'i. December 1996. 0 lS 0 0 0 3 • • D • O 0 . • • 4. LIVESTOCK . RANCHING Land Cattle ranching has a long history in Ka'u, going back to the 1860s for some operations ti] Today; four large ranches and a number of small ones graze cattle , and other animals on more than 80,000 acres in the District.J For the most part, a land used for grazing is of lower agronomic quality than land used for growing • commercial crops. • O Herd Animals • The cattle herds in Ka'u number about 11,000 head, most of which are owned CI by the four large ranches. In addition, some ranches graze a few hundred goats 0 and /or sheep. All ranches have working horses, and some board horses for recre- ational riding. 0 Feedlots and Processing Plants III The marketing of cattle in Hawai'i has become more difficult since the 1990 c losings of the Hawaiian Milling Company (the State's largest feedlot) and Hawai'i Meat Company (the State's largest meat processing plant), both of which were located on O'ahu. These closures were followed by closures of the feedlot and processing plant at Hamakua. . Several small processing and packing houses and one small feedlot remain in operation, but are too small to accommodate the supply of Hawai'i -grown cattle. . 1. Feedlots are expensive to operate in Hawai'i because of the high cost of imported feed grains. Rather than import about 7 pounds of grain to increase the n weight of an animal by 1 pound, it is less expensive to import beef — especially low- ly cost beef from Australia and New Zealand.i' 8 41 • I U 4.2 O o LIVESTOCK Big Island Cattle Trends As a result of the closure of the feedlots and meat processing plants on O'ahu rj and the Big Island, cattle•herds on the Big Island have dropped 14% from 138,900 � head in 1991 to 119,300 in 1996. The decline has occurred because most Hawai'i- grown steers and heifers are now exported for finishing on the mainland. How- ever, the number of beef cows has changed little over this period: 60,800 in 1991 and 61,400 in 1996. Forage Beef Forage beef is now being marketed quite successfully to restaurants on the Big Island. Although this is a relatively small niche market, chill space for carcasses 1 is inadequate to accommodate the potential demand of a few hundred head per year. t1 Exports and Shipping Since the closure of the major feedlots and meat processing plants in Hawai'i, most Hawai'i -grown steers and heifers are exported to the U.S. mainland, Canada, and Mexico where cattle prices are higher than they are in Hawai'i. To take advantage of the seasonal availability of grass on the mainland, a large number of animals are shipped from Hawaii in a short period of time.l Two forms of transportation are used to ship cattle to the U.S. mainland. The first is to fly them there, which is expensive and the available cargo space on aircraft is limi- ted. Furthermore, air service is available from Honolulu only, which means that the animals must be barged from the Big Island to O'ahu at additional cost and stress to the animals. The total cost of surface cargo and airfreight amounts to about 29e per pound, or about $116 for a 400 -pound anima1. The second alternative is to ship the cattle via Matson Navigation Company (Matson), which is also expensive (about 27¢ per pound, including the services of a shipping agent, or about $108 per animal). The cattle must be shipped in special containers which have been modified by shipping agents or members of the 3 Hawaii cattle industry at costs ranging from under $20,000 to over $35,000 per con- tainer. Although, this service is available only for animals weighing less than 700 pounds, the number of cattle shipped can be large and service is frequent (two ships per week to Los Angeles and one ship per week to Oakland and Seattle). 0 D 0 0 LIVESTOCK 4 -3 B . • A third alternative for shipping cattle to the U.S. mainland is discussed in the section which follows. , V Actions to Improve the Profitability of Ranching The profitability of ranching operations would be enhanced if the following actions were taken: — Change the Jones Act to allow the use of foreign, livestock carriers to ship cattle to the U.S. mainland If livestock carriers (the specialized ships designed to transport live- stock) were available, the best way to ship a large volume of cattle to the U.S. mainland would be to use them. These ships can accommodate very large loads of animals at a lower cost than other alternatives (about 200 per , pound, or about $80 per animal), and with the least stress to the animals. tS' Also, there are no limits on the weight of an animal. But scheduling could A be a problem, particularly for small ranchers. Hawai'i ranchers cannot use these specialized carriers to ship cattle directly to the U.S. mainland, however, because the Jones Act of 1920 bars r? the use of foreign -built and /or foreign- operated ships when transporting �y goods between U.S. ports. Unfortunately, none of the world's supply of livestock carriers was built in the United States. Because of the the Jones Act, some ranchers use foreign livestock carri- ers to ship their cattle to Canada and occasionally to Mexico. After the cat - tle are sold, the new buyer can transport the cattle across the border to the United States. D The Hawai'i Cattlemen's Council, Inc. advocates making changes to the Jones Act to allow use of foreign livestock carriers to ship cattle to the U.S. • (Th mainland. Thus far, the Hawaii Congressional delegation has opposed this. — Increase marketing and chill space for forage beef Sales of forage beef could be increased with more marketing to Hawai'i restaurants, and additional chill space to accommodate more carcasses. — In State leases of ranch land, allow rent credits for fences and other improvements that are made by rancher - lessees Under the auction system for leasing State land, a rancher may have to pay .twice for improvements: once when the improvements are first made, then again under a new lease when the property is bid to a high level U because the improvements were made. - • 4-4 0 0 LIVESTOCK This problem is avoided with Federal agricultural leases because they allow rent to be satisfied using credits for approved improvements. In effect, by allowing rent credits, the Federal government pays for, or at least helps subsidize, the improvements. Credits for fences would open up more land for ranching. — In State leases of ranch land, permit additional uses on the land to allow ranchers to earn supplemental income. State leases for ranching generally allow grazing of livestock only. Ranchers could derive supplemental income and provide jobs if the leases were to allow ranchers to diversify their operations to include ecotourism, �J dude ranches, mountain biking, paid hunting, etc. Economic and Other Community Benefits of Ranching Even though vast acreages are involved, ranching provides relatively modest economic benefits. Many ranches struggle to achieve profitability. For leased land, rents generally are less than $10 per acre per year. And relatively few jobs are provided; the largest ranches in Ka'u generally employ less than 10 people. But ranching does provide a very significant benefit in terms of reduced prop- E erty taxes. When the land is used for grazing, it is assessed at a low agricultural value rather than at a high market value which would be the case if the use were not classified as agriculture. A 20 -year dedication of the land to agriculture reduces property taxes even more since the tax rate is halved. Another benefit of ranching is that the grazing animals help prevent land from �. being overgrown. Finally, ranching offers an appealing and unique lifestyle for those who live and work on a ranch, while also contributing to the "country" ambience that Ka'u residents value. Outlook for Ranching 3 Despite the low financial returns, ranching is expected to continue in Ka'u with- out major changes in the levels of operations and employment. This is due to the vast supply of land of marginal agricultural quality, the lack of a more profitable J alternative use of these lands, the low property-tax assessment provided by ranch- ing and, for some workers, the appeal of the lifestyle. L ` LIVESTOCK 4 -5 DAIRIES ' , , . 0 S &S Dairy - ' • , , ; .. -. S &S Dairy, one of four dairies on the Big Island, is located in Na'alehu on about f 1,800 acres of land which are under a recent 30 -year lease from C. Brewer.r The ' dairy has over 1,00.0 animals, including about 325 milking cows as well as steers ' grown for the beef market. A new barn will allow the number of milking cows to be increased to 450 head. The dairy employs 12 workers. Like other dairies in Hawai'i, S &S Dairy has been adversely affected by a price/ cost squeeze. • The State, which .controls wholesale milk prices, has not u increased the Big Island milk price since 1993; the current price is about $23.50 per '(3 , hundred weight.' Meanwhile, feed prices have increased from about $250 per ton LL SS to as much as $290. . A source of lower-cost feed would contribute to the economic "health of S &S Dairy. One possibility is locally produced corn silage as discussed in Chapter 2. ' 11 . . ., ' Proposed Waiabuta Dair 8 . Planned Operations A rancher in Ka'u is pursuing the possibility of starting 'a new dairy, Waiabuta Dairy, in Na'alehu.J About 2,200 acres have been leased from the State, land is - . 0 being cleared, and fencing and ponds are being installed for pasture operations. To . • reduce costs, part of the dairy feed would come from the pastures and about 200 .l acres would be used to grow feed corn for silage. At full . operation, the Waiabuta . ' Dairy would employ about 10 people. - ' fl , ' • The cost a new dairy in Hawai'i (including cows, barns, milking equipment, -U etc.), runs as much as $1 million per 100 cows. 'Financing of the proposed dairy has not been arranged . Unlike many other areas in the State, the Na'alehu community is generally receptive to having dairies. It should be noted, however, that Na alehu is not r regarded as having the best weather for dairy farming.th' The occasional droughts are stressful for dairy animals, resulting in lower milk production and loss of . 0 . . . animals; also, additional costs for feed are incurred due to poor pasture conditions. ' Market Outlook . - ' Arranging a market for milk produced by Waiabuta Dairy will be difficult. The ' Big Island would not be able to absorb a major increase in the supply of milk from . 4-6 a LIVESTOCK a new dairy because nearly all of the grocery markets on the island already purchase their milk from local dairies. The only exceptions are the two Safeway stores in Hilo and Kona which import some of their milk from California. From a regulatory perspective, the existing Big Island dairies are already supplying 100% of the the State quota for the island, and, they are shipping their excess milk pro- duction to Honolulu. Given the market situation on the Big Island, Waiabuta Dairy plans to ship its 11 milk to Oahu to displace imports, which account for about half the O'ahu supply. [91 The O'ahu milk price "floats" with the cost of milk in Northern California, and then shipping and handling costs are added. In recent months, the O'ahu price has LJ been less than $25 per hundred weight compared to the Big Island price of $23. n The inter - island barging of milk costs about $1 per hundred weight. Additional costs would be incurred for trucking milk to Hilo Harbor, and then from Honolulu Harbor to one of the milk processors on O'ahu. In order to ship milk to O'ahu, Waiabuta Dairy would need to negotiate a milk contract with one of the milk processors. The dairy would also need a quota allocation from the State Board of Agricul- ture based on a finding that there is a milk shortage on O'ahu that cannot be sup- n plied by the O'ahu dairies. The State Department of Agriculture (DOA) regards V the granting of such a quota allocation as "very doubtful." If a quota allocation were to be given to allow more milk to be produced to supply the Honolulu mar- ket, the DOA reports it would recommend in favor of existing dairies, some of whom have requested an increase in their quota allocation for the sole purpose of supplying the Honolulu market. HOG FARMS Production Trends and Self= Sufficiency fl In 1995, a few hog farmers from Ka'u contributed to the total Big Island produc- tion of about 604,000 pounds of pork (live weight) from the approximately 3,400 animals marketed. About 60 hog farms on the island maintained an inventory of about 2,100 pigs and hogs, including about 500 breeders. Most were family opera- tions �1 averaging 35 animals each. (� From 1990 to 1995, pig and hog trends on the Big Island have been down: there are 25% fewer farms, an inventory of 19% fewer pigs and hogs, 15% fewer pounds of pork sold, and 1896 less revenue.f During this period, pork prices declined 4 %. -s o. O LIVESTOCK 4-7. `-y [41 Also, Big Island self- sufficiency in pork was low in 1995 —only 9%. This was 0 down from a 12% self - sufficiency in 1990. Declining trends and low self- sufficiency are general indicators that, on aver- age, Big Island hog farms_ are only marginally profitable. The competition comes from low -cost imports. . N ew Ka'u Hog Farm . 8 , • Despite the indicators of marginal profitability, a new hog farm in Ka'u having about 90 pigs and hogs reports success. This is a modern operation where the capital improvements for holding the animals were financed by a RETA -H grant, f combined with labor and supplies contributed by family and friends. Provided that land can be obtained, plans call for expanding the operation to 400 pigs and . i i hogs. • Feed costs are kept down by obtaining slop from friends and neighbors. The { pigs are sold alive or as kalua pig, laulau, sausage, and smoked pork. 0 , Potential for Hog Farms in Ka'u - Assuming that, over the long term, hog farms in Ka'u prove to be profitable and the price and quality are competitive with imported pork, expansion could occur 0 by displacing imports. An addition of five large hog farms of 400' animals each would double the size of -the industry on the Big Island, and would increase Big A i Island self- sufficiency to about 18 %. This would provide employment for about . five families and some additional workers. Slaughterhouse for Ka'u ' A major expansion in hog farming in the District would be required in order to - supply a sufficient, number of hogs to cover the capital and operating costs of a �' • slaughterhouse in Ka'u. L The capital costs for a small, Federally certified, commercial slaughterhouse 0 amount to about $800,000. This would include: planning and design, the build- ing to house the slaughterhouse, augers, bleeding rail, blood and floor drains, con - G trol center, dehairing equipment, dressing rail, electric stunner, elevating platform, gimbal table, hand sink, hog split saw, incline conveyer, a high - pressure water sys- tem, offal table and pan, pasteurizer, propane tanks, scalding tank, sterilizer, stock . U . Q . 4 -8 O LIVESTOCK 0 ` hoist, trucks and trailers, ventilating equipment, wash basin, water and blood drain, waste disposal, wheel barrows, etc. Additional equipment could include a refrigerator, an ice machine, and a freezer. The facility would require access to a large volume of low -cost water, and j l would require a major waste - disposal system for the water, blood, and solid waste. LJ Because of Federal requirements for sanitary operations, even a small operation would require four or more employees, including an experienced operator, as well as space for a Federal inspector.E Debt service and operating costs would amount to about $220,000 per year (based on 100% financing at 7% % interest paid over 20 years, and operating costs of about $35,000 per employee). To generate revenues of $220,000 per year, about 20 hogs would have to be slaughtered daily at a fee of about $30 per hog. This would require a population of u about 4,500 animals, including breeders. BEE OPERATIONS Honey Production For those stung by the desire to manage livestock but on a small scale, honey 3 production would be an appropriate alternative— either as a primary occupation or to supplement family income. B For a 400 -hive operation, gross income can amount to about $48,000 per year, based on 150 pounds of honey per hive per year, and priced at 80 cents per pound of honey. L To achieve high honey yields, most honey producers on the Big Island season- ally truck their hives from one site to another throughout the island depending l� upon when and where plants and trees are flowering [13] Hives may be moved among areas of macadamia nut trees, coffee trees, Christmas berries, keawe, lehua, etc., and placed at a density of about one to four hives per acre. With funding from the RETA -H Program, the Bee Enterprise Educational Ser- 13 vice in Papaikou provides free training, tools and supplies to budding beekeepers. Also, graduates of the 250 -hour, 12- to 16 -month program are provided, at no charge, a beekeeper's suit, tools, and 15 honey -bee hives valued at $225 each. Furthermore, The Honey Hui, a cooperative for purchasing supplies collectively and marketing honey, will purchase the graduate's honey production for a period of 5 years at fair - market value. D 9 �J LIVESTOCK 4 -9 • • O Queen Bees E • ' The Big Island is a major exporter of queen bees that are free of mites —these (°' critters are a problem on the U.S. mainland. {� Ka'u is not a suitable area for producing queens, however, because of its expo- sure f to strong tradewinds. A better location is Captain Cook where all three of the Big Island queen operations are located — largely because the area is sheltered from the tradewinds. A second problem is that exports of queens have plateaued. Also, the production of queens requires considerable expertise, which makes entry into the business difficult. • REFEREN . • [1] Discussions with ranchers and University of Hawaii extension agents. . [2] U.S. Department of Agriculture, Soil Conservation Service, Honolulu, Hawaii. Ka'u River Basin Study, Hawaii County, Hawaii. February 1994. [3] The Hawaii Cattlemen's Council, Inc. [4] Hawaii Agricultural Statistics Service. Statistics of Hawaiian Agriculture. Annual. . [5] Department of Agriculture, State of Hawai'i. [6] U.S. Department of the Navy, Naval Facilities Engineering Command, Real (� Estate Division. �} [7] S &S Dairy. [8] University of Hawaii extension agent for dairies. .3 [9] Waiabuta Dairy. . [10] Decision Analysts Hawaii, Inc. `North Shore Planning District, Oahu: Agri- cultural Resources, Situation, and Outlook." Honolulu, Hawai'i. July 1997. [11] Masazo's Pig Farm. [12] Based on discussions with equipment suppliers and slaughterhouse operators: [13] Bee Enterprise Educational Services. fl �9 . O • 0 • - 5. AQUACULTURE • • HAWAIIAN FISHPONDS Aquaculture Hawaii its roots in raising of in - B ponds. Historical in evidHawaence has suggests that, at the one time, between fish 340 old Hawaiian and 360 fish- fi §h ponds existed in Hawai'i, a few of which' were located in.Ka'u at Ninole, Kawa, Honu'apo, and Ka'alu'alu Bay. . • (� SEAFOOD AND AQUACULTURE MARKET ( J Aquaculture is an industry which has shown, and continues to show, great promise. This is indicated by the fact that the demand for seafood products out- strips the supply. •Regarding demand for seafood products, it is high and growing. Annual con- sumption averages 50 pounds per person for Hawai'i consumers, 16 pounds for U.S. consumers, and 176 pounds for Japanese consumers. • Much of the demand is supplied by of seafood: about 70% in the case of Hawai'i and the U.S., while Japan accounts for nearly 30% of the world trade in J seafood by value.J However, catches from many ocean fisheries have reached sustainable yields, or have even declined in some areas due to overfishing.' To make up for the shortfall in supply, aquaculture producers have stepped in to provide a large part of the growing demand for fish products. Hawaii's aquacul- ture operators now produce between 2% and 3% of all seafood consumed in the State. In the U.S. market, aquaculture accounted for about 17% of the seafood • supply in 1990. In the world market, aquaculture production in 1993 totaled nearly 16 million tons, of which about 80% occurred in developing countries, primarily in Asia.P . • Lj • 5-1 G 5 -2 0 AQUACULTURE 0 0 HAWAII'S COMPARATIVE_ ADVANTAGES IN AQUACULTURE Hawai'i enjoys a number of advantages for aquaculture production, including: C (1) a climate having year -round growing conditions and many sunny days, which stimulates production; (2) ready access to extensive research, training, and consult- ing '? services in aquaculture operations; (3) hatcheries to produce disease -free, genet- ically superior broodstock and seed stock; (4) an abundant supply of land and water in areas that are suitable for aquaculture; (5) a highly educated labor force; (6) excellent transportation services; (6) tariff -free access to the large U.S. market; (7) political stability; and (8) a history of strong support from the State. HAWAII EXPERIENCES WITH AQUACULTURE To profit from the demand for seafoods and Hawaii's comparative advantages, a number of aquaculture ventures have been attempted in Hawaii over the past — three decades. On the whole, however, aquaculture has not lived up to its early promise. Many of the operations did reasonably well at first, but most ultimately failed. Depending upon the particular venture, problems have included: inade- quate financing; problems with environmental regulations; high costs in Hawaii for 3 land, labor, etc.; technical and management problems; disease problems; insuffi- cient marketing; stiffer - than - anticipated competition; storm damage to ponds; and 3 improper siting of operations. Many of the aquaculture operations that are doing well have benefited from fl direct subsidies or hidden ones. On the Big Island, most of the successful aquaculture ventures are located at Keahole Point at the Natural Energy Laboratory of Hawaii Authority (NELHA) on the west side. The success of aquaculture at NELHA has been built on a combina- tion of factors: the availability of cold nutrient -rich and pathogen -free sea water which is pumped up from the deep ocean off Keahole Point; the warm surface water; the very high solar radiation; and the facts that NELHA is located adjacent to a major international airport, major government permits for operating there are already in place, and the very expensive infrastructure was government- financed. 0 Also, the valuable ocean -front land used by NELHA, with the improvements, is leased at low rents which correspond to the rental rates for agricultural land, rather than at higher rents which might otherwise be charged for ocean -front land. 3 0 0 AQUACULTURE 5 -3 --T . J In summary, aquaculture in Hawai'i remains an industry with great promise,. { but one which, for the most part, is still in the development stage. POTENTIAL BACKYARD AQUACULTURE IN KA • - Nearly 20 native - Hawaiian families on Oahu in the Waianae District partici- - 3 . pated in the Waianae Alternative Crop Cooperative (WACC) to. grow Waianae, Sunfish•(red tilapia) in small backyard tanksi Tilapia is grown because it is a hardy fish: . The WACC evolved from the Waianae Backyard Aquaculture Project, which " - was sponsored br the Waianae Coast Community Alternative Development Corpo- . ration (WCCADC) using substantial grant funding to provide training, technical 0 assistance, start-Up financing, and marketing support. Grants were provided by • . the Administration for Native Americans of the U.S. Department of Health and 0 Human Services, and by the Community -Based Economic Development Program (� of the Business Support Division of DBEDT. B Yields are on the order of about 500 pounds of fish per' tank per year, which provide revenues of about $3,000 or more per year to supplement family incomes. ` ri The families are -now on their own, although WCCADC still provides finger- - � lings and marketing support for selling the tilapia in Waianae and Chinatown.. A 'l. few of the families are diversifying their efforts into growing ornamental fish for } the aquarium trade. " But prospects for profitable backyard aquaculture in Ka'u based on the Waianae model or similar models are not encouraging, even with marketing sup - port, training, and subsidies to cover the initial cost of backyard,ponds. For Big - Island operations, it is anticipated that the wholesale prices for tilapia and catfish . • jj�� (which is also - suitable for backyard operations) would stabilize at about half the ' (._I. wholesale prices on O'ahu.Js? Hence, revenues would be about half that of a similar • operation on O'ahu. At the same time, the Big Island cost for feed and, in many ' cases, water are higher than on O'ahu.. . Ornamental fish grown for the aquarium market are a more promising pros- 0 pect, and one which is being explored by a number of entrepreneurs on O'ahu and ' "other islands. However, further market development will be needed to overcome • U Q0 • 0--. 