- Special Projects
Idled trucks and tractors are spread out in a field behind DuPont Pioneer’s parent seed facility in Kekaha, a small town on the west side of Kauai.
The noise of a generator is the only hint of activity at the site where researchers have worked for years growing genetically modified seeds used to create hybrid crops.
No one has worked the fields since Pioneer announced the facility’s shutdown May 20, and now only a skeleton crew is employed.
It’s the latest sign in Hawaii of corn seed industry contraction that is occurring worldwide and is unlikely to end any time soon, one national expert told Civil Beat.
DuPont Pioneer’s closure of its Kekaha operation will eliminate 34 jobs and potentially take 3,000 acres out of crop production. In the same town, Syngenta Kauai laid off 23 workers in March and returned 500 acres of leased land to the state Agricultural Development Corporation.
Back in 2012, the seed crop industry in Hawaii was valued at $243 million by the U.S. Department of Agriculture.
But by 2014, that value — which is based on operating costs — had dropped to $159 million. The number of acres harvested fell by about 30 percent within the same time period.
Biotechnology giants are attracted to Hawaii for its yearlong growing season and primarily research and develop new varieties of corn seed for export.
Now representatives from the companies said they are consolidating operations worldwide in response to market conditions that include a surplus of corn seed and low commodity prices.
The industry’s shrinking footprint is good news to some environmentalists who would like to see GMO operations replaced by organic farms. Hawaii has been ground zero for a debate over genetically modified organisms, with many residents fearing the health and environmental impacts of GMO farming and advocating for legislation to further regulate the industry.
But the changes are sobering to Charmaine Rapozo, a cashier at Menehune Food Market in Kekaha who has lived in the community for over four decades.
The 65-year-old Portuguese woman said the seed companies employ people who may not have a college degree and can’t afford the gas to drive to other parts of the island for work.
“This is going to be a real problem for the west side,” she said. “We need the companies to keep these people working.”
While Kekaha’s unemployment rate is lower than Kauai County’s, a higher percentage of people are not in the labor force, including the long-term unemployed. The community of about 3,000 has more people in poverty and a lower median income compared with the rest of the island, and a higher proportion of Native Hawaiians and Pacific Islanders.
Since the March Syngenta layoffs, Rapozo has seen some workers come into the shop with food stamps.
“I know they’re hurting,” she said.
Officials at Pioneer and Syngenta blame global market trends for the decrease in production.
Josh Uyehara, a station manager at Syngenta Kauai, said the recent Syngenta layoffs were part of a global cost-cutting effort that seeks to save $1 billion by 2018.
The company is expecting to save $50 million from consolidation and outsourcing in research and development in 2015. A total of 1,800 jobs globally will be lost or relocated, mainly in 2015, according to a corporate press release.
When the initiative was announced last November, Bloomberg reported that it was an effort to increase profitability after currency shifts and overproduction of corn seeds made Sygenta’s profits lag behind competitors, including Monsanto.
Uyehara told Civil Beat that the slowdown in production is partially due to a surplus of grain, and that low commodity prices for corn are making it hard for farmers to afford to buy more.
“We’re almost a victim of our own success,” he said, noting that Syngenta seeks to create seeds that are drought-resistant and help give farmers more reliable yields.
Laurie Yoshida, spokeswoman for DuPont Pioneer Hawaii, said the recent layoffs and shutdown of the company’s Kekaha parent seed operations also reflect global reorganization and restructuring. She said that although the company is consolidating its parent seed operations on the North Shore of Oahu, it expects to add only a few jobs.
Yoshida and Uyehara both said the Kauai downsizing had nothing to do with the political climate on the islands.
Pioneer recently settled a lawsuit for half a million dollars brought by residents of Waimea, the town next to Kekaha, who complained of dust from the fields blowing into their homes.
The seed companies have also been involved in lawsuits challenging county regulations seeking to ban genetically modified farming in Hawaii County, impose a moratorium on such farming in Maui County, and require more disclosure of pesticide use in Kauai County.
The consolidation of operations by Pioneer and Syngenta means that there’s now more land available for other farming on the west side of Kauai.
Earlier this year, Syngenta returned 500 acres of ridge land to the state that it never used for growing crops. DuPont Pioneer said that the company is in the process of returning 1,400 acres of land leased from Grove Farm, a major landowner on Kauai.