5 -4 AQUACULTURE market saturation and the risk of low prices. Also, operators on Oahu have an advantage in terms of the better airfreight service (see Chapter 2). R AQUACULTURE USE OF IRRIGATION RESERVOIRS 2] A more promising approach to aquaculture in Ka'u is to stock irrigation reser- voirs with hardy species of fish (e.g., tilapia and catfish) in order to derive supple- 8 mental income for farm operations. During droughts, however, the entire stock of fish may have to be sold before the reservoir runs dry, or crops may have to be sac- 1 rificed to save some of the fish — whichever is more profitable at the time. l AQUASEARCH, INC. Plans for Ka'u Located near Kailua -Kona at NELHA, Aquasearch, Inc. (Aquasearch) is a marine bioscience firm founded in 19880 At their 1 -acre research and devel- opment facility, Aquasearch has automated the "closed chamber photobioreactor" process for producing microalgae rich in astaxanthin, a natural food- coloring. R Astaxanthin is a red pigment which is used to add a pink color to egg yolks and to the flesh of pen - raised salmon and trout. The new photobioreactor process, for which Aquasearch has obtained U.S. and (� European patents, brings benefits in that it minimizes contamination, offers signifi- cant savings in labor costs, and controls the production environment more effec- tively.i6' r, If Aquasearch is able to perfect its process at commercial volumes, and addi- ` tional land is needed to meet demand, then the company plans to produce astaxan- thin in Ka'u on land to be obtained from C. Brewer in exchange for part - ownership in the company. The photobioreactors would be located near Honu'apo, which is an area with high solar radiation (sunshine) —about 400 calories per square centimeter per day.n High solar radiation contributes to higher yields. Initial production would begin with about 10 acres and, if successful, could be increased to 80 to 90 acres. About 500,000 gallons of water per day would be required, and the tailwaters would be used for irrigating crops: 0 O O AQUACULTURE 5 -5 Q If , this venture is successful, additional aquaculture operations could be . Il attracted to Ka'u where ample land is available. Market for Astaxanthin ' The world market for astaxanthin amounts to about $140 million per year in 4] sales.i In order to sell its astaxanthin, Aquasearch has entered into a partnership with Cultor Ltd., a Finland -based animal foods company which 'would distribute the product: Cultor could market up to 1;500 kilograms per month, which would be worth about $30 million annually. 0 Competition may come from Cyanotech Corporation, which is also located at NELHA and has developed its own process for producing astaxanthin microalgae. Employment ( Assuming that Aquasearch is successful in developing its technology at coin- r - mercial volumes, the company would begin operations in Ka'u with about 40 new 4] hires. Employment could grow to about 120 jobs within about 5 years.i ' U l - AQUATICS FEEDS RESEARCH CENTER AND PILOT PRODUCTION FACILITY In the long term, aquaculture ventures in Ka'u and elsewhere in Hawaii are 3 likely to benefit from an aquatic feeds research center and pilot production center to be located at the University of Hawai'i, Hilo Agriculture Farm at Panaewa out - `1 . side Hilo.t The U.S; • Department of Agriculture is providing $3.2 million in �JJ grants to the Oceanic Institute to build the facility,, and feed companies have pro- 0 vided equipment discounts valued at more than $700,000. To be completed in the' year 2000, the facility will be the first dedicated aquatic feeds research center and D pilot production center in the United States. The vision is for Hawai'i to become the nation's center for aquatic feeds research. r , • The operation will develop aquatic feeds for fish and other marine life that may d become part of Hawaii's aquaculture industry, including: moi, mullet, milkfish, 'omilu, and 'opakapaka. Hopefully, these feeds will be developed from the waste and /or low -value by- products that are generated from growing and /or processing macadamia nuts, sugarcane, coffee beans, coconut and other crops. The facility O 0 5 -6 AQUACULTURE will also serve as a testing site and showcase for production technology and feed equipment built by U.S. manufacturers. 11 REFERENCES 0 [1] Aquaculture Development Program, Department of Land and Natural 0 Resources. Hawaii's Future in Aquaculture: Strategy for the Blue Revolution. Hono- lulu, Hawaii. January 1993. [2] Meryl J. Williams. "A More Profitable Crop? Aquaculture and Food Security." Proceedings of the PACON Conference on Sustainable Aquaculture 95. Pacific Con- gress on Marine Science and Technology. Honolulu, Hawaii. June 1995. [3] Waianae Coast Community Alternative Development Corporation. [4] Waianae Alternative Crop Cooperative. [5] Aquaculture extension agent, Big Island. [6] Aquasearch, Inc. r- [7] Department of Business, 'Economic Development & Tourism. "Hawaii Sun- shine Map." Honolulu, Hawai'i. January 1985. [8] "New Hilo Center Will buoy Aquaculture." Honolulu Star - Bulletin. June 30, 1998. 3 [9] Jan TenBruggencate. "Oceanic Institute to Establish Fish Food Factory." Hono- lulu Advertiser. June 23, 1998. c n 3 L 0 L 0 o • 0 o 6. FISHING 9 OVERVIEW Fishing Grounds • 9 9 There are two centers for commercial and subsistence fishing in Ka'u: South - Point and Punalu'u. At South Point, fishermen fish nearby ko'a (fish houses), which are underwater features where fish are known to congregate due to localized enrichment of the ocean waters.« In addition, some anglers fish an anchored buoy called the South Point FAD ( "fish- aggregation device ") located 2% miles off Lae - okamilo (between South Point and Whittington Beach County Park) at 900 fathoms (5,400 feet).r Fishermen from Punalu'u fish primarily at (1) a small nearby ko'a, and (2) the Palima Point FAD which is located about 4 miles offshore of Palima Point at 733 fathoms (4,398 feet).J - �? Boat Ramps and Storage �} Local fishermen use small boats (usually less than 30 feet long) which they 9 launch from boat ramps.i' For South Point, the ramp is at Kaulana Bay about a mile east of South Point on lands owned by the Department of Hawaiian Home Lands (DHHL). Some of the Hawaiians at South Point help the fishermen get their boats in and out of the water, and serve as unofficial "harbor masters." Also, some of the boats are stored near the Ka 'Ohana o Ka Lae Visitor Center at South Point where resident Hawaiians help to provide security. A second boat ramp is located at Punalu'u. The launching of boats at both of these boat ramps can be difficult for the unini- . tiated because of the waves and surge and, for Punalu'u, a trailer with a long 0 extension is required because of the shallow slope of the ramp.J"" Fishermen who 1 1 are not familiar with the conditions can lose their boats on the rocks. 64 • V 6-2 0 FIS HING 0 Vandalism to vehicles left on shore can be a problem, particularly for visiting fishermen from outside the District Species of Fish Fish most commonly caught off South Point and Punalu'u are: ahi (yellowfin tuna), akule (big -eyed scad), mahimahi (dolphinfish), ono (wahoo), opakapaka (crim- son snapper), and opelu (mackerel scad).J Fishing Season 1 For most of the above -named fish, the fishing season generally runs from May through September. However, the season for opelu and mahimahi generally starts in March rather than May and, for mahimahi, excludes the summer months. Opaka- paka are caught in the winter from October to February.J The seas are too rough during some periods for fishing, primarily during the winter months. [11 r' y Fishermen 3 South Point waters are rough, rescue services are far away, much of the shore- line is formed by steep cliffs that drop off to deep water, and the launching and recovery of small boats is difficult and risky. Nevertheless, about six to eight skilled commercial fishermen fish the nearby waters. 11 In addition, about 20 to 30 part -time fishermen fish the waters off South Point's] Jt' At Punalu'u, which also has rough seas and difficult conditions for launching boats, many of the fishermen are reported to be former sugar workers who fish r part - time. Fishermen from outside Ka'u also fish the waters near South Point and 3 Punalu'u, including some who launch their boats from those boat ramps, and some who come by water from as far away as Keauhou in North Kona (about 56 statute miles to South Point) and Pohoiki Bay in Puna (about 50 miles to Punalu'u and 68 miles to South Point). Ice Ice is needed to maintain the high quality of freshly caught fish. The preferred �. method for icing fish is to place the fish in an ice /seawater brine slush immediately 1 O FISHING O 6-3 • upon landing the fish. After they are super - chilled to the core, they are packed' in {� ice. , {� • .. Ice is available from Ka'u Ice & Fishing Supply in Wai'ohinu.Ill Also, commer- f , cial fishermen who market their fish in Hilo and Kona generally purchase ice there, using it for their next fishing run. • 9 Marketing • Commercial fishermen from Ka'u sell their fish to a number of wholesale mar 0 kets, some of which include: Ka'u Ice & Fishing Supply in Wai'ohinu; Kona Sea - food, Inc. in South Kona; and in Hilo, Suisan Company, Ltd.; Hilo Fish Co., and j Mid- Pacific Hawaii' Fishery.J In turn, these companies sell fish to various retail ! } markets or directly to Big Island consumers, while some ship fish off - island. Fish . are sold fresh, dried and smoked. - Some fishermen sell their catches, directly, to retail markets; bypassing the wholesalers. . In addition to•commercial sales, many fishermen give portions of their catches to friends and family. THE FISHERIES RESOURCE . 3 The fishing grounds in Ka'u are limited because much of the cliff -lined shore- - • line drops off to deep waters, leaving few underwater features around which fish can aggregate. At the South ,Point ko'a, fish are reported to be more difficult to catch and • 9 require more fishing skill than was required in the 1980s and before.Ill Also, more seasonality in the tuna catch has occurred• since about 1990. The cause of the ' decline in productivity of the ko'a is unknown —some believe that the currents have . • changed, while others believe that the ko'a was overfished and has not been main - U • tained properly. . , The majority of fishermen are of the opinion that the resource is insufficient to support a larger commercial fishing industry. (� REGULATIONS TO PROTECT BOTTOMFISH STOCKS 1 } In March 1998, the State Board of Land and Natural Resources approved State - • wide regulations to protect stocks of the bottomfish ehu (red snapper) and onaga O 0 0 6 -4 FISHING (longtailed red snapper), which are caught at about 100 fathoms (600 feet).J Some of these regulations are: r — Anglers fishing for bottomfish must register with the State and must show special "BF" (bottomfishing) identification letters on their boats. — Recreational anglers are limited to a combined total of 5 ehu and onaga.. — Fishing for bottomfish using traps, trawls, nets, or longlines, or the posses- sion of this gear on boats with bottomfish are illegal. — Fishing for bottomfish in 20 of about 100 areas where spawning onaga and ehu, are caught is banned, including the area from South Point to Pohue Bay (below Ocean View). Although these new regulations will be a hardship on small -boat fishermen (7 who must engage in several types of fishing to earn a living, the closed areas will 1J be re- examined in 2003, and DLNR anticipates that healthy ehu and onaga popula- tions will be restored by 2008. r HEALTH AND ENVIRONMENTAL REGULATIONS The Federal Food and Drug Administration intended to implement on Decem- ber 18, 1997 new seafood regulations designed to prevent seafood -borne illnesses. One of the potential hazards for tuna and tuna -like species is histamine poisoning, which is best prevented by cooling fish rapidly after capture. This may require D some fishermen to chill their fish more than they do now, thereby increasing their costs. Also the Federal Environmental Protection Agency is requiring some wholesal- ers to upgrade their facilities in order to prevent runoff of blood into ocean waters. VALUE -ADDED PRODUCTS 0 Opportunities exist to sell additional sashimi, poke, fresh fish, dried fish, and smoked fish to both residents and visitors. Assuming no major expansion in the fishing catch, this could provide a few additional jobs in Ka'u and increased income for some families. Requirements would include a certified kitchen to prepare the products (see 3 Chapter 9), a store with good exposure to sell products to visitors (see Chapter 7), and marketing to sell the products to other stores on the island. 3 O O FISHING 6 -5 , - , 1 ' CHARTERBOAT FISHING . " Without improvements to the ramps and protective jetties, boat launching and - passenger boarding would be too dangerous for charterboat fishing. Furthermore, • 0 the seas off South Point and Punalu'u are typically very rough and, in small boats, • L,1 would be too uncomfortable for charterboat fishermen. , 9. •If a protected harbor were built in Ka'u to safely accommodate larger and more • •comfortable vessels, then a small charter fishing industry could develop. DEEP - WATER SHRIMP , • ' Deep -water shrimp may exist in the waters off Ka'u at about 400 fathoms . 11,31 • • However, the magnitude and sustainable yield of this resource needs to be deter - (� `mined. , - . (� Assuming that the resource is adequate to support a shrimp industry, medium . U to large vessels would be required to winch shrimp up from a depth of about 400 fathoms. �! In order for Ka'u to capture a portion of the economic benefits. of a shrimp • t.. industry, a harbor would have to be built in Ka'u to accommodate large shrimp .-41 boats. Otherwise the economic benefits would go to Honolulu, Hilo and /or 3 _ , Kawaihae rather than to Ka'u. . , • . 9 ' SUPPORT F ACILITIES ' • ' . . Kaulana Bay ' • ay • . • O , At Kaulana Bay near South Point, the boat - launching ramp is unprotected fl against the south swell. As a result, the launching and retrieval ,of fishing and rescue boats can be difficult and dangerous, with risk of bodily injury and /or dam- age to boats and trailers. During high surf, fishing opportunities are lost and res- cues cannot be attempted because boats cannot be launched safely. In order to increase the safety of launching and retrieving both fishing and res • cue boats, and to allow an expansion in commercial fishing at South Point, Federal, funds were provided in the 1980s to: •build a new ramp (about 200 feet west of the 0 • existing ramp and turned 90 °), dredge an entrance channel (135 feet long, 80 feet : • . wide tapering.to 60 feet, and 8.5 feet depth), dredge a turning basin (200 feet by 100 6 -6 FISHING O a n feet, and 6.5 feet deep), build a breakwater to protect the ramp (155 feet long, and 11.5 feet high at the head and 8.5 feet high at the trunk), and install navigational 3 aids. The improvements were to be located so as to avoid impacts to archaeologi- cal sites. In 1998 dollars; the cost of these improvements would be about $2 mil - lion.131 �. At an additional cost, planned shoreline improvements included: fresh water to wash down boats, restrooms, and possibly an open pavilion to provide shelter from sun and rain. These improvements did not go forward, however. Ka 'Ghana o Ka Lae (the 9 native - Hawaiian group at South Point) opposed the project, and argued that boats could be launched safely, the improvements would interrupt their swimming, and 9 that the project was too large and would attract major developments to the area. Also, some fishermen opposed the major improvement (as opposed to minor repairs) because they felt that it would make the area appealing to a greater num- ber of fishermen. In particular, they viewed the tricky launching conditions and the risk of losing one's boat as being an advantage to them because these dangers discouraged outsiders from fishing the local waters. They also argued that the waters were too rough and dangerous and the holding capacity for the grounds too small to accommodate increased fishing activity. Now, however, the fishermen have indicated that they generally support improvements to the launching ramp, with the least expensive and most desirable approach to be determined with their contributing information on local conditions and local preferences. Although the various components of the project could be reduced somewhat in size so as to lower costs, the basic design is unlikely to change In addition to the launching ramp, the fishermen generally support access to fresh running water to wash down boats, restrooms (about $12,000 for a compost toilet that will accommodate up to 60 visits per day per), and an open =air pavilion (about $50,000 for 500 square feet). The most economical approach for providing fl wash -down facilities would be to locate them near the area where boats are now stored; assuming water will be available from the cultural center planned by Ka 9 'Ohana o Ka Lae (see Chapter 8). Now under new leadership, Ka 'Ohana o Ka Lae indicates that they will sup - port whatever the fishermen want; nevertheless, they should be consulted. 3 O FISHING O 6 -7 • 0 Given that the facilities would be on DHHL lands, but users would include 0 both Hawaiians and non- Hawaiians, appropriate participating agencies would �J include DHHL, the Office of Hawaiian Affairs (OHA), and the DLNR Boating & (� Ocean Recreation Division. lJ If Federal funds are provided to improve facilities at Kaulana Bay, then a public rl right -of -way may be required to the Bay across lands controlled by the DHHL. Punalu'u 9 . In order to increase the fish catch off Punalu'u, a second FAD has been pro- posed. Its placement is critical because the natural ko'a could be disrupted if it is sited in an area that is too shallow; siting would require study by experts and advice from local fishermen. 0 • A FAD would cost at least $10,000 because of the rope and chain needed to LLJJ anchor it at the proper depth (900 to 1,000 fathoms).J • Also, the privately -owned boat ramp at Punalu'u is in poor condition and P needs repair. . • Li New Ka'u Harbor G Development approvals for new harbors are difficult to obtain in Hawai'i. To build one in Ka'u would require the identification of a suitable site which would not have .adverse environmental or cultural impacts, and which would be sup - � i ported by the community.' Furthermore, the high cost of constructing and operat- ing a harbor would have to be justified over the alternatives of using Hilo Harbor • 9 and /or Kawaihae Harbor to access waters off Ka'u. 9 Ice House and Flash Freezer As discussed above, commercial fishermen obtain ice in Wai'ohinu, Hilo and 0 Kona. Without a major expansion in commercial fishing in Ka'u, an additional ice house in the District to support the industry would be difficult to justify. 0 A State project which was proposed but did not come to fruition was a $90,000 flash freezer for maintaining the quality of freshly- caught tuna and preventing • freezer "burn." However, freezing would have changed the natural reddish color of the meat —this natural color is essential for the fresh -fish market.I Fishermen have come to learn that bleeding and rapid chilling -not freezing —are the two 1 l) • O O 6 -8 FISHING keys to preventing burn; since the chilling can be accomplished with immediate icing, a flash freezer is not necessary. 9 OUTLOOK AND DEVELOPMENT POTENTIAL While subsistence fishing does make a significant contribution to providing food for many Ka'u families, commercial fishing and the operations supporting them provide only about a dozen or so jobs in Ka'u. In view of the limited fisheries resource' in Ka'u, potential for expansion of the fishing industry and additional employment is modest. However, some employ- ment could be provided to prepare and sell value -added products such as dried and smoked fish. In view of the modest employment potential, the justification for major expen- ditures in Ka'u to support the fishing industry would be based primarily on increased safety. However, if a harbor were built in Ka'u, additional employment might be pro- vided by a deepwater shrimp industry, complemented with charter fishing. o REFERENCES B [1] Discussions with fishermen. [2] Hawaii Fishing News, "1998 Hawaii Fishing Almanac," Honolulu, Hawaii. 1997.. . [3] Information compiled or estimated by Decision Analysts Hawaii, Inc., Akala Products, or Belt Collins Hawaii. [4] Department of Land and Natural Resources, Division of Aquatic Resources. 9 9 [5] Department of Land and Natural Resources, Division of Boating and Ocean • Recreation. • 9 . • I ,_ � � o 0 } . 7. TOURISM n 9 INTRODUCTION ` . , Tourism is the_ largest indu in Hawaii and the largest industry on the Big J Island. The most popular tourist attraction in the entire state is located in the east- ern corner of ICa'u: the Hawai'i Volcanoes National Park (HVNP).J And most visi- n tors to the Big Island pass through the town centers of Ka'u on their way to and /or ' j from the volcano, and on their trips around the island. r • In spite of -the million or so visitors annually who travel the Belt Road through Li the District, a surprisingly small number of businesses have developed in Ka'u to sell goods and,services to visitors. Ka'u has no major hotels, few rooms for over- night guests, just three restaurants serving dinner, few road -side stores that cater to 9 visitors, and a limited number of commercial tours and activities. - Given this situation, one of the larger potentials for economic growth in Ka'u • lies with the visitor industry. - - 9 VISITOR TRENDS AND CHARACTERISTICS ' . . • _, Annual Visitors • In 1996, an estimated 1,227,840 visitors traveled to the Big Island, of whom 880,180 (72%) were "westbound" (from the U. S. mainland, Canada, Europe, etc.), and 347,660 (28 %) were "eastbound" (from Japan, Korea, Taiwan, Australia, etc.) 9 Between 1990 and 1996, the Big Island visitor count rose 5% for all visitors, dropped 10% for westbound visitors, and rose 85% for eastbound visitors. Daily Visitors . 9 • • In 1996, the average number of visitors present on the Big Island was 20,860, of which 17,620 (84 %) were westbound visitors and 3,240 were eastbound (16 %). 1n • 1 � 74 . . • . 0 0 7-2 TOURISM From 1990 to 1996, the average number of visitors present was up 23% for all visitors, 14% for westbound, and 105% for eastboundi The increase in the aver- age number of visitors present on the Big Island was greater than the growth in the %– number of annual visitors to the Big Island because, on average, tourists are staying more days on the Big Island. Selected Visitor Characteristics Westbound and eastbound visitors to the Big Island exhibit significantly differ- ent characteristics. Westbound visitors tend to be repeat visitors who stay an aver- D age of 7.3 days and rent cars to drive themselves to various attractions.R'R In 1996, U. S. mainland visitors to the State spent an average of $137.62 per day, including (� $3.14 for attractions, $4.04 for sports recreation, $4.72 for sight- seeing tours, $14.06 ( J for clothing and other fashions, and $4.77 for souvenirs: On the other hand, eastbound visitors to the Big Island tend to be making their first trip there and they stay a much shorter length of time —an average of 3.4 days.RlR Many of them travel by bus to the various attractions. Statewide, Japanese visitors spent an average of $293.52 per day in 1996: $5.16 for attractions, $5.51 for ti sports recreation, $4.84 for sight- seeing tours, $99.14 for clothing and other fash- 0 ions, and $11.37 for souvenirs. Museums, Cultural Attractions, State Parks and Zoos In, 1994 and 1995, attendance at Big Island museums, other cultural attractions, State parks, and zoos (which provides insight into the number of visitors who could be persuaded to attend similar attractions in Ka'u) is shown in Table 7 -1. Factors Affecting Tourism Growth Air Service 0 In recent years, the Big - Island visitor industry has benefited from airport improvements and from an increase in the number of direct flights to the island. In 1994, the runway at the Kona International Airport was lengthened to accommo- date direct flights of wide- bodied aircraft and, in 1995, a U. S. Customs facility was D added which sped up the processing of foreign visitors.R Visitors prefer direct �+ flights because they can avoid a plane -change in Honolulu, associated inconve- niences and delays, and the cost of an inter -island flight. D TotnusM 7-3 9 TABLE 7 -1. ATTENDANCE AT MAJOR ATTRACTIONS, L) COUNTY OF HAWAII: 1994 AND 1995 • J ' 9 Attraction 1994 1995 0 Hawaii Volcanoes National Parkl. 2,498,785 2,476,710 Hapuna Beach State Recreation Area . 1,399,000 (NA) 9 9 .. - Old Kona Airport State Recreation Area 1,397,000 (NA) Akaka -Falls State Park 832,000 ' (NA) Wailoa River State Recreation Area 736,000 (NA) J. , Lapakahi State Historical Park 336,000 (NA) D Kealakekua Bay State Historical Park • 218,000 (NA) Lava Tree State Monument 143,000 (NA) Panaewa Rainforest Zoo 71,606 75,563 Volcano Art Center 90,000 ' 75,000 9 ' Hawaii Tropical Botanical Garden 56,038 , 55,271 U Wailoa Center 21,000 - 38,000 Astronaut Ellison S. Onizuka Space Center 20,775 17,452 9 Hulihee Palace (closed for repairs 22,927 , 16,978 for 3% months in 1995) - 1 9 Lyman House Memorial Museum . , 16,076 .15,800 Parker Ranch Historic Homes - 16,117 14,778 n . j Parker Ranch Visitor Center 17,121 14,690 Greenwell Store Museum 6,000 6,000 ' /--) tJ NA: not available. • - ' ,- 1. Because of multiple visits, plus visits by Hawaii residents, the number of visitors to the ( Hawai'i Volcanoes National Park exceeds the number of visitors to the Big Island from over - 1 . seas. • to , 0 0 J 7-4 TOURISM In response to the airport improvements, Japan Airlines initiated direct flights between Tokyo and Kona, starting with three flights per week in early 19962 In 3 late 1997, they increased this to daily flights; this increase can be expected to add as many as 100,000 new visitors per year to the Big Island. In late 1997, Harlequin Air, a subsidiary of Japan Air Systems Co. which is Japan's third largest airline, initiated four charter flights per month to Kona from Japan's smaller cities, with the hope of obtaining permission to increase the number of flights.t All Nippon Airways has 0 indicated it would like to start a direct flight to Kona, and Korean Air is seeking permission to fly directly to Kona. Also in late 1997, United Airlines increased its direct flights from California from one per day to two per day.[21 U The new airline treaty between the U.S. and Japan is allowing more flights to (1 Hawai'i by more carriers, and thereby introducing more competition, possible �f lower airfares, and an increased number of passengers travelling to Hawaii and other destinations. Over the long term, a new generation of aircraft from Boeing Commercial Air- plane Company is likely to affect tourism by allowing direct flights from more 1 markets, including many small cities having short runways. In comparison to older aircraft of a similar size, the new Boeing aircraft can service airports having 31 much shorter runways; they can fly much longer distances; they burn far less fuel; UU their engines require less maintenance; and their flight crews are smaller. The Boeing 757 and new models of the Boeing 737 can service Hawai'i from the western United States and Japanese airports using runways as short as 6,000 feet versus about 10,000 feet for. the Boeing 747. In standard mixed seating, the Boe- t_ ing 757 carries about 190 passengers and, depending upon the model, the new gen- eration of Boeing 737 carries about 110 to 160 passengers. When a configuration of all- economy seating is used, the passenger loads increase 15% to 20 %. The two air- craft commonly used now for overseas flights to Hawai'i are the Boeing 747 which ('1 seats over 400 passengers, and the DC10 which seats over 270 passengers. �} Hawaii Convention Center The new convention center on Oahu is expected to increase the number of visi- tors to the Neighbor Islands. The increase will be due primarily to two factors: (1) conventioneers extending their stays to include visits to the Neighbor Islands, and (2) non - convention visitors being diverted to the Neighbor Islands because avail- L able rooms in Waikiki are filled by conventioneers. r . • • TOURISM 7-5 n - , J Adverse Factors 9 9 Factors which could dampen the growth in the number of visitors to Hawaii include economic recessions; the decreased purchasing power of the Japanese Yen , n . and other Asian currencies which has made Hawaii more expensive for Japanese J visitors while making Asian resort destinations less expensive; and growing com- P, petition from Mexico, Guam, Saipan, Palau, Bali, Australia, cruise ships, etc. U In Hawaii, the Kahului Airport runway on Maui is to be lengthened from 7,000 p to 9,600, feet which will allow Maui to receive direct flights of wide- bodied 0 aircraft.i United Airlines already provides Los Angeles -to -Maui service using the. 0 new- generation 188 -seat Boeing 757 -200 aircraft which do not require a long run- way, and intends to increase this service from two to three flights per day during the summer months.t In addition, United Airlines plans to introduce service from ' the U.S. mainland. to Kaua'i in June 1998 using this same aircraft.J These develop- ments may result in some visitors choosing to go to Maui or Kauai who might oth- G erwise have visited the Big Island. 9 Implications of More Japanese Visitors , To take maximum advantage of the increasing numbers of Japanese visitors to 9 9 the Big Island, many signs, directions, prices, brochures, etc., should be targeted to the Japanese and written in their language. Also, stores and visitor attractions 0 should be designed or modified to accommodate large tour buses if this is feasible �} and acceptable to the affected community. However, large tour buses may be inap- G propriate for South Point and Wood Valley given the physical limitations of the (] access roads, the lack of parking for tour buses, and the sentiments of the commu- 0 nities. G HOTELS AND OTHER VISITOR ACCOMMODATIONS . - Existing Facilities G . As mentioned above, Ka'u has relatively few rooms to accommodate visi- tors —about 110 units, including condominium units in rental pools, time - shared '1 units, motel rooms, bed - and - breakfast (B &B) rooms, and other facilitiesl In 1996, 3 this amounted to about 1% of the 9,558 visitor units on the Big Island.S' • ' 0 n I 0 0 J 7-6 TOURISM r SeaMountain The largest resort operating in the District is SeaMountain at Punalu'u, a condo- 3 minium project containing 76 units.' Slightly more than 20 of these units are rented to visitors and nearly 30 are time - shared units which are pre -sold to visitors (called Colony One at SeaMountain). The remaining units are occupied by resi- dents. The highest occupancy occurs during the winter months of January, Febru- ary and March. Related components of the original SeaMountain resort include: tennis courts; the SeaMountain Ninole Golf Course and its associated pro shop, bar, and restau- rant which serves a limited lunch menu; the former Village Restaurant (now closed); the Ka'u Center of History and Culture (now closed); and the former 9 Aspen Institute for Humanistic Studies which has three meeting rooms for groups of 50 to 100 people (now closed). r SeaMountain is within a short walking distance of the Black Sands Beach at Punalu'u. Shirakawa Motel r The Shirakawa Motel in Waiohinu, which has been operating since 1928, offers 12 modest rooms for visitors, some with a kitchenette. Bed & Breakfast Operations Seven B &Bs are known to operate in Ka'u?' Three are located in Na'alehu and C Wai'ohinu, one is in Wood Valley, and three are in Ocean View. Nechung Drayang Ling Nechung Drayang Ling ( "Immutable Island of Melodious Sound ") is a non -sec- tarian Tibetan Buddhist temple and retreat located in Wood Valley.I Dormitory - style accommodations are available for up to 25 guests. 0 Proposed and Potential Facilities r Sazale Black Sands Resort In the late 1980s, C. Brewer proposed the Punalu'u Resort, which was to include r 805 hotel rooms, 1,224 condominiums, 71 single - family homes, commercial space, and a golf course.I 3 0 0 TothuaM 7 -7 The property was sold to the Sazale Corporation, which renamed the project Sazale Black Sands Resort. By the early 1990s, the proposed project had been scaled down to 100 hotel rooms, 120 to 600 condominiums,' a commercial center, and a golf course." - Financial and legal problems ultimately resulted in foreclosure and the even- tual sale of the property to a hui which includes the owner of Roberts Hawaii Tours. Roberts is one of the tour -bus companies which makes stops at Punalu'u on its way to and from the volcano. Over the long -term, this project could resurface with a new developer. Hawaiian Riviera Resort In the early 1990s, a 3,000 -acre resort was proposed on lands fronting the ocean below Hawaiian Ranchos. Plans by Palace Development Co. for the Hawaiian Rivi- era Resort included 2,100 hotel rooms, 1,175 condominiums, 652 single - family homes, a marina, a commercial area, golf courses, a tennis stadium, a polo field, stables, riding paths, a medical center, and various support facilities. - Palace Development Co. won significant public support in Ka'u for the project, and the State Land Use Commission (LUC) approved 700 hotel rooms subject to a number of conditions, some of which would have been difficult to meet. The J , developer was unable to secure development financing and, as a result, lost the land to its creditors. In December 1995, the LUC ordered a "Constructive With- drawal" by Notepower, Ltd., the successor to Palace Development, and further ordered that the property remain in the State Land Use Agricultural and Conserva- tion Districts. It is unlikely that this resort will be developed. Kapapala Ranch Kapapala Ranch northeast of Pahala has the potential of offering overnight stays combined with horseback riding, hiking and other activities to draw daytime G ' and overnight guests to the ranch. The main ranch house, which was built in the late 1800s and is in need of major repairs, could accommodate two to four overnight guests [141 Nine cabins formerly J used by ranch hands and located near the main house have potential for accommo- dating overnight stays for couples. However, the cabins need to be renovated 9 ;- J 7 -8 0 TOURISM 0 f before they are suitable for commercial use, and the access road to the ranch house needs to be improved. Also, permission would have to be granted by the State r' Board of Land and Natural Resources for commercial use of the main house and cabins. B &Bs A number of properties in Ka'u are well- suited for B &Bs because they are located in attractive settings. This includes properties in Wood Valley, Na'alehu, Wai'ohinu, Ocean View, and other communities. Some of the properties could be operated in combination with ecotourism activities based on hiking, horseback riding and hunting. A specialized operation currently being considered would cater to residents from other parts of the Big Island who would stable their own horses on the property and then ride some of the trails in Ka'u. The County of Hawai'i allows B &Bs within residential and agricultural zones. Also, the County allows B &Bs to have up to five visitor rooms, but no more; this restriction relieves Big Island B &Bs from having to comply with federal requirements under the Americans With Disabilities Act which goes into effect when the number of visitor rooms reaches six. Finally, B &Bs are permitted to serve breakfast to their guests but cannot serve lunch or dinner. If the number of B &Bs in Ka'u were increased by ten, this would add as many 0 as 50 visitor units to the District. The ultimate success of more B &Bs in Ka'u depends partially upon the creation of more activities and tours in the District thereby tempting visitors to spend a few nights in this part of the Big Island. Cabins — Low -cost cabins are another alternative for accommodating visitors. The State operates a number of cabins at various parks (e.g., Hapuna State Beach Park and 3 Recreation Area in South Kohala). Moloka'i Ranch is in the process of developing 200 permanent high- quality tents in 15 campsites. On Oahu, Kualoa Ranch plans D to develop 50 cabins, while 250 "eco- tents" are proposed for an area outside Hale'iwa. On the Big Island, up to 100 "tent- cottages" are proposed for North Kohala. To reduce costs, many cabins lack electrical power and running water, and some use tent material for walls. r, These cabins are generally provided in combination with ecotourism activities such as hiking and horseback riding. O' 7 -9 TouRism Cabins have been considered for mauka areas of Ka'u and are envisioned at - 'South Point (see Chapter 8). . As with other types of accommodations, the success of cabins would depend -1 partially upon developing more activities, attractions and tours to draw visitors to J • the District.' —1 . J VISITOR ACTIVITIES, ATTRACTIONS AND TOURS Introduction .. tJ The travel books and activity magazines available to Big Island visitors pro - mote few attractions, activities and tours in Ka'u and, in comparison to other dis- ' Q , tricts, convey that Ka'u has the least to offer tourists who visit the island. In addi- - . tion to the volcano, the most commonly mentioned Ka'u • attractions are: (1) ', n Punalu'u and its Black Sands Beach; (2) South Point as the southernmost point in t � the United States; (3) Green Sand Beach which is shown on visitor maps but which , ✓ has comparatively few visitors because of poor access; (4) Manuka Nature Trail; (5) L the monkeypod tree in Wai ohinu planted by Mark Twain; and (6) the Tibetan Bud - -- dhist temple in Wood Valley. Because of the shortage of activities and tours in Lf Ka'u (other than HVNP), many visitors who rent rooms in the District and inquire about "things to do" are directed to Kona and other parts of the Big Island. . J To attract more visitors to Ka'u, existing attractions could be developed further, and activities and tours could be added. The development of new commercial O ventures will depend primarily upon the initiative of a few entrepreneurs— acting either as individuals or as organizations —who invest their time', funds, and energy 1 1 to develop viable businesses that take advantage of the opportunities in Ka'u. J Their success will depend upon, and contribute to, the number of visitors who . choose to stay in Ka'u for longer periods. . C Punalu'u ; • Attractions at Punalu'u Other than the volcano, the most popular attraction for visitors to Ka'u cur- . rently is the Black Sands Beach at Punalu'u, which can be reached via a short" detour on a paved road, and does not require hiking. Because lava flows covered 0 the black sand beach at Kalapana a number of years ago, Punalu'u is now the only • • readily accessible such beach in Hawai'i. • J . . o . 7 -10 TOURISM Another major reason for stopping at Punalu'u is the public restroom at the County's Punalu'u Beach Park located at the southwestern point of the bay. This is one of the few places offering public restroom facilities on the long drive between Volcano and the hotels in North Kona and South Kohala. The park is a desirable rest -stop also because it has parking, showers, picnic pavilions; drinking water, electricity and camp sites. Punalu'u is also known for its green sea turtles (honu) which breed from early summer to fall in shallow water, laying their eggs at night on the beach above the high tide line.J Honu can grow to be 3 feet long, weigh up to 400 pounds, and live 1 to be 100 years old. It is classified as a "threatened species" by the U.S. Fish and Wildlife Service, and is protected by Federal and State laws. Punalu'u is also one of the few areas in Ka'u that is comparatively safe for swimming and snorkeling (except during high surf), although there is no lifeguard. Mauka of the beach are two spring -fed ponds (Kauwila and Kauwale) which have been landscaped with various plants.J The ponds are connected by bridges and man -made walkways. A former Hawaiian fishing village, Punalu'u also is the site of a rich cultural and historical heritage. Atop the northeastern point of the bay are the ruins of the large Kane'ele'ele Heiau, along with a huge, flat - topped sacrificial stone. Also in the area are petroglyphs and portions of the old ala loa ( "long trail "), a shoreline trail circling the island. A representation of life. at Punalu'u before Western contact is captured in a large mural by Big Island artist Herb Kane, in the neglected Ka'u Center of History and Culture, a small former museum mauka of the beach and mauka of the neglected former Village Restaurant. Punalu'u means "diving springs" (puna means "spring of water" and lu ' u n means "to dive") J2122.1 For their fresh drinking water, Hawaiians dived in the bay at some distance from shore, taking empty containers down with them and stop- ping them up with their hands so their containers would not fill with salt water. When the divers reached the chilly fresh water welling up from a spring at the bot- tom of the bay, they unstopped the containers and filled them with the fresh spring water. On the bluff overlooking the area where the beach pavilion stands is the open- air, 12-person Hokuloa Church which was constructed in the late 1950s in memory • L.2 O • ' TouMsM - 7 - _ of Henry Opukaha'ia (1792 - 1818). When he was a teenager, "Henry O sailed to New England, arriving in 1809, converted to Christianity, and helped convince, New England's,Congregational Church to send the first missionaries to Hawai i.P .-1 - The church covers the ruins of a former heiau which was quarried to provide stones i fora pier. - Also of interest is Koloa —a small beach near Punalu'u that is the home of 'ili'ili • hanau (birth"pebbles).t The 'ili'iii hanau are conglomerate stones formed when • . U - molten pahoehoe flows. over small streams or onto beach pebbles, and envelops the pebbles.. Over the years, as the lava flow is eroded by the action of the ocean waves, stones are formed which contain the pebbles. Eventually, the outer layers • of these stones are worn away and so "give birth" to the pebbles. The Black Sands Beach at Punalu'u is visited . daily by rest -stop tourists who arrive in buses or in individual rental cars on trips to or from the volcano. Sodas; , souvenirs; snacks and crafts are sold to passing visitors from a small beach stand. One possible addition to The inventory of the beach stand could be imaginatively- - bottled fresh water gathered from the offshore underwater spring described above, G accompanied by a written description arid illustrations showing how the Hawai- . ians used to dive .for the water.. . n , ` Potential Improvements , i 1 Physical which would enhance Punalu'u without compromising • J i the exceptional surroundings include: " - " . — revive the Ka'u Center of History and Culture, along with the adjoining ` • restaurant (see the discussion of restaurants below). =, relocate the unsightly telephone poles at the beach to the road circling - C ' behind the beach; , • • . - stop maintaining the beach road so that the beach will widen and the area will appear more natural and attractive; . — resurface.the rock wall surrounding the petroglyphs inland from the beach . , G pavilion so that it blends with the pahoehoe lava of the petroglyphs . J ($10,000), and relocate the telephone pole currently located inside this rock r wall so that it is away from the petroglyphs,i" 4J _ — improve the beach stand to harmonize with the natural beauty of " Punalu'u; C . • O 7 -12 O TOURISM - add signage to mark the trailhead to Hololua Church and explain the his- toric role of Henry Opukaha'ia, and make minor improvements to the short walking trail to the church; and — remodel or construct a new beach stand to harmonize with the natural surroundings. The proposed Ka'u Hawaiian Cultural Center, which is planned for a site along the Belt Road about a half mile inland from the Black Sands Beach, could become an additional attraction to visitors by providing a cultural events center, a museum /gallery, gift shop, guided walking tours of the area, etc. (see Chapter 9). South Point Ka Lae ( "The Point"), commonly referred to as South Point, offers many natural and man-made attractions which draw a significant number of visitors to the area. The greatest initial attraction to tourists is that this is the southernmost point in the United States. Those who make the trip down the 11 -mile one -lane road are rewarded with spectacular vistas of cliffs along the west side of the point, clear '-- waters, an expansive ocean, and unique diffside fishing where the tradewinds and — floats are used to carry fishing lines far out to sea. For visitors who are interested in Hawaiiana, the South Point area is culturally rich in such features as heiaus, ancient canoe moorings, and petroglyphs. A pro- posed Hawaiian cultural center would add to the appeal of the area to tourists (while helping protect and preserve the area) by providing guided walking tours of the surrounding sights, a gift shop, demonstrations of Hawaiian activities, etc. (see Chapter 8). The land is owned by the Department of Hawaiian Home Lands (DHHL). The number of visitors to South Point, which currently amounts to about 100 people per day, could be increased by changing the many tourist maps that state incorrectly that rented cars cannot be driven on South Point Road.t However, many in the community do not support widening South Point Road --- from one lane to two lanes so as to accommodate large tour buses and additional automobile traffic. But for safety reasons, the shoulders of this narrow road should be maintained. r This comparatively remote area would benefit from having attractive low- maintenance compost restrooms which do not require water or electrical power. A 1 0 TOURISM - - - . 7 -13 • LJ single complete restroom accommodating up to 60 visits per day is estimated to cost about $12,000: • • 1 Green Sand Beach Another potentially significant visitor attraction located a few miles northeast of South Point is Green Sand Beach at Mahana Bay; it is also called Mahana as well as Papakolea Beach. The green sand is comprised of fine grains of olivine —a green volcanic stone which has been eroded by surf from the base of Pu'u o Mahana, a J shoreline cindercone formed during an ancient eruption of Mauna Loa.I Green Sand Beach has sites of historical and cultural significance and has been J recommended for inclusion in the Ka Lae National Historic Landmark District. The area offers no facilities, shade or water. Nevertheless, the beach and sandy inshore waters are frequented during calm surf by swimmers, bodysurfers, divers, and others.- Also, shoreline fishermen try their skills and luck on the outer reaches J of the bay. . Although Green Sand Beach appears on most visitor maps and visitors are curi- ous about it, and those who go there enjoy themselves, few visitors make the jour - ney. This is because the 2 %- mile -long access road from Kaulana Boat Ramp at Ka Lae is unpaved, heavily rutted, and requires a 4- wheel -drive vehicle. Furthermore, G • the DHHL restricts commercial access.I Visitors who arrive at the South Point visitor center by rental car and wish to see Green Sand Beach are advised to walk J in. Half -day, 4 =wheel -drive van tours to Green Sand Beach are provided by a pri- vate tour operator at a cost of $30 per passenger but, due to the DHHL access • J restriction, the operator is not permitted to use the shorter access road from South 0 Point and, instead, uses longer back roads to reach the beach?' Also, South Point � itself cannot be included in this Green Sand Beach tour due to the same access a restrictions. With proper marketing, a narrated tour from South Point to Green Sand Beach via a 4 -wheel -drive van has potential as a visitor attraction. For a one -van oper- ation, gross revenues from a guided tour could amount to $80,000 per year, based on: an 8- passenger, 4 -wheel -drive van, 50% average occupancy, three trips per J day, operations of 335 days per year (about 1 month lost to bad weather), and a fee of $20 per passenger. With these assumptions, an average of 12 visitors would 0 0 7 -14 TOURISM visit Mahana during the course of a day —a relatively small and achievable figure. Most visitors probably would view the beach and take pictures without staying for a swim. An additional van or vans could be added as demand grows. The tour could be operated by the Hawaiians located at South Point, and /or by non - Hawaiians, possibly subject to an access fee. If non - Hawaiians were granted permission to conduct tours to Green Sand Beach from South Point in addition to r , the tours being conducted by the Hawaiians, then this would result in additional marketing efforts, additional business contacts, specialized services (such as Japa- nese narration), and combined tours which include Green Sand Beach and other attractions in Ka'u. A tour operation to Green Sand Beach would benefit from modest improve- ments in the access road to fill in the ruts, while taking special care to keep from disturbing historic and archaeological sites. The benefits would include: greater passenger comfort, reduced travel times, reduced wear and tear on vehicles, reduced maintenance costs, and possibly better protection of human bones which can become exposed by erosion. An additional way for tourists to visit Green Sand Beach would be by mountain bike rented from a concessionaire at South Point. Assuming each bike costs $600 and is rented at $15 per outing, the investment would be recovered after 40 rentals. V Other Beaches A number of other beaches in Ka'u would appeal to tourists, including Kawa Bay, Ka'alu'alu and Pohue. Kawa Bay, located about half -way between Whittington Beach County Park and Punalu'u, features a black -sand beach, spring -fed ponds, and Ke'eku Heiau on the northwestern bluff. Kawa was known by the old Hawaiians for its surfing waves; now, the waters are used for an annual surf meet.J Assuming that permis- sion is obtained, public health and convenience would be enhanced if low- mainte- nance compost toilet(s) were installed; a single complete compost toilet accommo- dating up to 60 visits per day is estimated to cost about $12,000J' For major events, such as surf meets, chemical toilets accommodating about 50 people can be rented for about $150 for an extended weekend period. This cost includes delivery, servicing the toilet, and pickup.J71 �( }J 0 • 0 TOURISM ' 7 -15 • Ka'alu'alu, located due south of Wai'ohinu, is one of the few protected embay- ments in Ka'u, and was once the major port for the District The area features some of the best windsurfing on the island, board surfing, and also bears the 0 remains of a Hawaiian fishpond that was destroyed by a tsunami in 1946. Pohue ( "gourd ") Bay, located below Ocean View, contains a beautiful pocket of white sand bordering a small sand - bottomed inlet. � � When the seas are calm, this picturesque beach is one of the safest swimming areas in the District and offers excellent snorkeling opportunities. A vast petroglyph field stretches to the south- east. For each of these beaches, convenient access is a problem in that 4- wheel -drive J vehicles are required to navigate unpaved or poorly paved roads, and use of pri- ,-. vate roads may be restricted. To provide access for visitors and tour operators, per - mission to use the roads will be required 'from landowners, portions of roads would have to be repaired, and liability issues must be resolved. Trails Shoreline trails and mountain trails exist or could be established in order to help attract visitors to Ka'u, including trails used for: hiking to observe the court- tryside, the flora and fauna, and Hawaiian cultural sites; horseback riding; long- distance jogging and running; mountain biking; etc. Asphalt -type trails could be, used by people on regular bicycles. --J Since visitors have time to visit only one or two trails, improvements should focus on a small number of high - quality trails, rather than dissipating funds on a large number of trails. Depending upon the circumstances, employment opportunities could be devel- 1 oped by providing narrated tours; providing drop -off and pick -up services; renting bicycles or. horses; repairing equipment; selling food, beverages and supplies; etc. J Narrated tours to remote areas can generate revenues of about $80 per person for a half -day and $130 for a full day." In order to gain access to private property, commercial tour operators and /or individuals would have to agree in writing to liability provisions set by landowners. Existing and proposed trails are discussed below. 