Yoshida said that the company also is determining whether to return land to Alexander & Baldwin and the state Agribusiness Development Corporation.
Jimmy Nakatani, who leads the ADC, said the downsizing creates an opportunity for more diversified farming.
He has already contacted a Big Island farmer who grows ginger and sweet potatoes to see if he would be interested in the 500 acres that Pioneer is considering turning back to the state, even though the company hasn’t yet made a formal request.
Nakatani said that the state receives $150 per acre per year for rent from Pioneer and an additional $400 per acre per year for infrastructure costs.
“The speculation is that the soil is depleted and there’s been lots of pesticides applied and therefore there’s probably residue. I don’t know that, but I certainly think it deserves some testing.” — Kauai Councilman Gary Hooser
Nakatani visited Kauai last week and said that from the roadside, it looked to be in good shape.
“If they returned it tomorrow it would be a good opportunity for someone else to farm it,” he said.
He said the agency doesn’t generally test for pesticides when receiving back leased land unless it has cause for concern.
Generally, after receiving a request to take back land, the agency will conduct a visual inspection to check for junk cars or hazardous material. Depending on the results, additional analysis might occur, and then the agency would make a recommendation to the ADC board.
Nakatani said he’s not worried about contamination by the seed companies because they are using normal farming practices.
“We don’t want anything contaminated to come back to us,” he said. “There’s no reason for us to think that there’s something really bad over there…. They are big companies — deep pockets, high liability, so they do their homework and do it well.”
That approach disappoints Kauai Councilman Gary Hooser, who championed a bill at the County Council which sought to require large agricultural companies to disclose more information about their use of pesticides. After the measure became law, the seed companies sued and a federal court struck down the ordinance.
“Soil remediation and soil testing is an important factor and needs to be done,” Hooser said. “I would encourage the ADC to test the soil if nothing else to have some peace of mind and lease it out to somebody else.”
“The speculation is that the soil is depleted and there’s been lots of pesticides applied and therefore there’s probably residue. I don’t know that, but I certainly think it deserves some testing,” Hooser said. “I think this is an opportunity to put those fears to rest or not.”
Don Roose, president of the hedging and risk management firm U.S. Commodities Inc., thinks that the price of corn is unlikely to increase for at least a year or two. He noted that the U.S. Department of Agriculture has predicted that the price will remain under $4 per bushel for the next decade, compared with its peak at $8 in 2012.
With his West Des Moines, Iowa, office just a 20-minute drive away from DuPont Pioneer headquarters, Roose has been hearing similar stories about layoffs in Iowa as the company cuts costs.
Having worked in the industry for over 40 years, the downward cycle is not unfamiliar to him. Roose said that back in 2007, low interest rates combined with ethanol production put corn into a “super cycle” where seed sales were big, which led to overproduction.
From Roose’s perspective, the conditions that led to Hawaii’s seed industry peaking at $243 million in 2012 were an anomaly.
“I think that was unusual times with unusual circumstances and to go back to those levels we are going to need some unusual circumstances again,” he said.
Daniel Sumner, director of the University of California Agricultural Issues Center in Davis, California, agreed the high prices weren’t sustainable.
He said commodity prices have gradually declined for the past century as agriculture has become more efficient, and he expects that trend to continue in the long run.
Despite that, he thinks that there will continue to be a strong demand for the type of research and development that seed companies do in Hawaii.
Sumner wonders if the local pushback against the companies from residents who fear genetically modified crops influenced the consolidation and layoffs, even though DuPont Pioneer and Syngenta say it didn’t.
“Hawaii has gotten a reputation for a state that doesn’t like innovation, particularly in agriculture,” Sumner said.
Regardless, the downsizing shows that changes on the global stage have real effects on the local market. And more shifts may be in store — Monsanto is considering buying Syngenta, and that could prompt another merger between DuPont Pioneer and Dow AgroSciences.
Locally, Nakatani is optimistic about changes in the agricultural landscape.
“It is what it is, you can’t stop it,” he said. “If it’s a world thing, it’s a world thing and it’s going to happen. Rather than saying woe is me, look at the opportunity to see other crops grow.”