1 ,J Q Q 7 -16 TOURISM — Manuka Nature Trail Within the Manuka Natural Area Reserve, the Manuka Nature Trail is already suitable for tourists. It has convenient access from the Belt Road at an elevation of about 1,760 feet; it is a short loop trail; the plants are -- identified; and parking and restroom facilities are available. — 'Ainapo Trail For the serious hiker, 'Ainapo Trail rises from the Belt Road (at an ele- vation of about 2,900 feet) to the the summit of Mauna Loa at 13,679 feet. The lower portion of the 'Ainapo Trail is used by mountain bikers up to about the 5,700 -foot elevation.I — Ala Kahakai The proposed 175 -mile Ala Kahakai ( "trail by the sea" or "shoreline trail ") would extend from Upolu Point at the far northern tip of the Big Island, and wind down through North and South Kohala, North and South Kona, and into Ka'u, proceeding around South Point as far as HVNP.t291 ^ This trail would restore a portion of the ancient ala loa which, from the 1400s to the early 1800s, served as the major land route connecting the 600 or more communities of the Big Island, along with nearly all the royal cen- ters and most of the major heiaus. If the trail is restored, it would be administered by either the National ^ Park Service or the State of Hawai'i. The many historical and cultural sites on or near the trail would have to be preserved and protected. Because of concerns about this, the project is controversial. — South Point to Punalu'u Bike and Running Path A narrow asphalt -paved shoreline path from South Point to as far as Punalu'u (about 20 miles) could become a major draw for visiting cyclists, runners, and skaters who travel either as individuals or as members of a group tour.I Such a path would provide views of the shoreline, humpback whales during the winter months, and windsurfers at Ka'alu'alu Bay, while also providing access to Green Sand Beach, Ka'alu'alu Bay, and other sites of interest. The path could become a safe and attractive place for athletes to train for races such as the annual internationally recognized triathlon in Kona and various other marathons and cycling events in Hawai'i. It could also become the venue for annual events. u u J O 0 TOURISM - 7-17 . Portions of the path could be formed using existing jeep roads, but the, path would have to be created in such a way that it avoids damaging the •. , , ala loa and the Hawaiian historic and cultural sites. . - Development of the path would require access rights from the land- owners (the. Department of Hawaiian Home Lands, the State of Hawai'i and C. Brewer), and liability issues would also have to be resolved. • 1 J - The construction cost is estimated at about $100,000 per mile where a jeep trail already exists, and $200,000 per mile where new cuts would have to be made.I The County would be the party responsible,for developing and maintaining a shoreline bike path, possibly with financial assistance from the State and/or the Federal government. • C Community reaction to such a path has not been explored, but could be controversial for the same reasons as those given above for Ala Kahakai. . fl - - J. - Plantation Roads Plantation roads on the former Kau Ag sugar plantation extend from - 1 Wood Valley to Na'alehu. These roads, which are paved in some areas . and gravel in others, could be improved for mountain biking and cross- Cj country running, providing a safe and attractive place for athletes to train . for races such as the annual triathlon in Kona and various Big Island mara- thons and cycling events, and could also become the venue for annual events. Permission'to use plantation roads would have to be obtained from the landowners: (C. Brewer, Bishop Estate /Kamehameha Schools, and the • State of Hawai'i); safety issues with respect to joint use of the roads with . farmers and area residents would 'have to be resolved; portions of roads J would have to be repaired; and liability issues would have to be resolved. One or more of the major agricultural companies would be responsible for improving and maintaining the plantation roads, possibly with joint — funding from landowners, the State, and /or the County. , Kapapala Ranch - . . Kapapala Ranch has trails suitable for horseback riding and hiking. ' 7 This cattle and goat ranch covers about 23,000 acres of scenic land which is J , - leased from the State and runs from north of Pahala to the border of HVNP. The land, was retained by King Kamehameha IV for his own personal use' at the Great Mahele in 1849, and has been a working ranch J since 1860. . 7 . J . , . . 0 0 7-18 TOURISM The State Board of Land and Natural Resources has granted permis- sion to the lessee to develop ecotourism. = Other Trails Other trails can be found in the foothills above Wai'ohinu and Wood Valley, and from mauka areas to the shoreline. One or more of the major trails in the area may merit improvements to add to their appeal to visi- — tors. Spelunking Some caves in Ka'u are suitable for commercial spelunking tours, including a ^ large cave located in Kula Kai View Estates (one of Ocean View subdivisions). Mark Twain Monkeypod Tree Another attraction for Wai'ohinu, already appearing on maps and in visitor literature, is the "Mark Twain Monkeypod Tree" planted by Mark Twain in 1866. The original tree was toppled during a storm in but a new tree sprouted from the original trunk. Mark Twain Square, which is next door to the residential prop- ^ erty where the tree is located, has capitalized successfully on its location and on the name recognition of Mark Twain among U. S. mainland visitors. Nechung Drayang Ling . The previously mentioned Nechung Drayang Ling is a brightly painted Tibetan Buddhist temple in Wood Valley. Established in 1973 by Nechung Rinposhe, the grand lama of Nechung Monastery in Lhasa, Tibet and Dharamsala, India, it was — dedicated in 1980 by the Dalai Lama.I The temple serves as a retreat for teaching, meetings, quiet introspection, read- ing and rest. It also has a small bookstore featuring relevant reading materials. The temple provides an interesting stop for the casual day visitor who comes upon it either intentionally or by chance. Although Nechung Drayang Ling has strong visitor appeal, large tour buses have been discouraged by the resident oper- ators because large groups of visitors would change the ambiance and purpose of this retreat. L 0 0 J TOURISM 7 -19 O • ' •Kauaha'ao'Congregational Church - • Until early 1998, the dominant landmark in Wai ohinu and a significant attrac- tion for some tourists.was the Kauaha'ao Congregational Church; first organized in ' 1841. The original church was a grass house built on a stone enclosure. This was replaced in 1844 by a stone church which was leveled by the earthquake of,1868. A third church at the site burned down in 1877.1321 . ' The fourth church, whose design reflected its New England heritage, was built -- in 1880, but was demolished in April 1998, causing much sadness and anger for families who had worshipped there for generations, and for many others through- out Ka'u and beyond. The reason given for the razing was that the church had • ' deteriorated too extensively to warrant refurbishment. Much of the wood was rot- ' • ted and termite damaged, and the steeple was leaning and in danger of falling. J Rebuilding a church with modern materials while retaining the exterior appear- • _ ance of the fourth church would restore the church as a landmark and as a signifi- cant visitor attraction in this picturesque site. Na'alehu Theatre ' The dominant landmark in Na'alehu is the Na'alehu Theatre which, from the • 0 outside, looks abandoned to the casual observer but is being used for a variety of . U activities. The Theatre is equipped With both old and modern film and video equipment, and houses a museum containing old movie equipment and photo- graphs. It is also used as a gathering place for community functions. , 7 ' In addition to a locally popular annual film festival, advertised special events J would help draw visitors, to Na'alehu. One obvious theme catering to visitors n . could be based. on ; Mark Twain and might include readings, plays, look -alike contests; etc. Physical improvements which would enhance the appeal of the Theatre are dis- J cussed in the next section. . U Paniolo Events and Activities , Na'alehu hosts an annual Fourth of July rodeo, but the event competes with the • . better -known and better - advertised rodeo at Waimea which celebrates the same holiday. - n 7 -20 0 0 TOURISM For qualified riders, paniolo (cowboy) activities could be provided year -round similar to those offered by Molokai Ranch, including recreational cattle sorting and herding, barrel racing, pole bending, etc. Riding fees are about $45 per hour ?' Lua Palalauhala, Kahuku Ranch Lua Palalauhala ( "very old pit ") is a sunken crater located on Kahuku Ranch — below the Ranch headquarters. The floor of the crater is protected from heavy winds, and has lush vegetation and a tropical micro - climate uncharacteristic of the surrounding area. Lua Palalauhala would be an attractive and unique setting for catered events, such as weddings, birthdays, large parties, etc. Agriculture As diversified agriculture and processing plans develop in Ka'u, opportunities may arise to present tours of processing plants and nearby farms since such tours -- appeal to some visitors. Pahala will be positioned to become the center of agricul- ture-related tourism since it is the center of most agricultural activity in the District. Hunting Hunting tours would appeal to some visitors. Game in Ka'u include: feral pigs, ^ Mouflon sheep, goats, ring- necked pheasant, kalij pheasant from Nepal, green pheasant, gray and black Francolins from India and the Sudan, chukar from Tibet, dove, Japanese and California varieties of quail, and wild Rio Grande turkeys.I In order to gain access to private property, commercial tour operators and /or individuals would have to agree in writing to liability provisions set by landown- ers. Target Shooting and Archery Target shooting is also popular with Japanese visitors; 16% of them visit shoot- ing galleries during their Hawaii stays at a cost of $35 per visitor to over $100. To take advantage of the Japanese fascination with guns —which are illegal in Japan— Kualoa Ranch on O'ahu offers target shooting as well as archery. Also, sporting clays are offered on Oahu and Lana'i, with shooting areas laid out some- what similarly to a golf course. An indoor shooting gallery is being developed at Kahua Ranch in North Kona. v 4 fl o 0 • J TOURISM 7 -21 ' Golf • Ka'u has two golf courses: SeaMountain Ninole Golf Course and, Discoyery -- Harbour Golf Course. Neither of these courses is identified in most of the maps • D provided to tourists. . Ocean- Related Activities • n . M a general rule, visitors to Hawaii are more attracted to ocean- oriented activ- ities rather than to tnauka activities: Popular activities include: sunbathing, swim - • C ming, outrigger canoe paddling, rides in sailing catamarans and sailing canoes, scuba diving and snorkeling, kayaking, thrill -craft rides, sports fishing, etc. However, most of Ka'u is exposed to rough seas, surf, strong currents, and diffi- cult launching conditions. Days of calm and safe seas are too infrequent to sustain --1 commercial ocean - related operations serving the visitor industry. J (� Restaurants B From the perspective of a visitor, one of the major deficiencies in Ka'u has been the lack of restaurants serving dinner. This is particularly a problem for visitors who stay overnight in Ka'u at bed - and - breakfasts since B &Bs are not permitted to serve dinners. It is also a problem for those who stay at SeaMountain and prefer not to cook every night of their stay. District restaurants serving dinner include one in Ocean View and, with the J enlargement a restaurant in 1998, two in Na'alehu. Over the longer"term, the hui which purchased the Sazale Black Sands Resort n property is seeking a restaurant operator to lease the Village Restaurant at Punalu'u J and reopen it. This was an upscale restaurant which served both local residents and tourists, and provided considerable employment. Unfortunately, the Village rl J Restaurant along with the adjoining Ka'u Center of History and Culture were van- dalized after they were closed by the owners. If the Village Restaurant is revived, it would be highly desirable for the opera - . , tors to make an arrangement with a tour bus company to have busses stop at the • 0 restaurant for a meal on their ways to or from the volcano. To contribute to the economic success of a refurbished Village Restaurant, it is likely that luncheon guests would be transported there by tour . bus companies, • particularly by Roberts Hawaii Tours since the owner of that operation is a member of the hui which.purchasedthe Sazale Black Sands Resort property. • I 0 0 7-22 TOURISM Another restaurant which could be renovated to serve dinner is at the Sea- Mountain Ninole Golf Course. Currently, this restaurant serves cold lunches only. ` Hawaiian Arts, Crafts and Culture If classes and demonstrations featuring Hawaiian arts, crafts and culture were available, some tourists would participate in them. This could include: hula, — flower and feather lei making, lauhala weaving, beating prints into tapa, Hawaiian language, Hawaiian song and chanting, Hawaiian legends, Hawaiian religion, astronomy, Hawaiian food preparation, Polynesian navigation, etc. A number of these activities are planned as part of proposed cultural centers (see Chapter 8). Interpretive Displays A number of interpretive displays would add to the appeal of Ka'u to visitors. For example, historic photographs, artifacts, etc., could be provided in association — with restaurants, gift shops, etc. Also, interpretive sign boards in English and Japanese would help explain the significance of a particular site, including cultural attractions, historic sites, unusual geology, etc. Because these sign boards may be approached and photographed extensively, it is important that their siting, a nearby parking area, and space to accommodate pedestrians are arranged in cooperation with nearby landowners, .- stores, and residents so that hazardous situations and nuisance problems can be avoided. Alternative Health Care Wellness programs and alternative health care appeal to some visitors, including: special exercise programs, meditation, hula, special diets, lomi lomi, Hawaiian and Chinese herbal cures, acupuncture, reflexology, hydrotherapy, colonics, chiropractic, etc. The Big Island supports about a dozen of these operations, most of which are located near the resorts) Such operations as acupuncture and chiropractic might also prosper if they are combined with attractions for rest -stop tourists (see below). v ' 0 0 TOURISM 7 -23 • "REST- STOP" TOURISM One of the larger and more immediate potentials for increasing employment in Ka'u is "rest- stop" tourism based on selling goods and services to the many visitors who pass through the District. The various stores and business found along the Belt Road between Honaunau and Captain Cook illustrate this potential and, for entrepreneurs in Ka'u, provide models of successful ventures. Factors Favoring Rest -Stop Tourism Punalu'u, Na'alehu, Wai'ohinu and, to a lesser extent, Ocean View and Pahala serve as rest -stops for visitors traveling in rental cars. The tour buses generally J stop at Punalu'u Bake Shop & Visitor Center in Na'alehu or Punalu'u Beach Park, and sometimes both. These stops typically last about 20 minutes, which is suffi- cient time to allow visitors to use the restrooms (the principal reason for a stop), take photographs, and purchase refreshments and souvenirs. J • The above - mentioned communities lend themselves to being rest -stops for a number of reasons: —a million or so visitors pass through Ka'u each year on their ways to and from the volcano, or on trips around the island; r 1 —a rest -stop is necessary between the West -side hotels and and the volcano J and Hilo attractions (the distance between the hotels and the volcano is about 100 miles or more); —the communities in Ka'u are located approximately mid -way between the West -side hotels and the volcano and Hilo attractions; - Punalu'u Beach Park has the advantage of having the only accessible black . sand beach in Hawaii, as well as having natural beauty, restrooms, the shade of a beach pavilion, a beach stand, and parking to accommodate large buses; Na'alehu and Wai'ohinu are inherently attractive (large trees contrast with the landscape outside the two communities, and the various churches, old buildings and homes contribute to the character of the two towns and present appealing photo opportunities); — reduced driving speeds through Na'alehu and Wai'ohinu can encourage travelers to stop to purchase goods and services; t • 7-24 0 0 TOURISM r — Na'alehu's Punalu'u Bake Shop & Visitor Center has attractive landscaping, restrooms, snacks (ice cream, sandwiches, baked goods, beverages, etc.), souvenir items, and parking to accommodate large buses; — Na'alehu has the added attraction of being the southernmost community in — all of the United States; — Wai'ohinu has the historical connection to the famous author Mark Twain; — Pahala is a convenient stop for visitors who pass through the town on their ways to and from the Buddhist temple in Wood Valley; and — stores and other establishments are available in Pahala, Punalu'u, Na'alehu, _ Wai'ohinu and Ocean View to purchase gasoline (except Punalu'u), snacks or lunch, and to attend to personal needs. Improvements Common to All Communities A number of improvements can be made to entice more travelers to stop in Ka'u to purchase goods and services, and these are discussed below. Signage For visitors traveling in rental cars, conspicuous but attractive signage can inform them in advance about restrooms, gasoline stations, food, and other visitor - related stores, local attractions, scenic views, etc. Signs in English exist but more are needed. Signs in Japanese are rare and should be added. Improved signage is particularly important for Pahala, Punalu'u and Ocean View because (1) of the high speeds driven along the Belt Road; (2) each of these communities has only one marked access road; and (3) in the case of Pahala and Punalu'u, the commercial areas are not visible from the Belt Road. Restrooms Well- marked, clean and readily accessible public restrooms are an essential aspect of motivating drivers to stop in the communities catering to visitors. Na'alehu and Wai'ohinu Town Plan The adoption of a Town Plan could, over the long term, help preserve the unique character of Na'alehu and Wai'ohinu, while enhancing their appeal to both 0 O ..i TOURISM 7 -25 -1 J residents and visitors. Based on community desires and practical considerations, . such a plan would address: (1) the layout of commercial, residential, and other ' areas; (2) design standards and guidelines for remodeled and new buildings; (3) 1 traffic circulation; and (4) infrastructure needs (e.g., water, sewage, etc.). . . • To attract more rest stop visitors, it would be .highly desirable to create an . appealing grouping of visitor - related stores and attractions that are: (1) located on J• . the Belt Road •so they are highly visible to passing motorists, and (2) sufficiently . close to one another to allow visitors to explore a number of them by foot (once 9 • back in their automobiles, visitors are unlikely to stop again in the same town). • , An obvious focal point for visitor attractions is the highly visible Na'alehu The - n atre near the Punalu'u Bake Shop & Visitor Center', and near a newly- renovated restaurant. The Theatre is considered by many residents to be the center of town n . and the "heart of Na'alehu.' .� Over the long term, the economy of the District would improve if space were to be made available in this central area for businesses catering to rest -stop visitors. J To provide the required space in the central area, it may be desirable for certain • other businesses to relocate if they do not require this central location to be profit - able. A Town Plan, which would be developed under the direction of the County, `1 would cost on the order of $100,000. . 7 Na'alehu Theatre • - -1 As mentioned above, the dominant landmark in Na'alehu is the Na'alehu The - • atre, which is highly visible upon entering town from the West side. The appeal of J this plantation -era theater and its museum would be enhanced by repainting, installing a new roof, and other improvements which convey 'that the Na'alehu J ,Theatre is unique, still in use, and worthy of a visit. Also, termite problems need to • be addressed. . 7 . ..i On the west side of the Theatre, open -air tables and chairs — located away from J the highway and far enough, away from the Theatre exit doors to meet the County . fire code, while still offering a view of the church and mountains across the street . from the Theatre -could provide a place for visitors and residents to stop and enjoy snacks purchased from the concession located in the Theatre building. A • . small outdoor covered stage could be used for performances. The land next door would have to be acquired in order to provide adequate space. , r b • • i . 0 0 7 -26 TotnusM Art Galleries Art galleries that feature the work of local artists can play a significant role in C encouraging more visitors to stop in Ka'u to purchase art and crafts as well as other items, such as food from a nearby coffee shop. In turn, the increased sales of art- works provide income and employment to Ka'u artists. — Such galleries have an established record of success in other rural communities on the Big Island, including about ten galleries in North Kohala past Kawaihae, and about ten galleries along the Hamakua Coast between Hilo and Waipio Valley. Art galleries are credited with the economic revival of Hawi in North Kohala and Honomu on the road to Akaka Falls. — In Ka'u, about 40 artists have formed the non - profit Ka'u Gallery Cooperative with plans to develop the Ka'u Creative Arts Center where works of local artists will be displayed for sale to both visitors and residents. The Center will feature art- ists and crafters working on site, creative art classes, and tours, and will serve as a venue for sponsored events. In addition to the Center, art will be marketed through a "Virtual Gallery" on the internet (and, in the process, it will also help — market Ka'u to potential visitors). — The.cost for the two galleries is estimated at about $68,000. Revenues of the Cooperative are to be derived from commissions on sales, "booth- space" fees at — sponsored events, and membership fees. Operating costs are to be kept low by having a small salaried staff supported by volunteer labor from members of the — Cooperative, with reduced commissions charged to those who volunteer their time. With funding from the State, the Ka'u Gallery Cooperative has completed a feasibil- ity analysis and business plan.t The gallery will be located in the front portion of the old police station on the — main street which passes through town, across from Na'alehu County Park. The building is being shared with Na'alehu Main Street which will assist with develop- ing the Virtual Gallery. This building also will house an acupuncturist which will — present an unusual, but complementary, combination with the art gallery —some _ weary travelers stopping to view the art may decide to take advantage of the acu- _ puncture services while other members of their party spend time at the gallery. t Even though these documents were largely financed.by the State, they were not evaluated for this Economic Development Plan because they were designated as proprietary bythe consultant who wrote them. 0 O 7 -27 TOURISM r . Food Cart • • A food cart offering a limited menu could enhance the •appeal of making a stop • and could provide a market for items produced by local cooks in a certified kitchen. • — • The advantage of food carts is that they are comparatively inexpensive ($5,000 to .J . , $7,000); can be moved to take advantage of special events (such -as the annual rodeo, the film festival, the surf meet at Kawa, etc.), and can be sold easily if a ven- . ture does not work out. Produce Stand . J An open -air, covered fruit - and - vegetable stand located at the focal point for vis- . itors in Na'alehu 'and. featuring locally grown produce would offer an additional reason for visitors to stop, and an outlet for farmers. A model.could be the Kona . Fruit Stand in Honaunad, which has good access, attractive signage, colorful and J well - labeled fruit which is displayed artistically and is geared to passing tourists. r Such a stand could also feature smoked and dried fish caught in local waters. . Town Greeter • • Some communities on the mainland have reaped significant benefits from hav- • ing a gregarious person serve as their town greeter by standing along the main • • 7 highway, waving a welcome to passers -by. This conveys that the community is _ friendly to visitors who may then be encouraged to stop and explore the area. - • • . Many of those who stop do purchase food, beverages and souvenirs. The greeter 1- also becomes a subject of photographs and artwork to sell to visitors. , -- . Na'alehu and Wai'ohinu lend themselves to having town 'greeters because of - .J their inherent visual appeal,. the travelers' need for a rest -stop at a mid -point ' r between West and East"Hawai'i, and the slowed traffic through town. The historic .. - L connection of the communities with Mark Twain offers the possibility of a theme • , . character resembling the famous author. A greeter could be paid for a period of a few months by local businesses that • . cater to visitors; with payment continuing indefinitely if the effort proves to be suc- rr cessful. - _ . • . 7 Honu'apo Bay Commercial Center Between Kailua -Kona and Hilo (a distance of 155 miles), the Belt Road nears the • , • r ocean in only one place— Honu'apo Bay located 2% miles northeast of Na'alehu. c u .. Li O O 7-28 TOURISM From a purely economic viewpoint, this is a logical site for a commercial area (restaurant, coffee shop, gift shop, etc.) which would cater to rest -stop visitors trav- eling through the area on their ways to and from the volcano.P 'The site provides dramatic ocean and coastal vistas, and is also a good place from which to spot — whales during the winter months. A possible commercial center could be similar to those on the Belt Road between Honaunau and Captain Cook overlooking Kealakekua Bay. Development of the site, which is on land owned by C. Brewer, would require community support, a change in land -use designation from Agriculture to Urban, and sensitive planning to accommodate the terrain, preserve view planes, and pro- vide for safe ingress and egress from the Belt Road. Community reaction to such a project has not been explored, but probably would be of concern to existing commercial operators in Na'alehu and Wai'ohinu. — J Punalu'u — The improvements intended to enhance the general appearance of Punalu'u — and its appeal to visitors (see pages 7 -11 and 7 -12) also applies to visitors in search — of rest- stops. One of the more significant contributions would be to reopen the _ Village Restaurant to serve lunch to visitors arriving in rental cars or tour buses _ (see page 7 -21), along with reopening the adjoining Ka'u Center of History and Cul- ture. The proposed Ka'u Hawaiian Cultural Center, which is envisioned for a site fronting the Belt Road about a half -mile inland from the Black Sands Beach at Punalu'u, could become an additional rest -stop for visitors arriving in tour buses r and rental cars (see Chapter 8). L Pahala J Over the long -term, opportunities may arise to attract more visitors to Pahala to tour agriculture processing- facilities once they are developed. Complementary operations could include displays of crops grown in the area, a coffee shop, gift shop, photographs and old farm equipment featuring the plantation history of r' Pahala and, as mentioned previously, clean restrooms and better signage. i— Subject to technical studies to determine market need and feasibility, the -, County is seeking approximately $800,000 to fund the "Ka'u Food Processing and — Visitor Facility," which would include components to support agriculture- related J J 0 0 TOURISM - 7-29 • tourism: For the agricultural elements, see pages 2 -66 through 2 -68 under the sec- tion on 'Processing and Support Facilities." • Ocean View J For Ocean View, one of the most important improvements to attract more visi- tors would be the improved signage discussed above. Visitors traveling towards Kona often pass the turnoff to Ocean View before they become aware of the com- mercial areas there. • A pottery studio, which would include a large area for throwing the pots, has been suggested for a site in Hawaiian Ranchos. It would be combined with a small museum, a certified kitchen, and a fruit and vegetable garden. J J MARKETING TO VISITORS As mentioned previously, the activity magazines for visitors, and the tourist maps and travel .books convey that Ka'u has little to offer to visitors other than a road to and from the spectacular volcano at the northeastern corner of the District. - This oversight is a serious problem and merits attention. J Ka'u Visitor Map • It would be worthwhile to prepare a visitor - oriented map of Ka'u, and distrib- ute it to appropriate publishers with'follow -up contacts to insure that the material is incorporated into their publications. It would also be appropriate to distribute J the map to various travel desks at hotels, airports, airlines, etc. The map would: (1) show the locations of various attractions, activities, tours, places of historic interest, restaurants, stores for visitors, places accommodating. - overnight visitors, etc.; (2) provide descriptions and photographs of various points of interest; and (3) give contact information. The map should be published in both English and Japanese. The information could be assembled and mapped by a local organization such • as Na'alehu Main Street or a marketing consulting firm. Once the information is assembled and photographs selected, the cost of producing and printing 10,000 copies of a 4 -color 16 x 9 -inch gatefold map with six color photos would be approx- imately $10,000. Additional costs would be incurred to distribute the maps. In a related effort, publishers of visitor maps that wrongly state that rental cars are not allowed on South Point Road should be contacted to correct the inaccuracy. 0 . • 7 -30 0 TOURISM 0 Internet — Web pages on the internet have proven to be an effective and inexpensive method for marketing B &Bs, ecotourism, and other visitor attractions, activities, — tours and products. A few of the business operators in Ka'u are sophisticated in their abilities to design web pages and, as a result, obtain most of their business from marketing on the internet. — An extensive, well- organized presence on the internet would contribute signifi- cantly to increasing the level of tourism to Ka'u. Linked web pages would cover the same subjects that are covered in the above - mentioned visitor maps of Ka'u, but would include more detail and more photo- graphs. An internet server with rapid access should be used which may require using a server outside Ka'u. Also, multiple web pages should be designed for each operation so that the operation appears high on a search list, regardless of which of the many possible key words are used in a search, and regardless of which search engine is used. (The various search engines use different criteria to find web pages.) Web pages also should be provided in both English and Japanese. Na'alehu Main Street may be the best - positioned organization in Ka'u to help El develop web pages for visitor - related companies in the District that are new to the internet — particularly if this organization is involved in developing a visitor map for Ka'u. Na'alehu Main Street has already developed web pages for various busi- nesses in Ka'u, and is continuing to do so. The initial cost of the effort would be about $15,000. Movies, Television and Advertisements One of the best ways to market an area is to have it featured in movies, televi- sion, and product advertisements since this kind of exposure amounts to free national and international advertising of an area. For example, Kilauea Volcano is featured in many movies and advertisements, and this helps draw visitors to the Big Island to view an eruption. Also, Fuji Photo Film has featured Green Sand — Beach in its television advertisements in Japan, which also generated visitor interest in seeing Green Sand Beach. _ To foster this opportunity for free advertising, a Ka'u package should be pro- vided to the State's Film Industry Branch of the Business Development Division of DBEDT. The package would contain: (1) photographs and descriptions of unique — o • • TOURISM 7 -31 r features of Ka'u; (2) the above- mentioned visitor map; and (3) film, video and audio equipment and services available from the Telecommunications Business Incubator located at Na'alehu Theatre (see Chapter 9). (� This same information should also be featured on a web page for Ka'u, with U links to the State's web page which promotes Hawaii's film industry. Na'alehu Main Street, in cooperation with the Na'alehu Theatre, may be the best- positioned organization in Ka'u to help assemble the necessary information and develop these web pages. The initial cost of the effort would be about $15,000, with funding from the State.( 1 Business Relationships A number of visitor - related businesses in Ka'u would benefit from developing and nurturing ongoing relationships with other businesses to help market tourism in Ka'u. For example: — Tour operators in Ka'u should work with the operators of SeaMountain, J B &Bs, motels; etc., to ensure that visitors inquiring about tours are referred, to the extent possible, to local operators rather than to operators J in Kona as is often the case now. Over the long -term, such relationships will help develop new activities in Ka'u which will, in turn, help attract. J more visitors. • — Visitor - related businesses in Ka'u should work with publishers of tourism guide books to promote Na'alehu and Wai'ohinu as attractive visitor rest- stops. r — Certain stores and restaurants in Ka'u should work with the car - rental agencies to provide discount coupons in order to encourage more visitors r to stop in Ka'u. Unlike other areas on the Big Island, few if any discount coupons are now offered by establishments in Ka'u. - Certain stores and restaurants in Ka'u should work with the tour bus com- panies to insure that their stops are welcome and mutually beneficial. Visitor- related businesses in Ka'u would benefit by organizing a local tourism association whose mission would be to market Ka'u effectively by coordinating marketing strategies, exchanging ideas, and exploring opportunities. Such organi- zations have developed in Ka'u for agriculture, but not for tourism. -J � r--n 7-32 0 TOURISM 0 OTHER FACTORS REQUIRED FOR A SUCCESSFUL VISITOR INDUSTRY Telephone Service One of the necessities of operating a tourism - related business is having good telephone service. Noise -free, single -party business lines are essential to respond to telephone calls and E -mail, take reservations, arrange for services, verify credit charges, etc. Until recently, Ocean View was in a particularly untenable situation, — but now it receives greatly improved service (see Chapter 10). Airport for Light Planes Some business operators have suggested that a small airport for light planes be built in Ka'u to make the District more accessible to travelers. The cost and justifi- cation are discussed in Chapter 10. r Aloha Tourism is greatly enhanced by workers and residents who extend aloha to visi- tors, which can be a challenge at times. People working directly with visitors typi- cally receive special training sponsored by their employers.J In general, the community benefits if residents fully appreciate the importance t_ of being friendly to mainland and foreign visitors, accepting their presence as well as the presence of their slower moving rental cars, tour vans, tour buses, etc.J These tourists provide needed jobs and income to families in Ka'u. Control of Crime A few Hawai'i residents succumb to the fact that tourists are tempting targets for theft: they often carry cash or other valuables, many let their guards down while vacationing, and prosecution can be difficult if witnesses are unavailable to testify against perpetrators. Also, a few residents prefer not to share their commu- nities with outsiders, vandalizing tour vans and rental cars to discourage their return. But tourism is a fragile industry that is easily damaged by crimes directed against visitors. A single nationally - publicized incident can cause tourism to `^ Hawai'i to plummet. Even minor incidents can be very damaging to the industry. Thefts from visitors or vandalism of vehicles will cause tour companies to avoid ` problem locations and will encourage rental companies to instruct visitors to do the same. L TOURISM 7 -33 J A problem�for Ka'u is that the community has a reputat of having a lax atti- ' tude toward crimes of theft and vandalism.I In view of this situation, commu- pity efforts to prevent crime directed against visitors is extremely important to the success of a visitor industry in Ka'u. _, • . With commitment from the community and coordinated support from the , police department, the schools, youth groups, community groups, businesses, and , families throughout the District, the communities in •Ka'u could take it upon them- ., selves to develop Ka'u's name as being the most crime -free district in Hawai'i. i This, in itself, could become a unique selling point for Ka'u, while also serving as a • source of pride for all residents. - --1 POTENTIAL EMPLOYMENT BENEFITS OF TOURISM . J • Increased tourism in Ka'u could provide significant economic benefits to the . 1 District. For example, approximately 250 jobs would be created if about 150 addi- . J tional visitor units were added to the District, and if the estimated average of 2,000 • visitors per day who pass through Ka'u could be induced to purchase an additional J $5 worth of goods and services in the District.I Approximately 160 jobs would be . created via the purchase of goods and services by visitors staying in the additional 0 visitor units, and about 90 jobs would be created by the additional purchase of goods and services by visitors passing through the District. . rrs • . - These jobs would include the "direct': jobs that would be related to providing goods and services to visitors, including people involved with renting rooms, oper- "-I ating restaurants, operating tours, selling merchandise, etc. The above job counts .also include "indirect "jobs supporting the effort, such as jobs related to farming, producing crafts, maintaining buildings and equipment, accounting, marketing, -- etc. -- An addition of 150 visitor units is a relatively modest number, and could take — the form of B &Bs, time - shared condominiums, condominiums in visitor rental pools, a small hotel; of some combination of these. The employment estimate related to 150 additional rooms is based on the following assumptions: an average occupancy -rate of 65 %, an average party size of 1.85 people, average expenditures n in Ka'u of $100 per day per visitor, 35 direct - plus - indirect jobs created for each $1 million in annual expenditures, and about 70% of the jobs being located in Ka'u. 'I J . 7 -34 Toua[sM • The employment estimate related to the additional purchase of goods and ser- vices by visitors, passing through the District is based on the following assump- [-] tions: an estimated average of 2,000 visitors per day who pass through Ka'u, an �] ' addition expenditure averaging $5 per visitor, 35 direct -plus- indirect jobs created for each $1 million in annual expenditures, and about 70% of the jobs being located t- in Ka'u. REFERENCES [1] State of Hawaii, Department of Business, Economic Development & Tourism. The State of Hawaii Data Book. Annual. Honolulu, Hawai'i. [2] Press release. [3] Boeing Commercial Airplane Company. 737 Airplane Characteristics, Airport 0 Planning. September 1995. Seattle, Washington. [4] Boeing Commercial Airplane Company. 757 Airplane Characteristics, Airport Planning. September 1989. Seattle, Washington. [5] Susan Hooper. "United to Increase Maui Flights in Summer." The Honolulu Advertiser. Honolulu, Hawai'i. February 27, 1998. [6] Russ Lynch. "United Plans Kauai Flights." Honolulu Star - Bulletin. Honolulu, Hawai'i. January 1, 1998. [7] Information compiled or estimated by DAHI. [8] Hawaii Visitors and Convention Bureau. [9] Nechung Drayang Ling. [10] PBR Hawai'i. Punalu'u Resort. Volume I, Final Environmental Impact State- ment. Honolulu, Hawaii. January 1987. [11] Decision Analysts Hawaii, Inc. "Hawai'i Commercial Rocket Launching Facil- ity: Economic, Population, and Housing Impacts." Honolulu, Hawai'i. Febru- ary 1993. r .. [12] Community Resources, Inc. Hawaiian Riviera Resort Socio- Economic Impacts: -- Updated Estimates. Honolulu, Hawai'i. August 1989. [13] State Land Use Commission. D [14] Kapapala Ranch. [15] County of Hawaii. ,- [16] Moloka'i Ranch. [17] Kualoa Ranch. [18].Lori Tighe. "Eco -camp Planned on North Shore." Honolulu Star - Bulletin. April 6, 1998. r 0 0 TOURISM 7 -35 - , [19] Tom H. Yamamoto. ='Kohala Mountain Camps: An - Ecologically Balanced Campground." Hawaii Planning. September 1997. . — [20] William Kresnak. "How Laws Protect Sea Turtles." The Honolulu' Advertiser. . ' March 20, 1998. .' . [21] John R. K. Clark: Beaches of the Big Island. University, of Hawaii Press. Hono- , lulu, Hawaii. 1985. [22] Mary Kawena Pukui and Samuel H. Elbert. Hawaiian Dictionary. University. of- : , Hawaii Press. Honolulu, Hawai'i. 1986. ' [231 A. Grove Day.. History Makers of Hawai'i. Mutual Publishing of Honolulu. • Honolulu, Hawaii: March 1984. , --/ [24] Ka 'Ohana o Ka Lae. , • ' ' ' ae. ' r, [25] Community discussions: - J ° [26] Ka Lae. "Guide to,Cultural and Historic Sites." Undated. [27] Department of Hawaiian Home Lands. - .. [28] Big Island Mountain Bike Association: . "Big Island Mountain Biking." [29] U. ,S. Department of the Interior, National Park Service, .Pacific West Field '. -! , Office. Al'a Kahakai, Draft National Trail Study • and Environmental Impact . J ' ' ' Statement. 1997. _ . [30] Discussions with Ka'u business operators involved with the visitor industry. 7 [31] Estimated by Belt Collins Hawaii. ' - [32] Kauaha'ao Congregational Church. ` [33] J.D. Bisignani. Big Island of Hawai'i Handbook. -Moon Publications. Chico, Cali - J forma. June 1994. . [34] Hawaii Visitors & Convention Bureau. : [35] Alan Decker McNarie. - "How the Arts Saved Main Street." K May . — . 1997. [36] Ka'u Gallery Cooperative. _ • [37] Estimated by Stryker- Weiner Associates. • J J , .-1 I . . O • 0 • C 8. CULTURAL AND EDUCATIONAL CENTERS KA'U HAWAIIAN CULTURAL CENTER - _- Planned Facilities and Activities . • _ The proposed Ka'u Hawaiian Cultural Center (KHCC) is envisioned as both a . - ' cultural attraction for visitors and a gathering place for community functions. It will be located on a 5.25 -acre site that fronts the Belt Road at the entrance to Sea- - Mountain (Alantii Road) at Punalu'u, about a half mile inland from the Black Sands " Beach.E The project is sponsored by Hana Laulima Lahui o Ka'u ( "Hana J Laulima"), a non - profit organization founded by native - Hawaiians in Ka'u on the principle of "people helping people help themselves." The long -term vision for the KHCC is to develop a "Living History Hawaiian Village" that will reflect "traditional Hawaiian construction," and will feature the — following components: -, — Hawaiian Botanical Garden • . Traditional Hawaiian agricultural products will be grown in a Hawaiian Botanical Garden, which will take up most of the KHCC acreage. The prod- -, J • ' ucts grown in the garden will be used to create such items as arts and crafts, herbal teas, potpourri, lotions, oils, floral leis, ceremonial items and agricul- • J tural products used in preparing traditional Hawaiian foods. The items will or sold in a Museum/Gallery display (see below) in conjunction with • - the cultural events and visitor attractions at the KHCC. ' — Cultural Events Center — The Cultural Events Center will be comprised of a stage and rock seat- ing area, and building with modular walls that allow users to customize the facility to accommodate the varying needs of individual events. KHCC will use the Cultural Events Center to host cultural events, ' Hawaiian music festivals, hula contests, arts - and - crafts activities, commu- r" . 8 -1 . L - - - 0 8-2 CULTURAL AND EDUCATIONAL CENTERS nity events and other special events, symposia, business seminars, leader- ship and business training classes, fund- raisers, etc. They will also rent it out to others in the community for similar activities. In addition, a "Kupuna — Project" will provide a vehicle for the kupuna (Hawaiian elders) of Kau to impart Hawaiian traditions, history, language and music to the community and to visitors. — Hawaiian Museum /Gallery and Gift Shop The Museum /Gallery will feature authentic Hawaiian artifacts, artwork, sculptures, carvings, petroglyphs, historical items and photographs. The Gift Shop will feature authentic Hawaiian arts and crafts created by local artists. These items will be sold in conjunction with the cultural events and visitor attractions at the KHCC. — Certified Kitchen r KHCC will use the certified kitchen to raise funds to support the Museum /Gallery and Botanical Garden. The kitchen will also be made available for rent to the community and to local entrepreneurs who wish to prepare Hawaiian and local ethnic foods for commercial sale. In addition to the on -site activities, Hana Laulima will conduct tours of nearby [ areas of natural and cultural interest, and lead groups of local youth in outbound- type activities.I Areas visited could include Punalu'u, South Point, Green Sand Beach, and the nearby mountains. In the longer term, KHCC could expand onto adjacent lands (16+ acres) with r classroom activities.I Project Status — With funding primarily from the State and some from the County, along with volunteer efforts and contributions from its members and the community, Hana Laulima has completed a feasibility analysis and business plan for the KHCC ./ An additional State grant has been provided to: secure a long -term lease to the KHCC ~ site, design and partially develop the Cultural Events Center and the rock seating • area, design and plant the Hawaiian Botanical Garden, and conduct a Leadership and Management Training Program in the community. — t Even though these documents were largely financed by the State, they were not evaluated for this Economic' Development Plan because they were designated as proprietary by the consultant who wrote them. r CULTURAL AND EDUCATIONAL CENTERS 8 -3 Hana Laulima has obtained a preliminary commitment from the State Board of- • Land and Natural Resources to lease the subject property, and is negotiating with them to secure a lease having a duration of at least a 35 years.I The organization J has also been in touch with a bus company who has indicated a willingness to make stops at KHCC.I Development Costs and Funding Hana Laulima estimates that development costs for the KHCC will amount to J slightly more than $300,000 for construction, inventory and stock, and miscella- neous start -up expenses.i The bulk of the funding will be requested from the Office of Hawaiian Affairs (OHA) and the U.S. Department of Health and Human Services' Administration for Native Americans (ANA). Additional funding is expected to be derived from fund - raisers and membership drives, as well as from other government agencies. Members of Hana Laulima will contribute Tabor and equipment to prepare the J • site and construct some of the facilities. • Self- Sustaining Operations — Hana Laulima expects to be self- sustaining and profitable within its first year of operations, with revenues derived from admission charges, the sale of various items, and paid tours of nearby areas.I Operating costs are to be kept low by having a small salaried staff of one full- -" time manager and a half -time administrative assistant, supported by volunteer labor.I Note, however, that day -to -day reliance upon volunteer workers can be J difficult to sustain at a high level of service, particularly for an on -going commer- cial enterprise. • Locational Advantages J - Given its location fronting the Belt Road at the entrance to SeaMountain and the Black Sand Beach at Punalu'u, KHCC will have good visibility and access for visitors traveling to and from the volcano and around the island. J The KHCC location also lends itself to being a rest -stop for visitors, provided that sufficient restrooms are available and that they are well- maintained. For tour buses, rest stops generally last about 20 minutes, but could be longer if the attrac- r' 8-4 O CULTURAL AND EDUCATIONAL CENTERS tion warrants a longer stay. However, it is likely that tour -bus stops at KHCC — would occur at the expense of the current tour -bus stops in Na'alehu at the Punalu'u Bake Shop & Visitor Center. For tourists staying at the 50 units at SeaMountain that are used by visitors, the KHCC will be within walking distance. Record of Success of Cultural Centers in Hawai'i A number of cultural centers have been proposed in Hawaii over the past 40+ years, but self- sustaining cultural centers in remote areas are rare. The closest par- allel in size to the proposed KHCC may have been the Mau Mau Village which operated on Oahu from the 1950s to the early 1970s. It survived for many years in C Ala Moana Park just outside Waikiki, but struggled after it moved to Heeia State Park on windward O'ahu and eventually closed. Although O'ahu hosts many visi- tors, the rural location of the Mau Mau Village proved to be a disadvantage. — Waimea Falls Park on Oahu's North Shore has many features similar to the KHCC: it is located in a rural area on the main highway, and features Hawaiian culture, the State's largest and most extensive Hawaiian botanical garden, an enter- tainment center, a small museum, a gift shop, a certified kitchen and dining facilities, tours of the natural and cultural areas of interest in the valley, and com- munity events.J However, Waimea Falls Park is a much larger operation having r more attractions (including a 45 -foot waterfall, a lush valley setting, and a stream). It also draws from a much larger pool of visitors, benefits from a large marketing budget, has a sharper focus on economic success without the social and cultural — objectives, and relies on hired labor. In recent years, attendance has exceeded 400,000 visitors per year?' Nevertheless, the Park has struggled to be profitable. The Polynesian Cultural Center on O'ahu is another self - sustaining operation in a rural area, but it is far broader in scope than the KHCC, and it benefits from hav- ing a large pool of student - entertainers from the adjoining Brigham Young Univer- — sity who work part -time at the Center. Employment and Other Benefits As mentioned above, KHCC will provide employment for a full -time manager and a half -time administrative assistant. Other jobs will be created for artists and artisans who sell their works at the gift shop, entrepreneurs who use the certified kitchen to prepare Hawaiian and local ethnic foods for commercial sale, and tour — CULTURAL AND EDUCATIONAL CENTERS 8-5 operators. Also, special events held at the KHCC will benefit area businesses through the participants' purchases of goods and services. , • . The KHCC is also structured to provide non - economic community benefits - . aimed at preserving Ka'u's Hawaiian cultural heritage, providing opportunities to • learn about the Hawaiian culture, and strengthening community pride. As indi- cated above, the facilities will also be available for community functions. • — KA LAE CURATORSHIP PROGRAM AND CULTURAL CENTER J Introduction - Ka 'Ohana o Ka Lae, grass -roots native- Hawaiian organization established in • 1982, has established a presence at South Point as the curator of the Ka Lae National Historic Landmark District, and is expanding its activities to include a D cultural center. • Cultural and Natural Resources . Ka Lae ( "The Point "), commonly called South Point, is the southernmost point • —` of the Big Island, the State of Hawai'i, and the United States. Ka Lae is located • -S • within an 11,000 -acre area known as Kama'oa- Pu'u'eo, which is owned by the -- Department of Hawaiian Home Lands (DHHL). - J . W ithin the lower, part of this area lies the Ka Lae National Historic Landmark , District, encompassing an area of about 700 acres. This District lies below and • west of an L- shaped boundary: the upper edge of the boundary is about 2 miles north of Ka Lae, and the vertical leg of the boundary runs through Hanalua Bay. The Ka Lae area was designated as a National Historic Landmark District in 1966 in recognition of the fact that it is rich in Hawaiian culture, history, legends — • and archaeological sties. The site encompasses one of the most important records • • ' of human occupation in the Hawaiian Islands, and some scholars believe that r Polynesian voyagers made landfall there as early as A.D. 150. Ka Lae is known in J • chants throughout Polynesia as a place for fishing and voyaging. • - Sites, features and legends of interest include: - 101 —Ke au o Hala'ea and Kawili , These two strong ocean currents run deep close to shore, and converge , J offshore of South Point, creating turbulent surface conditions, but good . . feeding grounds for a wide variety of fish, including 'ahi (yellowfin tuna).. • i y J 8 O CULTURAL AND EDUCATIONAL CENTERS Ke .au o Hala'ea is named after a greedy chief who's canoe was pur- posely overloaded by discontented subjects so that the canoe swamped, and the chief was carried away by the current. — —Canoe Mooring Holes Hawaiians cut over 200 mooring holes into the leeward side of the pali to moor their voyaging and fishing canoes. About 80 of the mooring holes remain. One of the unique ways by which the Hawaiians fished the grounds, in spite of the Hala'ea current and the powerful offshore winds, was by tying their canoes to these mooring holes with a long line (rope), and letting the ` wind and current carry the canoes out to a desired fishing spot. With the line tied off and the canoe securely moored, the fishermen could then bottom -fish the lucrative grounds where it was too deep to anchor and oth- erwise impossible to remain stationary. (� — Kalalea Heiau l � This heiau was associated with fishing and voyaging traditions, and remains in use for cultural purposes. —Kaulana Bay 4- This well - protected bay provided easy canoe access to the rich ko'a (fish - houses) of Ka Lae. r —Pu'u Ali'i This was a fishhook production area as far back as 400 A.D. From 1400 • to 1800, the sand dunes were used as a burial site. —Lua Makalei This collapsed lava tube created cave openings that were used for many centuries as a shelter and work area by fishermen. —Lua o Palahemo (also called Ka Wai a ka Palahemo) 9 Famous in chants and significant in local legend, this is Hawaii's pre- miere anchialine pool, and is surrounded by eight rock cairns. It is said "if you haven't seen Palahemo, you haven't seen Ka'u." The deep pool contains two unique species of shrimp which evolved in r the high - salinity ecosystem. — Kapalaoa Village A large old native - Hawaiian village complex. C 0 0 , CULTURAL AND EDUCATIONAL CENTERS 8-7 ' —Pinao Bay . , This small. white -sand bay was used as a burial site by the Hawaiians — from 1400 to 1800 AD, and was a functioning settlement until the 1840s. • Endangered Hawaiian monk seals frequent the bay. . - Lauakeananolo and Pali Haukeuke • - . . These are blowholes, which spout when a south swell is running. — , — Petroglyphs, Trail, Salt Pans . • Other attractions in the area include old petroglyphs, trails, and carved J and natural salt pans. , — For native Hawaiians, particularly those originally from the Ka'u District, Ka • —. Lae holds promise as a place for renewal —for learning and teaching Hawaiian tra- ditions and practices, conducting traditional ceremonies and observances, self -heal- . ' J ing, hosting indigenous delegations from other parts of the world, partaking of tra- ditional Hawaiian foods, etc. 0 But before the early 1980s, there was little or no effort to protect or enhance the . cultural resources found at South Point, or to realize its cultural potential. n . J Goals of Ka 'Ohana o Ka Lae , " 7 . The goals of the ' Ohana are to: re- establish native - Hawaiian practices at Ka ' Lae; restore and protect the cultural and natural resources of the area; educate — 1 native - Hawaiians, other residents and visitors about the cultural sites, history and J natural environment of the area; and provide safety, security and emergency ser- vices to visitors.' -Ita ' Ohana o Ka Lae also advocates the resettlement of native- J , " Hawaiians on Hawaiian Homestead lands with the goal of making them self -sus- taining. . J Past- and_On -Going Activities of Ka 'Ohana o Ka Lae ' • In pursuing their goals, the volunteer caretakers living at Ka Lae and other members of the 'Ohana have completed or have been engaged in a number of on- going activities, including:'$ , — rebuilding and restoring Kalalea Heiau, • — building and repairing modern structures, including the Information/Cul - tural Center; 1 . O r 8- 8 CULTURAL AND EDUCATIONAL CENTERS r — saving rare species of.shrimp; ` — replanting some areas with native plants; — cultivating on a small scale such Hawaiian plants as taro, banana, ipu, and sweet potato, as well as some non - Hawaiian plants; r —re- interring at Pu'u.Ali'i the ancestral bones of 97 Hawaiians that were removed in the 1950's and held by Bishop Museum; — providing cultural immersion programs for 50 to 60 Hawaiian children each summer; C — educating visitors and residents about the cultural legacy of Ka Lae through . written materials, guided walks of Ka Lae, answering questions, etc.; C — selling books and crafts at the Information /Cultural Center; — monitoring the historic and cultural sites, controlling litter, and cleaning the 9 restrooms; and — contributing to overall public awareness of the cultural and historical sig- C nificance of Ka Lae. The 'Ohana operates now with volunteer labor, and with funding from dona- tions, and from selling items in the Information /Cultural Center. Funding in the past has been provided from 'Ohana fund - raising efforts, donations, the National C Park Service (1985), the Donrey Foundation (1985), the State Foundation on Culture and the Arts (1986), and the State of Hawaii (1991 - 1993). Project Plans r- . Proposed Activities Ka 'Ohana o Ka Lae is negotiating with the DHHL for a new 5 -year lease since a their past lease has expired. Furthermore, the 'Ohana is proposing that the Cura- torship Program and Cultural Center activities be expanded as follows: Mahana Bay The leased area would be enlarged to include Mahana Bay (Green Sand Beach). — Historic Sites Historic sites would be improved and better protected by establishing and maintaining trails and pathways, building rock enclosures, adding C • O O 8-9 • CULTURAL AND EDUCATIONAL CENTERS ' restrooni§, establishing a litter clean -up program, and regulating visitor traffic. — Education " • - Educational activities would be improved with new and updated edu- cational materials, adding classes and seminars, offering more tours to stu- dents and community groups, adding a library /meeting room, adding a kitchen and sleeping facilities to serve students, etc. • — Security . Security would be expanded to discourage vandalism, theft, use of fire- ' arms, use of canoe mooring holes, unpermitted commercial activities, etc. J —Flora and Fauna Resource management would be expanded to better protect native J plants and animal habitats. Also, more lands would be planted with native shrubs, medicinal plants, fruit trees and other trees. — Farming Farm activity would be expanded. (Note, however, a significant expan- sion in farming activity would require water which may be very expensive J to provide.) — Income - Generating Activities Income- generating activities would be expanded to include visitor tours by van; operating a dining area featuring traditional Hawaiian foods; expanding retail sales (educational materials, books, maps, videos, crafts, artwork, clothing, native plants, seeds, gourds, agricultural products, etc.); and charging an entrance fee to the area as well as other user fees. The. 'Ohana would like to have exclusive privileges to conduct visitor tours. Equipment and Supply Needs and Funding To implement their project plans, the 'Ohana is seeking funding for numerous items, including but not limited to: art 8- passengeer, 4- wheel -drive van (about . $40,000 new), a tractor, a truck, a water line, toilet repairs at the Cultural Center, compost toilets (about $12,000 for a facility accommodating up to 60 visits per day), photovoltaic solar power systems, back -up power generator; water catch- ment/ tank, solar water heater, building supplies, office supplies, cellular telephone service, food supplies for the summer program, vehicle insurance!) 0 0 8 -10 CULTURAL AND EDUCATIONAL CENTERS — Except where noted, costs for the various items have not been estimated. Fund- ing is to be requested from the Office of Hawaiian Affairs and various private foundations. _ Self - Sustaining Operations Ka 'Ohana o Ka Lae expects that the Curatorship Program and Cultural Center T- will be of self- sustaining within 3 years after the proposed commercial services are provided to visitors.E Development Issues Farming at Ka Lae beyond the level of demonstration crops used by Hawaiians C is likely to encounter major water problems. The area receives less than 20 inches of rain per year which is inadequate for an effective water - catchment system. Also, the groundwater is brackish. Significant cultivation of crops would require L an expensive water line from a mauka source. ._- With regard to visitors, a number of the items proposed may be controversial in the greater community, including conducting commercial operations within the Ka Lae National Historic Landmark District, and charging an entrance fee to visi- tors.I The granting of exclusive privileges to Ka 'Ghana o Ka Lae to conduct tours will also be controversial, particularly if the leased area is expanded to include Mahana Bay.r On the other hand, the granting of permission to outside tour operators to take groups to South Point and Mahana Bay could be to the mutual advantage of all parties if the permit is structured in such a way that they share in the benefits. Outside tour operators could contribute additional marketing efforts, — a broader base of business contacts, specialized services (such as Japanese narra- tion), combined tours which include South Point, Green Sand Beach and other attractions in Ka'u, and transportation services to South Point. Ka 'Ghana o Ka Lae could benefit in terms of add -on tours, sales of various items, and possibly reve- nues from an access fee to help cover the costs of managing the Ka Lae National — Historic Landmark District. The widening of South Point Road from one lane to two lanes in order to accommodate more cars or large tour buses probably would be opposed by many area residents.L However, for safety, the shoulders of this narrow road should be maintained. O J CULTURAL AND EDUCATIONAL CENTER 8 -11 n J Potential Market and Revenues Many visitors already elect to visit the Ka Lae National Historic Landmark Dis- trict for no other. reason than because it is the southernmost point of land in the United States. Those who make the trip down the 11 -mile one -lane road are rewarded with spectacular vistas of cliffs extending northward along the west side of the point, clear waters, an expansive ocean, and unique cliffside fishing. Well- maintained historic and cultural sites, an. enhanced Cultural Center, and guided tours can only add to the appeal of Ka Lae and enhance the experience for J visitors. With limited promotion now, the small Information Center at Ka Lae receives an estimated 100 visitors per day, or about 36,000 visitors per year. The number of visitors to South Point could be increased through thoughtful marketing that is ~� sensitive to the cultural and other resources in the area, and by correcting the many tourist maps that state incorrectly that rented cars cannot be driven on the South ' Point Road. An average of 50,000 visitors per year is a conservative estimate of the potential market. Assuming an estimated $10 spent per visitor in various fees and sales, annual revenues would amount to about $500,000 per year. Employment and Other Benefits J Annual revenues of about $500,000 per year would support about 14 full -time salaried, staff, based on about $35,000 per worker for wages, benefits, and other costs. Ka 'Ohana o Ka Lae anticipates a somewhat greater number of jobs, which could be possible if wages are kept low and many of the positions are part -time. Anticipated jobs include: a project manager, a director of the Ka Lae Cultural Cen- ter, a groundskeeper, farmers, horticulturists, a custodian, 4 security guards, 4 tour guides, sales clerks, drivers, a health /medical specialist, and construction U workers. 181 During the summer immersion program, additional jobs would - include: a teacher, teaching assistants, student helpers, a cook, and kupuna. (elder). Volunteers would include workers who help with repair and maintenance, �'. building new structures, library staff, and teachers. Indirect jobs would also be provided for various artisans, crafters, food produc- J ers, etc. r I — • 8-12 0 C 0 ULTURAL AND EDUCATIONAL CENTERS Non - economic community benefits would reflect the broader goals of Ka 'Ohana o Ka Lae (see above). KAWA CULTURAL RESTORATION Introduction About 2 miles southwest of Punalu'u lies Kawa, a bay which is accessible from r the Belt Road by a X -mile long, narrow and poorly -paved access road. The area remains undeveloped, but some Ka'u residents occasionally visit Kawa to use the a beach and fish its nearshore waters. The only heavy use of the area occurs dur- ing an annual surf meet at the break known as Windmills. An informal proposal in an early conceptual stage is to restore the area similar in approach to that for Ka Lae. Kawa Cultural and Natural Resources Kawa is an attractive area that is the site of a former fishing village that was destroyed by the tsunami of 1868. °I The area features freshwater springs, two freshwater ponds, an intermittent stream, remnants of old Hawaiian fishponds, remnants of old rock walls, and a black -sand beach. On the eastern end of Kawa Bay is a massive 'a'a flow, upon which are the ruins C of Ke'eku Heiau, a major heiau of human sacrifice. [10,16] Kawa has wildlife characteristic of other makai lands in the area, including the endangered green turtle, and the pueo (Hawaiian short -eared owl), and damselfly.I r In older times, Kawa was known for its famous surfing break and for its surf- — ers.I One of the most famous was Nu'uanupa'ahu, a chief of Ka'u who surfed Kawa in the mid- 1700s, and who was known as the "cut worm tearing son of Na'alehu. "[ ° The "cut worm" refers to the legend of Pu'u 'Enuhe, the large cater- pillar- shaped hill inland of Punalu'u. C Cultural Restoration and Programs The vision is to restore the fishing village at Kawa as a center for cultural stud- ies and education, and to preserve the area for future generations. Proposed resto- ration work would include:us] r� C • • J ' ' ' C ULTURAL AND EDUCATIONAL C 8 13 . restoring Ke Heiau, the fishponds, and rock walls; • . clearing the two freshwater ponds; • - - planting a garden behind the stream; • — _ —building a lauhala (pandanus -leaf) village mauka of the beach; • — building on the beach a pili grass hale (house), a kitchen pili grass hale, and a - hale wa'a (canoe house); - . - — building canoes; - J — removing mauka water diversions in order to restore stream flow. Hawaiiana studies and educational programs would cover structures, canoes, crafts, astronomy, fishing, farming, plants, animals, endangered species, language, 1 etc.11s1 . J • Initially, the programs would be for local residents, particularly the children.J 1 • Eventually, tourists would take part in some activities. - J Equipment and:Labor Needs ' J Equipment and modern conveniences that will be needed to accomplish the -Lt work are expected to include: a truck, chain saw, weed eaters, cellular telephone J and walkie- talkies, solar- or wind- powered generators to pump water; and a com- . posting toilet, with additional portable toilets for use during the annual surf meet. ~ Volunteer labor is envisioned to accomplish the restoration, including kokua • from troubled teenagers in the Ka'u area and students • from Ka'u and the other islands (e.g., the Kamehameha Schools and the University of Hawaii)5 rn In exchange for their efforts, the students would (1) learn about old Hawaiian . ways, (2) regain pride in their Hawaiian heritage, and (3) possibly receive high 7 • school or college credits for their contributions to restoring Kawa.1151 . • Cost and Funding : Since the proposed restoration and cultural programs are in the early concep- - 1 • tual stage, the co st of restoration and the funding sources are yet to be determined. J I I I . 8 -14 O CULTURAL AND EDUCATIONAL CENTERS r Development Issue A major hurdle in restoring Kawa will be to obtain rights to the land, which is privately owned. a PACIFIC REGIONAL TECHNICAL COLLEGE AND PUNALU'U AHUPUA'A Culturally- Oriented Technical College and Ventures r An ambitious suggestion envisions the eventual purchase of the entire Punalu'u ahupua 'a (mountains -to- the -sea land division) and reestablishment of its cultural integrity while addressing community concerns for education, economic develop- ment, and historic preservation.I The purpose would be to preserve the cultural knowledge of the Polynesian ohana (extended family) system, and to . provide an opportunity to evolve out of Polynesian traditions — solutions to the appropriate r development of Pacific Basin social economies. -- Phase I would involve purchasing and converting SeaMountain into a Pacific Regional Technical College to provide an education program consistent with ohana values and the development of Polynesian society.I The program would feature (1) Polynesian culture and skills (language, music, arts, crafts, agriculture, aquacul- ture, forestry, animal husbandry, fishing, culinary arts, navigation, boat building, healing arts, etc.); (2) technical and communications skills (electronics, computer technology, renewable energy technologies, sustainable agriculture, small -scale _ economic development, etc.); and (3) leadership development and political econ- omy. Phase II would involve purchasing the mauka lands, and protecting, caring for, and developing appropriately the entire ahupua'a. Self- sustaining ventures to pro- vide employment to graduates and other residents would include agriculture, 9 aquaculture, forestry, fishing and ecotourism. r- Economic Benefits If this venture is successful, it would provide considerable employment. For example, a boarding school of 500 students would provide about 75 jobs.I Addi- tional employment would be provided by the various business ventures. r' l_ r✓ CULTURAL AND EDUCATIONAL CENTERS , 8-15 ' Market .. No comparable activity- exists in Hawai'i on which to judge potential - market. . , success. However, boarding colleges in remote areas are able to attract students, provided that they are highly rated by accreditation committees: Schools which are not highly rated may struggle and eventually fail. ' . - • Cost and Financing ' . 7 The cost to, purchase the entire ahupua'a including SeaMountain, and to convert J SeaMountain into the Pacific Regional Technical College has not been estimated, .7 but is expected to exceed $50 million. The college alone would cost'as much as -i • • $15 million. - - - -- • The operating costs for. a college of 500 students, of which half are boarding sill- -- .. • dents, would probably exceed $5 million per year.I - Financing has not been determined, but would present a formidable challenge - •, J and probably would require a wealthy benefactor. , . . . - - / Outlook _ ' • Given the market uncertainty and the difficult financial challenge of such an . • ambitious proposal, it may be more feasible to incorporate elements of this concept . 1 . ' into one or more of the 'proposed cultural centers discussed above. . .. ' After experience is gained with the cultural centers, then the situation' can be — reassessed to evaluate whether or not a major' expansion is warranted, and how . best to proceed. 1. J REFERENCES • [1] Hana Laulima. Lahui o Ka'u, Inc. "State of Hawaii, Community -Based Eco- nomic Development (CBED) Program Application.", Undated: . ' • [2] Office of Environmental Quality Control. The Environmental Notice. July 23, 1997. . • [3] Hana Laulima Lahui 'O Ka'u. "Ka'u Hawaiian Cultural Center." Undated. . [4] Discussions with Hana Laulima o Ka'u and others familiar with the project. r • • • O ' D 8 -16 CULTURAL AND EDUCATIONAL CENTERS r [5] Department of Business, Economic Development & Tourism. "Project Sum- mary, Hana Laulima Lahui o Ka'u." February 21, 1997. — [6] Waimea Falls Park. [7] Department of Business, Economic Development & Tourism. The State of Hawaii Data Book: 1996. Honolulu, Hawaii. 1997. 9 [8] Ka 'Ohana o Ka Lae. "A Proposal for Ka Lae." March 31, 1997. [9] Ka Lae. "Guide to Cultural and Historic Sites." Undated. [10] John R. K. Clark. Beaches of the Big Island. A Kolowalu Book, University of Hawaii Press. Honolulu, Hawai'i. 1985. [11] Department of Planning and Economic Development. "Assessments of Lands C for Aquaculture." 1978: [12] Discussions with representatives of the visitor industry who operate in Ka'u. [13] Discussions with Ka'u residents. [14] Site visit. [15] Discussions with project advocates. . [16] U.S. Department of Agriculture, Soil Conservation Service, Honolulu, Hawai'i. 'Ka 'u River Basin Study, Hawaii County, Hawaii. February 1994. r - [17] Samuel M. Kamakau. Ruling Chiefs of Hawaii (Revised Edition). The Kame- hameha Schools Press. Honolulu, Hawaii. 1992. [18] Information compiled or estimated by Decision Analysts Hawaii, Inc. r J C r r O 0 9. OTHER ECONOMIC ACTIVITIES ARTS AND CRAFTS . • The production of arts and crafts can provide income to a number of artisans while contributing significantly to the success of tourism in Ka'u. Additional income and employment are derived from sales to residents as well as to overseas J buyers. Plans of the Ka'u Gallery Cooperative and of a pottery studio in Ocean View are discussed in Chapter 7,while the role of Hawaiian crafts is discussed in Chapter • 8. BUSINESS OPPORTUNITIES RELATED TO IMPROVED TELEPHONE SERVICE, OCEAN VIEW J As discussed in Chapter 10, the telephone service for much of Ocean View and for other parts of Ka'u has been upgraded recently, with party lines and old mechanical switches having been replaced with private lines and modern digital , switches. This constitutes a significant improvement in communications capability r ' for Ocean View, which now allows businesses to use answer machines, fax — machines, and modems reliably to connect computers to the internet. This development is likely to accelerate business development in Ocean View . and in other parts of Ka'u where service has been inferior to most of the rest of the State. For example, the comparatively low land and housing costs in Ocean View may attract software developers who will now be able to operate successfully because of the ability to use e-mail, transmit computer programs and documents via the internet, etc. Such business development can be accelerated even more by marketing this new telecommunications capability, the low land and housing costs in Ocean View, and other attractions and advantages of living in Ka'u. The least expensive market - n • 9 -1 I — 9-2 0 0 2 OTHER ECONOMIC ACTIVITIES ing approach would be to use web pages on the internet. Also, existing and new businesses in Ocean View would benefit from web -page marketing. r The Rural Roots Technology Center, discussed below, may be the appropriate organization to assist Ocean View businesses in developing these web pages. r' CERTIFIED KITCHENS r State Requirements Food establishments preparing or dispensing foods for public consumption r g p P must be approved by the State Department of Health, Sanitation Branch, Environ- mental Health Services Division before they can begin operations.t'I The informal terminology commonly used for approved food establishments is "certified kitchen." The purpose of the law is to protect the life, health, safety and welfare of the r general public. The focus of the regulations is on "potentially- hazardous food" (PHF), which is any food that contains milk or milk products, eggs, meat, poultry, r fish, shellfish, or other ingredients, including synthetic ingredients in a form capa- ble of supporting rapid and progressive growth of infections or toxigenic microor- r ganisms.I Approval must be received for newly constructed kitchens as well as for r' remodeled or converted facilities.M A change in menu can also prompt a require- ment to install new equipment or modify existing facilities, equipment or opera- — tions. Also, food prepared in home kitchens to be given away or sold must be pre - pared' in a separately approved area in the home unless it is for a one -time event. The State requirements for vending machines, mobile food establishments, and ^ temporary food establishments are less stringent. Regulations for certified kitchens require floors and floor coverings that are durable and easily cleanable (e.g., sealed concrete, terrazzo, ceramic tile, quarry tile, durable linoleum, etc.); a 3 -basin sink for washing, rinsing and sterilizing kitchen- ware; a separate sink for handwashing; hot and cold potable running water; tem- perature control for the hot water; sewage disposal via a public wastewater system; r' acceptable plumbing, lighting, garbage refuse facilities, and vermin and animal — control; and refrigerator(s), freezer(s), stove(s); oven(s); and kitchen equipment.t'I r Food establishments that are exempt from the State provisions include ones which offer non -PHF; prepackaged non -PHF; or whole, uncut fruits and vegetables r- 9-2 • 0 0 J OTHER ECONOMIC ACTIVITIES ' 9 -3 only.m Also exempt are temporary food establishments (those operating for no more than 14 consecutive days) that sell or serve only non -PHF, and food opera- tions that are inspected by another federal, State, or County regulatory agency. — Variances can be granted for a 2 -year period and can be renewed if the appli- cant is able to demonstrate that the current situation cannot be brought into compli- 1 ance or would produce serious hardship without an equal or greater public bene - J fitJ � . Existing Certified Kitchens in Ka'u At least a dozen certified kitchens exist in Ka'u, most of which are associated with restaurants and stores.i Some of these kitchens are used by local entrepre- neurs to supply cookies, pies, breads, smoked fish and other items to grocery mar - 9 kets, hotels, and other outlets throughout the island The Catholic Church in Na'alehu has the equipment and space to accommodate a certified kitchen which, when it is completed, will be available to both commer- cial and non - profit users.t The equipment was purchased as part of a grant from 7 the RETA -H program to the Masazo's Pig Farm. J Proposed Certified Kitchens . A number of organizations and entrepreneurs would like to establish certified kitchens or would like to have access to one, in order to start small businesses J based on preparing and selling food products, including ethnic foods, baked goods, smoked foods, dried foods, jams and jellies, sauces, plate lunches, etc. J Ocean View 0 . Plans are underway to have the existing kitchen at the Hawaiian Ocean View Estates Community Center certified.J — Huliau 0 Ka'u Huliau 0 Ka'u —a non - profit organization which was established to help dis- . placed sugar workers, native - Hawaiians, and the poor —has expressed interest in having a certified kitchen to serve as an incubator for entrepreneurs 151 Foods _ would be prepared from locally grown fruits and vegetables, locally grown hogs and other livestock, and locally caught fish. One of the outlets for the prepared i • 9 -4 O OTHER ECONOMIC ACTIVITIES 0 foods would be the Ka'u Farmers Market which is sponsored by Huliau 0 Ka'u and is held every Saturday in Pahala. The kitchen also would be used to prepare foods for various community functions. The certified kitchen would be located in Pahala, possibly in a portion of one of !- the vacant sugar -mill buildings.ls Pahala is the logical location for most agricul- tural support facilities and services for Ka'u, given its central location with respect to the majority of good farmland and new plantings, and because the old sugar plantation roads feed directly into Pahala. The cost of establishing a certified kitchen and related improvements (e.g, a stove, shelves, cooking pots) can range from $10,000 to over $50,000, plus the cost of the building to house the kitchen. A successful project would lead to additional employment and income in Ka'u. Ka 'Ohana o Ka Lae As a complement to the proposed cultural operations at South Point (Chapter 8), a certified kitchen is needed to prepare native - Hawaiian foods and meals for community functions, and for sale to visitors and residents.' Ka'u Hawaiian Cultural Center (KHCC) As a complement to the KHCC (Chapter 8), a certified kitchen would be used to prepare Hawaiian foods for community functions, and for sale to visitors and resi- dents. — COMMERCIAL AND INDUSTRIAL ACTIVITIES, OCEAN VIEW Non - Conforming Activities — The Ocean View subdivisions are divided into lots which are within the State Agricultural District, but which are intended for residential use inasmuch as the land generally is unsuitable for agriculture. Most of the lots in Ocean View are about 1 -acre, but lots below the Belt Road are 3 -acres or more. In addition to using the lots for homes and for limited agricultural uses, a con- siderable amount of commercial and industrial activities occur in these subdivi- sions. If homeowners on these lots wish to conduct such businesses, they are required to apply for variances from the County zoning code. In practice, however, some business activity occurs without benefit of proper zoning or variances.191 U • J OTHER ECONOMIC ACTIVITIES O . - 9 -5 To address this problem, two solutions have been proposed for Ocean View: (1) expand the permitted uses for agricultural subdivisions, and (2) designate a spe- cific area for a light - industry park.I — • J Permitted Land Uses within Agricultural Subdivisions - Some in the community have suggested that certain types of small businesses , •J and cottage industries of about five employees or fewer be permitted to operate on • these agricultural subdivisions.I This encouragement to small businesses would 1 give the homeowner /business - person the advantages of convenience and added security, without having to incur the additional land costs associated with operat- • J ing an off -site business. In addition, it would become more feasible for potential . businesses to explore new ventures at a low initial cost. . For large -lot residential subdivisions within the State Agricultural District, a J change in the zoning code to permit •limited commercial activities and cottage f ' industries may be appropriate, provided that the activities do .not create safety, - health, or nuisance problems. Permitted activities should have no visually offen- 7 sive structures or equipment, produce no unsafe or unpleasant odors ,or noises, ' J - cause no noticeable increase in traffic or parking, receive only a limited number of customer visits to•the property over a given time period, etc." The 1 -acre lots in Ocean View have adequate space on them to screen activities which would be visu- ally offensive on smaller lots. . 7 J To the extent possible, the criteria for acceptable activities would be based on the impacts, and not on the type of business. Also, the change would involve per - 7 'milted uses under the zoning code, rather than a variance or "spot zoning." Spot -1 . • zoning would be a violation of good land -use planning principles, and would be D - unacceptable to the County. • . On a limited scale, acceptable commercial and industrial activities within agri -H cultural subdivisions might include: real- estate operations, beauty shops; J _ chiropractic operations, accounting firms, travel agencies, secretarial services, com- puter operations, mail -order services, pottery studios, manufacturing of dolls, etc. J In fact, a pottery operation has been suggested for a location in Hawaiian Ranchos where dinnerware other items would be made to sell to residents, visitors, and in hotels. . R , H I1 - . . 9-6 0 0 �C OTHER ECONOMIC ACTIVITIES Light - Industry. Park — Proposed Light - Industry Park Commercial areas exist along both sides of the Belt Road, but an area desig- nated for light- industry activities is lacking. Such an area is needed for those light- [ industrial activities which are too large to locate within agricultural lots, or which would cause a nuisance. Furthermore, the need for a light- industry area in Ocean View will increase over time as more homes are built. Businesses which typically locate in light- industry parks, many of which r - already exist in Ocean View, include:I — general contractors who would use vacant lots as a base yard to store mate- rials, equipment, trucks, and partially fabricated structures; [ — speciality contractors who are involved in home construction, home improvements and repairs (access roads and driveways, water- catchment systems, cesspools and septic tanks, solar heaters, plumbing, satellite tele- vision dishes, electrical systems, custom cabinetry and furniture, masonry, painting, floor coverings, roofing, fencing, yard supplies, etc.); — vehicle maintenance and repair shops; — equipment maintenance and repair shops (computers, televisions, VCRs, — appliances, etc.); — warehouse and storage operations for nearby businesses, community orga- nizations and residents; — assembly operations (e.g., a cabinet assembler has expressed an interest in relocating to Ocean View); and — light manufacturing operations (e.g., a manufacturer of steel fences or a pottery factory that out grows a home studio). The benefits of having a single area designated for light industry include: — fewer nuisance complaints from residents, lower costs for utilities, the develop- ment of synergistic relationships among companies, and convenience for custom- ers in finding business services. Market As a rule of thumb; land requirements for light- industry space amount to about 1 acre per 1,000 residents.I For Ocean View, the demand could be somewhat higher because of the ample supply of land and the low land costs — possibly on the [ order of 1.5 acres per 1,000 residents. This figure is assumed below. n . O b , . OTHER ECONOMIC ACTIVITIES 9 - 7 - Within a few decades, Ocean View could reach a population of about 5,000 resi- 1 i dents, assuming growth of about 1,000 or more new residents per decade. . Corresponding requirements for light- industry space would ,amount to about . — 7.5 acres, based on 1.5 acres per 1,000 people. For Ocean View, it may be appropri- • ate to designate about 14 acres for light- industry use. This would allow adequate • acreage to serve areas in Ka'u other than Ocean View, and would also allow for unforeseen demand and future expansion. The typical size of a lot in a light - industry park is 1/2 acre.161 • . . Land Use Requirements and Approvals • D • Designating an area in Ocean View fora light- industry park would require: (1) confirmation of the dernand with a more in -depth marketing analysis; (2) working • - 1 • ' with the community to identify a suitable location for light industry .with proper J buffering, use restrictions, and access; and (3) obtaining the necessary- State and . — , County land -use designations, permits and approvals. The cost of these items is J estimated at $50,000.161 , , . . . The development of a light- industry park would require that the State designa- ' . tion'of the land be changed from the Agricultural District to the Urban District. If . the parcel is smaller .than 15 acres, the redistricting can be decided by the County '1 Planning Commission rather than by the State Land Use Commission. The County j .process is simpler and less expensive. • . • 7 . _ , The appropriate County zoning for a light - industry park would be Industrial- • - J Commercial (MCX), which allows the mixing" of light industrial and commercial . uses. . , , . Operations would require access to water and•power, and a County- standard , access road. The developer will have to secure the rights to the land and the ' financing. - J E mployment - At full development, light industry. provides about 20 jobs per acre, consistent with the demand of 1.5 acres per 1,000 residents. Thus, employment could . exceed 150 workers based on the estimated demand of 7.5 acres. However, it will take a few decades before this level of employment is reached. Within one decade, ' J . - employment could reach about 90 jobs, based on an area population of about 3,000. • p eople (3,000 residents.x 1.5 acres /1,000 residents x 20 jobs /acre). r' . 9-8 0 0 • _$ OTHER ECONOMIC ACTIVITIES COMMUTER Bus SERVICE Proposed Service Based on the 1990 census, about 200 resident of Ka'u commute 60 or more miles to the tourism - related jobs in North Kona and South Kohala. It is a long com- mute that can consume about 3 hours of a worker's day and, over the course of a year, gas and vehicle maintenance are expensive. The commute can also be clan- `' gerous, particularly when workers are fatigued and are driving in the dark and sometimes in the rain. The triple -S curve at Mile 92 is regarded as a particularly r dangerous section of highway. A number of residents have suggested that the County provide commuter bus -- service from Pahala, Na'alehu and Ocean View to North Kona and South Kohala. 1 � � It would be similar to that already provided to residents of Hilo who use the County bus service to commute to their jobs in North Kona and South Kohala. Potential Market C For the analysis which follows, it is assumed that about 20% of the people who now commute by car would switch to a bus service if it were offered, resulting in about 40 riders. Not all commuters would take advantage of the service due to scheduling problems and the greater convenience that personal vehicles provide r` for running errands and transporting groceries and other items. It is also assumed that about 20 additional Ka'u workers would be enticed to take jobs in Kona and South Kohala if the bus service were offered. Thus, the total market could amount to as many as 60 commuters, which would r support two scheduled runs. This market demand should be verified with a sur- vey and /or trial commuter bus service. U Availability of Commuter Buses Between late 1997 and the end of 1998, the County expects to obtain seven new tour -type buses for use by long- distance commuters, increasing the fleet from five — to 12. These new buses will have reclining seats and air - conditioning. Thus, buses will be available to provide service from Ka'u to the hotels in North Kona and South Kohala, provided that demand does in fact materialize. � O 0 L. 9 -9 OTHER ECONOMIC ACTIVITIES 0 Cost of Bus Service . • Commuter bus fares between Hilo and North Kona /South Kohala are $6 per round -trip when purchased in blocks of 10, or $4.50 per one -way trip when pur- r chased as a single trip. Similar fares can be expected to apply to commuter ser- vice between Ka'u and North Kona /South Kohala. ,— The fares are structured to cover all operating costs, plus 10% of the cost of pur- • chasing the bus. The Federal government provides 80% of the cost of the buses, and the County provides the remaining 10 %. 9 On an annual basis, a commuter would spend about $1,440 for commuter bus service, based on 240 round trips at $6 each. Sixty commuters would generate gross revenues of about $86,000 per year. U When labor markets are tight, some employers may elect to pick up all or a por- tion of the commuter fares of their employees. n Economic and Other Benefits J Bus service for commuters from Ka'u to jobs in Kona and South Kohala would r , offer a number of advantages. First, the service would allow existing commuters to • save on personal expenditures for gas and vehicle maintenance. For a typical com- muter, this savings is conservatively estimated at $2,880 per year, based on 240 commuter trips per year, and a cost of about $12 per round -trip by car for gas and vehicle maintenance. The annual savings would exceed $100,000 if 40 commuters '1 switch from using their cars to the bus. -1 Second, the service would allow commuters to sleep or rest on the bus rather fl • , than driving while fatigued, or possibly spend time reading during the commute. - A side - benefit, would be that workers are more likely to arrive home more rested, and will be more likely to spend "quality time" with their families. 0 Third, the service may result in more people commuting from Ka'u to jobs in North Kona and South Kohala, thereby increasing the incomes of a number of Ka'u families. The benefit could amount to about $500,000. per year, assuming 20 new • commuters and an average annual salary of about $25,000.161 • - 1 Fourth; the new commuters would spend a portion of their increased incomes . on purchases of goods arid services in Ka'u, thereby generating some additional jobs in the District. The expenditures could exceed $250,000 per year which would . generate about a half -dozen jobs in Ka'u, assuming half of the income is spent in Ka'u, and 1 job is created per $40,000 of expenditures.161 , 9 -10 OTHER ECONOMIC ACTIVITIES ` After adjusting for double- counting, the total economic benefits of providing a commuter bus service to Ka'u residents could exceed $600,000 per year. 1 DIGITAL ARTS BUSINESS INCUBATOR The non - profit Na'alehu Theatre has proposed a Digital Arts Business Incuba- tor to: (1) provide training, technical assistance, and support services to clients who Q wish to use state -of- the -art visual, audio and computer equipment to produce broadcast - quality media for distribution; and (2) serve as an interactive distance learning center.I The operation will offer, at affordable prices, all equipment required for pre- .. production, filming or video - recording, editing, reproducing and distributing media products. This equipment, much of which has already been purchased, includes: broadcast - quality cameras, video tape- recorders, a sophisticated audio- recording studio, digital converters, computers for editing digital video, and equip- ment for recording onto various formats for distribution of the product.I13a41 `- The operation will be housed in the Na'alehu Theatre which offers: the largest movie screen on the island; theatre seating for 330 people, with additional floor — space for tables and chair seating; a large theatrical stage with programmable light- ing and sound systems; capabilities to display film and video in an unusually wide variety of formats; access to cable television; access to the internet with plans for a high -speed connection; and planned access to satellite communications for distrib- uting digital materials.I The equipment and services will be available to business ventures in the Na'alehu area who wish to produce or record performing arts, cultural events, scenes of nature (e.g., the volcano), instructional materials, etc.I For example, Hawaiian cultural programs developed for presentation to the community and vis- itors (Chapter 8) may be recorded to produce programs for distribution beyond Ka'u. — Plans call for the Theatre to serve as the satellite learning center using large - screen video - conferencing, interactive -media capabilities, high -speed internet capa- bilities, and satellite communications.I The Digital Arts Business Incubator has been partially funded, and has access to considerable equipment and the Na'alehu Theatre. Project sponsors are seeking 1 further investment of about $880,000, most of which would be used to purchase O OTHER ECONOMIC ACTIVITIES 0 9 -11 additional equipment.t By the year 2000, net revenues are projected to be nearly $120,000. L ENERGY PRODUCTION L Ka'u is blessed with a variety of natural energy resources while the Big Island as a whole is burdened with relatively high electric rates (an islandwide average of L • 17.3o /kWh in 1995). Also, many homes are not connected to the electric grid. This situation presents opportunities for energy - production ventures—opportuni- ties which will increase if and when energy prices rise. J Wind- Powered Generators South Point and other areas of Ka'u are exposed to unusually strong • tradeWinds. To take advantage of this energy resource, Kamoa Wind Farm was developed near South Point. This operation runs about three -dozen large wind- ,– driven electric generators, although only about two-dozen are functioning. • The energy is sold to Hawaii Electric Light Co:, Inc. (HELCO) for resale to its consum- -- ers. J In addition to the above, some off -grid homeowners have installed small wind generators to supply energy for home use. J Wind generators have a few problems which should be noted, the most serious of which is the lack of reliability due to variable winds and the high cost of storing electrical energy. Consequently, the energy may not be available at peak periods when it is needed. Also, some wind generators do not produce "clean" power that J is free of spikes and delivered at a steady 60 cycles per second. Opportunities for wind generators are likely to increase with technological advances that will increase reliability, improve performance, and lower purchase and maintenance costs. Once wind generators are built, relatively few workers are required to operate and maintain them. Ocean Thermal Power Ocean- thermal energy conversion (OTEC) is a developing technology with con- c. siderable activity located at the Natural Energy Laboratory of Hawaii Authority (NELHA), abutting the Kona International Airport. •• 0 0 • 9 -12 OTHER ECONOMIC ACTIVITIES With this technology, cold deep -ocean water and warm surface water are pumped to a generating plant; through heat exchangers, the warm water is used to produce steam from a substance which boils at a low temperature; the steam drives a turbine connected to an electrical generator; the spent steam is cooled with the — cold water until it reverts to a liquid form; and the cycle is repeated continuously. — An additional benefit of OTEC is that the cold deep -ocean water is rich in nutri- — ents and is pathogen -free. Its availability at NELHA has spawned considerable aquaculture development, as well as some agricultural projects for plants that require cold temperatures. Until OTEC becomes economically viable with no large subsidies required for its development and /or operation, OTEC operations in Hawai'i are likely to remain — at NELHA only. Geothermal Power The two active volcanoes in Ka'u offer potential for developing geothermal power. With this technology, deep wells are dug to capture steam which is used to drive a turbine connected to an electric generator. The resulting energy is "dean," reliable, and available on demand. — To date, all geothermal development has occurred in Puna. The projects have been very controversial with a segment of the public because of cultural concerns, noise, and health concerns related to gases that have been released on occasion. — Solar Power South Point and Ocean View receive high levels of solar radiation, and many of the homes in the area are off -grid. As a result many of the homes use solar panels to provide hot water, and photo - voltaic panels to produce electricity. Sales of solar panels and photo - voltaic panels will continue as new homes are built in the off -grid subdivisions. In the case of photo - voltaic panels, sales could increase as ongoing technological advances increase efficiency, improve reliability, — and lower costs. The installation of solar panels and photo - voltaic panels provides employment — to a few workers in Ka'u. Once installed, however, relatively few workers are -- required to maintain them. — • O O OTHER ECONOMIC ACTIVITIES 9 -13 • J Energy Crops . Energy Crops are discussed in Chapter Z . , • PRISON , Proposed Prison , . The State has determined that there is a pressing shortage of prison space in Hawai'i, and has proposed that a 1,500- to 2,300 -bed medium - security prison for men and women be built on the Big Island.I The prison would be built on up to — 100 acres of State land, with construction by a private organization that specializes — in prison designs that are comparatively inexpensive to build and operate.J Con- _ struction costs are estimated at between $75 million and $160 million, with financ- ing to be provided by State revenue bonds. , J The prison would be privately owned, but leased to and operated by the State. _ The eventual cost is estimated at about $50 per prisoner per day versus about $79 per day for other prisons in Hawaii, allowing for a savings of over $20 million per year for a 2,000 -bed prison.I In early 1998, the State's preferred location for the prison was in Ka'u at a site north of Pahala and mauka of the Belt Road on a portion of State land leased to the Kapapala Ranch.I : The State's proposal for Ka'u followed lobbying efforts by — members of the Ka'u community who supported a private prison of 1,000 to 1,500 . ' beds that had been advocated by the V- Group, a firm based in Cleveland, Ohio. — - nn But by mid 1998, Ka'u was eliminated as a possible location for the prison due to strong opposition by a segment of the Ka'u community. • J Three Big Island sites on State land outside Ka'u remain under consideration: — , (1) land in the Kilauea Forest Reserve near the Kulani Correctional Facility (about 220 inmates), located 20. miles southwest of Hilo; (2) land off the Saddle Road .(between Mauna ,Kea and Mauna Loa) and near the Mauna Kea Access Road, owned by the Department of Hawaiian Home Lands and leased to Parker Ranch; and (3) a portion of land currently leased to the U.S. Army for the Pohakuloa Mili- - tary Training Area, located on the Waimea side of the saddle between Mauna Kea . — and Mauna Loa.c For all three of these sites, questions remain as to whether the — 24 -hour lighting required of a prison would compromise the astronomical observ- _ _ ing conditions at the Mauna Kea Observatories. , 9 -14 O OTHER ECONOMIC ACTIVITIES r Economic and Other Benefits A large number of jobs will be available during construction of the prison and immediately upon the initiation of operations: 530 to 870 operating jobs for a 2,000- – bed prison, including: I —a warden and deputy warden; – —corrections officers; – —social workers; – — administrative staff (secretaries, computer operators, bookkeepers, payroll accountant, records clerks, and property clerks); —food service staff (dietitian, supervisors, cooks, receiving stewards); _ — health service staff (doctor, dentist, nurses, and X -ray technicians); and — maintenance staff (plumbers, electricians, locksmiths, carpenters, painters, etc.). – It is anticipated that most prison workers would be hired from nearby commu- nities and would receive training to prepare for employment at the prison. Prison jobs would be secure and largely unaffected by local and national economic down- turns. (This assumes that dramatic changes are not made in criminal law or how 0 criminals are handled, either of which could result in a greatly reduced need for prisons. In particular, the legalization of drugs could reduce the need for prisons.) Additional indirect jobs would be created through purchases of goods and ser- vices by the State for the prison, by employees and their families, and by prisoners' –, families who visit or move to be near the prison. To realize these collateral eco- nomic benefits, it will be incumbent upon local farmers and entrepreneurs to nego- tiate contracts with the prison to supply: (1) food products, such as milk, pork, beef, fresh fruits and vegetables, etc.; (2) trucking services to deliver goods and remove wastes; (3) laundry services; (4) maintenance services for vehicles, comput- ers, office equipment, etc.; (5) hotel services for visiting officials and families; etc. Additional benefits to the community at large could include improved health- care services, road improvements, the development of water systems, etc. – Community Issues and Concerns – Locating a prison in Ka'u was highly controversial, with strong advocates – favoring its development, and strong opponents. Proponents cited the very signifi- – cant economic and associated benefits. In addition, they argued that the Dis- – _ ` 0 0 . . OTHER ECONOMIC ACTIVITIES 9 -15 ,- trict is geographically large enough to accommodate a prison on "junk" agricul- ' tural lands, while also preserving the "sacred grounds" and the cherished lifestyle. . For some, the prison would have been acceptable only if a large community exac- • tion (tens of millions of dollars) to support other projects in the community was — ' provided. b Opponents doubted -that Ka'u residents- would benefit, and cited concerns • J a bout potential public endangerment; aesthetics (visual, noise, night lighting); . _ image.problems forKa'u which could have adversely affected tourism and the abil- ity to attract investors; a loss of serenity of Nechung Drayang Ling _(the Tibetan _ , . Buddhist temple in Wood Valley); development of limited water resources at the J expense of agriculture; social problems associated with the possibility of prisoners' families moving to ka'u to be closer to incarcerated family members; a major increase in population in - the District; arid reduced property values near the prison. E l'"1 . . • - 1 The many concerns may or may not have been valid, and actual impacts would • -J have depended upon such things as the specific siting of the prison, its design, mit- - - - igating measures taken, its operating procedures, etc. — A community survey conducted in 1996 and 1997; and a community petition _ conducted in early 1998 combined to indicate that, at that time, the community was - ' _ divided over the prison, but that the greatest support for building a prison in Ka'u . . come from residents of Pahala.I _ ' RETIREMENT COMMUNITIES ' ' _ Introduction _ _ Kau attracts retirees primarily because of its ideal weather, peaceful rural lifes- tyle, and'low cost'housing. . The attraction of low =cost housing is particularly apparent in the partially improved Ocean View subdivisions. Even though homes in some of these subdivi- sions lack utilities .such as water and power, the combined- cost of a lot, a house, , . water- catchment system and a home power - generator is generally much lower ( — • than the price of 'a typical home where all utilities are provided as part of the pur- . chase price of the home.I - ' Housing projects such as those in Ocean View appeal to older retirees living on — - - fixed incomes —such as pensions, social security, or other steady outside r 9 -16 O f OTHER ECONOMIC ACTIVITIES sources —where they do not need a local job to cover their living expenses. How- — ever, the younger retirees sometimes work part- or full -time to supplement their — fixed incomes. — Developers have explored the possibility of constructing new housing projects in Ka'u targeted especially to the retiree market. — Economic Benefits Retirees support the local economy and create jobs by purchasing groceries, — gasoline, home - maintenance and auto - maintenance services, health and personal — services, recreation services, etc. For example, if 100 new retirement families were to spend an average of $10,000 per year for local goods and services, this would contribute $1 million per year of income to the economy of Ka'u. Assuming that one job is created per $40,000 in C expenditures, 100 new retirement families would support about 25 new jobs. Efforts to Attract More Retirees — Government Permits and Approvals The existing supply of empty housing lots available in Ka'u to retirees and — other new residents exceeds 10,000 parcels —most of them in the Ocean View sub- — divisions. Other than a County building permit, no additional permits or approv- — als are required to construct homes on these lots. — If a new community targeted especially for retirees were proposed for Ka'u, it — would require State districting, County zoning, and subdivision approvals. Marketing As indicated above, Ka'u is inherently appealing to retirement families who like the rural lifestyle, the weather, and the comparatively low cost for homes or hous- ing lots. Nevertheless, additional marketing would help attract more retirees to the area. A cost - effective approach to conducting this marketing would be to increase the — visibility of Ka'u on the internet, using well - designed web pages featuring these — three inherent qualities, other attractions of living in the area, and links to realtors who sell properties in Ka'u. O O = OTHER ECONOMIC ACTIVITIES 9 -17 Health Services The most serious shortcoming that makes it difficult to attract retirees to Ka'u is the inadequate health care. If health -care services were improved, this would help attract more retirees to the District and would, at the same time, provide improved health care to all residents. The immediate focus should be for the community to work with health -care • — providers to identify improvements in facilities and services which can be made at comparatively low cost. In view of the State's fiscal problems and the small popu- _ lation of Ka'u; a major expansion of health services would be difficult to justify if _ large subsidies are required.. Once low -cost improvements are identified, lobbying by the community to improve Ka'u's health -care services would be warranted. Over the long -term, health -care services in Ka'u can be expected to improve as the population grows and is able to support more services. • J RURAL ROOTS TECHNOLOGY CENTER, NA'ALEHU MAIN STREET The Rural Roots Technology Center, a project of the non - profit Na'alehu Main J Street, is a business service center which supports local ventures. It is located in the former police building in Na'alehu, and shares space with the Ka'u Gallery Cooper- _ ative (Chapter 7), an acupuncture clinic (Chapter 7), and Vegenet (Chapter 2). Services of the Rural Roots Technology Center include:E — business training (leadership, business financing, bookkeeping, marketing, etc.); — assistance in writing business plans; . — computer training (general computer literacy, internet tools, creation and indexing of web pages on search engines and topical indices, etc.); and —office support - (secretary, bookkeeping, fax, voice mail, computers, internet _ • access; meeting rooms, business library, etc.). Assistance in writing business plans and grant requests is of particular impor- _ tance in securing financing for start -up businesses, while providing help in Bevel- - oping web pages is important for off - island marketing in a global economy. Web pages have proven to be successful in marketing bed -and- breakfast operations, — tours and recreational activities, crafts, flowers, fruit baskets, etc. • • 9 -18 OTHER ECONOMIC ACTIVITIES O • r Funding for the Rural Roots Technology Center comes from the State's Com- munity -Based Economic Development program of the Business Support Division — of DBEDT, and also from other organizations. The operation merits continued sup- — port. — SPACEPORT — Past Proposal for a Spaceport In the early 1990s, the State proposed that Palima Point become the site for a — commercial "spaceport" to launch satellites into space. Palima Point is well- located — globally for a satellite launching facility in that satellites can be launched into both — equatorial and polar orbits. This flexibility would allow a new rocket - launching — company to build and maintain just one site rather than two, as they must do on the U.S. mainland where satellites destined for equatorial orbits are launched from — Florida's Cape Canaveral and satellites destined for polar orbits are launched from California. — Also, launching from Palima Point would allow heavier payloads to be placed in equatorial orbit than can be launched from Florida because the boost is greater from Hawai'i due to the faster spin of the earth nearer the equator. This assumes —' the same -sized rocket and fuel load. Employment Benefits — Had the proposed spaceport been realized, it would have provided an esti- — mated 270 jobs in Ka'u, and would have added a unique' and significant visitor — attraction to the District.I Community Support Efforts by the State to promote the Spaceport were terminated because a seg- ment of the community opposed it due to safety and other concerns. Demand for Launching Services A rapid worldwide increase in the number of satellites being used for global telecommunications is underway. For example, the Iridium, Celestri, Globalstar, SkyBridge, and Teledesic programs collectively plan to launch about 600 satellites 0 0 OTHER ECONOMIC ACTIVITIES 9 -19 • over the next 5 years from 1998 through 2002, or an average of about 120 satellites per year. A rapid worldwide increase in the number of satellites to be launched indicates — a corresponding increase in the demand for satellite launching services. Sea -Based Launching Services To help meet the demand for satellite launching services, launch ,compa- nies —both in the United States and elsewhere —are developing floating launch J platforms which will be sited in the ocean close to the equator. One that is quite far advanced is Sea Launch Co., which is developing for non- military purposes a floating launch platform to be sited about 1,400 miles south of Hawaii near Kiritimati (Christmas) Island.E -241 The platform (220 feet by 436 feet) will be serviced by a command ship (660 feet) that will function as a floating rocket assembly plant and mission control center. Home -port facilities (office, payload processing, fueling, ship docking, etc.) will be located in Long Beach, California. J _ Sea Launch Co. is a consortium of four companies. Boeing Commercial Space Co. will design certain parts and provide marketing services. A Norwegian ship- building company will build the launch platform from a converted mobile oil drilling platform, and provide the command ship. Russian and Ukrainian compa- • nies will provide the launch rockets. Funding for the $2 billion project has been provided by 14 international banks with guarantees from. the World Bank, and construction has started on the launch platform, command ship, and home -port facilities 1221 The first launch is scheduled for late 1998, and long -term plans call for 10 launches per_year.«I Together, Hughes Space & Communications International r and Space Systems /Loral have contracted for the first 18 launches, and hold options for additional ones. — Outlook for a Spaceport Even with the launching services to be provided by existing and new opera- tions, the demand for additional land -based launch sites is sufficiently high that companies continue to seek possible sites. Thus, potential exists for renewed inter- - est in Ka'u as a launch-site for satellites and small sounding rockets, particularly if land -based operations prove to be significantly less expensive than sea -based oper- ations. 0 0 9 -20 OTHER ECONOMIC ACTIVITIES Any potential organization showing an interest in developing a spaceport in Ka'u would have to satisfy community concerns about safety and other issues. Past history suggests that building community support would be a formidable chal- lenge. TRADE SCHOOL, PAHALA As the former sugar plantation is replanted in new crops, and as food-process- ing activities develop in Pahala, job opportunities will arise for skilled tradesmen, including welders, mechanics, computer technicians, etc. _ To supply the demand, a trade school has been proposed that would be housed at the former sugar mi11J The trade school would provide employment to teach- _ ers, administrators and maintenance workers. r- For the most part, tradesmen learn their skills from on- the -job apprenticeships and/or classes in high school or at one of the community colleges. The development of a trade school in Pahala should be postponed until it is verified that the demand for these workers is growing at a rate that outpaces the supply from on- the -job apprenticeships and established high - school and communi- ty-college programs. REFERENCES [1] State of Hawaii, Department of Health. Hawaii Administrative Rules, Title 11, Chapter 12, "Food Establishment Sanitation." November 22, 1996. [2] Discussions with business operators in Ka'u. — [3] Masazo's Pig Farm. [4] Discussions with residents of Ocean View. [5] Huliau 0 Ka'u, Inc. — [6] Information compiled or estimated by Decision Analysts Hawaii, Inc. [7] Ka 'Ohana o Ka Lae. _ [8] Hana Laulima Lahui o Ka'u. — [9] Discussions with Ocean View business operators and /or residents. [10] U.S. Census. [11] Discussions with Ka'u residents. [12] County of Hawaii, Transit Agency. J 0 ' OTHER ECONOMIC A CCIVTITES ' 9 -21 [13] Demourelle, Sandra. "Draft Digital Arts Business Incubator: Feasibility Analy- - sis." Na'alehu, Hawaii. March 11, 1998. . [14] Na'alehu Theatre. . [15] State of Hawaii, Department of Business, Economic Development & Tourism. The State of Hawaii Data Book: 1996. Honolulu, Hawaii. • [16] Department of Business, Economic Development and Tourism. — [17] Provided by V- Group, or extrapolated from information provided by V- Group. — • • [18] Ka'u Connection, Special Edition. February -March 1998. [19] Na'alehu Main Street. ' 9 [20] Decision Analysts Hawaii, Inc. "Hawaii Commercial Rocket Launching Facil- ity: Economic, Population, and Housing Impacts." Conceptual Plan, Commercial , Satellite Launching Facility, Palima Point, Ka 'u, Hawai'i, Draft Environmental - Impact Statement, Volume IX, Technical Appendices: Socioeconomic, Sociocultural . and Land Use Issues: 'State of Hawaii, Department of Business, Economic Devel- opment & Tourism. Honolulu, Hawai'i. 1993. . [21] Reuters Limited, October 1997. . [22] Reuters Limited, February 1988. [23] The Boeing Company. - [24] Pacific Islands Development Program, Center for Pacific Island Studies. "Con- - sortium Plans Satellite Launching at Sea Near Kiritimati." Pacific Island Report. April 23,1998. [25] Discussions with project advocates. - J • I� _ 0 • . r . • • 10. INFRASTRUCTURE NEEDS ROADS ' For the most part, the roads in Ka'u are adequate to support economic activities in the District. However, as discussed in Chapter 2, some improvements and ongo- ing repairs are needed to improve or maintain access to farm areas. These — improvements can be of a less- expensive, lower quality than County- standard roads —e.g., a quality similar to that of a plantation road. Regarding widening the road to South Point from one lane to two, many in the community do not support this, arguing that the current narrowness discourages • . speeding.E However for . safety reasons, the road shoulders should be maintained. Just outside Ka'u in South Kona, the triple -S curve at Mile 92 of the Belt Road is dangerous for the Ka'u residents who commute to jobs in Kona and South Kohala, _ as well as to the many visitors who explore the island by private rental car.i The . road is particularly dangerous for drivers who, may be fatigued, are driving at J night and sometimes in the rain and, in the case of most visitors, are unfamiliar with the curves. — • WATER ' ATER • " A number of . water projects to support agriculture are discussed in Chapter 2. —. . " However, the water system discussed for Ocean View would provide significant benefits beyond agriculture. Additional users of water in Ocean View would • _ include various stores. in the commercial areas, other businesses throughout the I community, residential users, and the County Fire Department J1] As with the I farmers, all these other water users would save significant time and expense if they no longer had to haul water from from Wai'ohinu and Na'alehu, or to pay commer- • • cial haulers for the water. . ' .104 .. 10 O 0 2 — INFRASTRUCTURE NEEDS TELEPHONE SERVICE Past GTE Service GTE Hawaiian Tel (GTE) provides telephone service to the entire State. Until recently, however, service in Ocean View and some other parts of Ka'u was inferior to that provided to nearly all other communities in Hawai'i.J These areas were served with old mechanical switching systems, not modern' digital ones. Also, — most businesses and residents had to share 4 -party lines because too few lines were — available. Businesses on party lines were unable to use answering machines, fax — machines, or modems to link their computers to the internet. Also, important calls _ were missed or delayed, and business conversations were not private. Private lines could be obtained, but the additional monthly charge was very high and unafford- able for many users. Furthermore, new businesses reported long waits for hook- ups. .— Cellular phones were not a reasonable alternative because data transmission — rates are comparatively slow and some areas do not receive the service or suffer — from interference.Ell — Because of the poor telephone service, some businesses were unable to operate in certain areas of Ka'u. Universal Service Fund Through their monthly phone charges on long- distance calls, Hawai'i residents contribute millions of dollars annually to the Universal Service Fund (USF), which — is a Federally- operated program that provides funds to upgrade rural phone sys- —' tems. [2] In spite of this contribution by Hawai'i residents, Hawaii is one of just a few — states that does not receive the USF subsidy to upgrade its rural phone systems.J r The reason for this is that GTE is ineligible for the funding because GTE also serves — many urban areas and, under the program requirements, should not need the sub- sidy to provide adequate service to rural areas of the State. Proposed TelHawai'i Service After an investigation of the telephone service in Ka'u, bids from other tele- phone companies, and public hearings, the Hawai'i Public Utilities Commission (PUC), in 1996, elected to transfer the responsibility of providing the telecommuni- — r o 0 • INFRASTRUCTURE NEEDS 10 -3 cations service for most of the Ka'u District to a new firm, TelHawai'i, Inc.i This occurred after the PUC determined that the service provided by GTE was inade- - quate. As a result, GTE was ordered by the PUC to negotiate the sale or transfer of its Ka'u facilities to TelHawai'i. TelHawai'i—a subsidiary of TelAlaska, Inc. which has been providing service to rural Alaska for 30 years —has promised state -of- the -art, single -party telephone _ service to all subscribers (business and residential) using new digital switching.i • In anticipation of its new responsibilities, TelHawai'i applied in August 1996 to the Federal Communications Commission (FCC) for a "study area waiver "to: (1) upgrade the telecommunications equipment in Ka'u, and (2) receive the subsidy from USF immediately instead of waiting the standard 2 years. In July 1997, the –1 FCC granted TelHawaii's request for a waiver but denied its request to make the funds available immediately. Current GTE Service - ~ GTE is contesting through the courts the transfer of Ka'u's telephone service to TelHawai'i. Furthermore, since the time when transfer was first authorized by the PUC, GTE has installed modern switches and new telephone lines in Ocean View and elsewhere in Ka'u, so that businesses now have access to private lines and can use answering machines, faxes, and modems to link their computers to the internet. Such equipment is required for a business to operate effectively in a modern econ- - omy. This upgrade in communications capability constitutes a significant change in Ocean View and in the other affected communities in Ka'u, and so expands their business development horizons. _ HONU'APO PIER Suggestions have been advanced to repair the historic FIonu'apo Pier so that it can be used again for shipping cargo, as well as serving boats engaged in tourism activities. - The first pier at Honu'apo was built in the 1870s for transferring sugar, molas- ses and other freight to cargo ships.i In subsequent years, the pier was modified so that by the 1930s, it had a concrete and steel frame that supported a wooden deck, a warehouse, an electric- driven derrick for lifting cargo, and three sets of train tracks. The pier was 280 feet long, 49 feet wide, and 15 feet above the water. 'I J r 10-4 0 0 4 ' INFRASTRUCTURE NEEDS Because the bay is open to rough sea conditions, ships did not tie up at the pier to transfer cargo. Instead, they were moored in the bay and cargo was trans- ported to them in small boats. But soon after the bombing of Pearl Harbor on December 7, 1941, the Army blew out a 20 -foot horizontal section of the pier with dynamite to make sure that ..r the pier could not be used by invading Japanese; the explosion also shattered some _ of the vertical concrete supports at the water lineJ After the war, the pier was not rebuilt because it was more economical to transport sugar and molasses by truck to the safer Hilo Harbor. Further damage was inflicted on Honu'apo Pier in 1946, when a tsunami from Alaska destroyed the warehouse. Then, in 1975, a locally generated tsunami crushed the remaining deck on the pier. Over time, the internal steel has rusted and expanded, and concrete portions of the pier have fallen off into the water. All that remains is a partial skeleton of the pier which, in all probability, is not — structurally sound. To be usable, it would probably be necessary to rebuild the — pier at considerable expense, rather than repair it. _ If it is rebuilt; limited commercial use of the pier can be expected because its _ exposure to rough seas creates unsafe conditions for transferring cargo and /or pas- sengers between the pier and a boat or ship. It is convenient and far safer to truck - — cargo to Hilo Harbor which has equipment to move containerized cargo. Any refurbishment of Honu'apo Pier would have to be based on restoring it for its his- torical value. AIRPORT FOR LIGHT PLANES Some business operators have suggested that a small airport for light planes be — built in Ka'u to make the District more accessible to tourists and business travel - ers. Assuming that a level site is available, a runway and small terminal similar — to the airport at Hana, Maui would cost approximately $2.5 million, excluding land r- costs.l _ However, an airport will be difficult to justify until a commitment is made to a major hotel that increases the number of rooms available to visitors, or the popula- _ tion increases significantly, or some other major project (possibly the prison) is introduced into Ka'u that requires a small airport. r _ o 0 INFRASTRUCTURE NEEDS 10 -5 REFERENCES • [1] Discussions with Ka'u business operators and residents. [2] TelHawai'i, Inc. [3] Fred K. Duennebier and Robert C. Jordan. "Environmental Assessment, Hugo Projects." University of Hawai'i at Manoa, Department of Geology and Geo- physics, School of Ocean and Earth Science and Technology. September 12, 1995. [4] Department of Land and Natural Resources, Division of State Parks. J [5] Information compiled or estimated by Decision Analysts Hawaii, Inc. and /or Belt Collins (Hawaii). r J • • O O - 11. OVERSIGHT MANAGEMENT , • COUNTY OFFICE OF RESEARCH AND DEVELOPMENT Oversight management of this economic development plan will be necessary to (1) facilitate implementation of various projects and programs, (2) insure follow - through on any implementation which is delayed pending subsequent events, (3) • adjust and update the Plan to reflect changing circumstances and new 'opportuni- -- ties, and (4) maintain momentum to help facilitate the economic development of Ka'u. - , — The County of Hawaii, Office of Research and Development is the logical - choice for this role because (1) it has the proper legal authority and broad mandate J for economic development in Ka'u, and (2) it possesses extensive knowledge of eco -. riomic development issues in the District and of the people and organizations 1 involved with economic development. Other governmental organizations gener- ' _J . . . ally have mandates which are narrower in terms of function and /or client group, . 1 . and /or their knowledge of economic development activities in Ka'u is less exten- ' J sive. . — The oversight management role would be to: -apply for or assist others in applying for Federal and State implementa- tion grants; '' ' —for complex projects, determine what technical studies will be needed to • evaluate them; -for simple projects, evaluate them to verify their merit; • — manage technical studies and the implementation of projects; , .— encourage other organizations to follow through on opportunities for -- economic development and implementation; - — - coordinate actions with other public and private organizations, including - a the All Ka'u 'Council and other community organizations in Ka'u, DBEDT, DLNR, DHHL, OHA, C. Brewer, KSBE, and other organizations; ' • 11 -1 • O • 0 OVERSIGHT MANAGEMENT 11 -2 — monitor progress on implementation; and —adjust and update this Economic Development Plan periodically to – reflect changing circumstances and new opportunities. The County Office of Research and Development, however, has limited person- nel and would be able to be more effective if they have a new position to take on this additional responsibility. The cost for a full -time position with benefits is esti- mated at $75,000, with funding to be derived jointly from the Federal government and the County of Hawaii.h – ' ALL KA'U COUNCIL At the community level, the All Ka'u Council is best - positioned to play a coor- -- dinating role in advocating and supporting the economic development initiatives – discussed in this Plan, as well as other initiatives which will arise. This is the only – existing community organization in Ka'u that has been established to take a broad economic perspective that includes the entire District, all economic activities, and all community organizations who choose to be involved with economic develop- ment or its impacts. The All Ka'u Council was formed to provide a forum for members to discuss issues and pending legislation that concern Ka'u and to advocate appropriate – actions to (1) guide the economic development; (2) preserve and protect the cul- tural heritage and environment; and (3) protect and enhance education, safety and health. REFERENCE [1] County of Hawai'i. – r