Seed grain, mostly corn, has emerged as Hawaii’s top cash crop after the demise of the state’s pineapple and sugar industries. But the value of the seed industry has dropped sharply in recent years, and the trend continues.

According to the U.S. Department of Agriculture, the value of Hawaii’s seed industry is estimated at $106 million for the 2018-19 season. That’s a 13%  drop from the previous year – and a 56% decline from 2011, when the industry’s value peaked at $241.6 million.

Shipments of seeds from the state have dropped steeply to about 4.8 million pounds this year from a high of 12 million pounds in 2009-10.

But despite major declines in economic activity in Hawaii in recent years, Hawaii’s genetically modified seed industry will be around as long as there’s a demand for corn, industry executives said this week during a briefing held at Bayer Crop Science’s facility in central Oahu.

The industry breeds corn with traits that are designed to help farmers be more productive. Most controversial among these are crops engineered to tolerate pesticides sprayed to control weeds.

Bayer Crop Science located at 94-520 Kunia Road Kapolei. Rows of newly planted corn with Waianae Mountains in the background.
Bayer Crop Science’s seed corn operation, formerly owned by Monsanto, in Kunia contributes to produce Hawaii’s largest cash crop, valued at $106 million this year. Cory Lum/Civil Beat/2019




None of the seed company executives brought up the controversy surrounding pesticide-tolerant crops during the hour-long briefing at Bayer’s Oahu facility earlier this week.

Instead they stressed the importance of other traits tailored for specific geographies: crops designed for shorter or longer growing seasons, high winds, cold weather; corn with deeper roots.

Bayer officials were joined by a spokeswoman for Hartung Bros., which acquired Syngenta Seeds’ operations on Oahu and Kauai in 2016, and an industry lobbyist for the Hawaii Crop Improvement Association. A spokeswoman for Corteva Inc., which spun off from DowDuPont Inc. in June 2019, joined in by phone for the discussion, which was followed by a tour of Bayer’s fields in Kunia.

Formerly operated by Monsanto, the Kunia facility was taken over by the German chemical giant when it acquired Monsanto for $66 billion in 2016.

The value of Hawaii’s seed industry has declined sharply in recent years, the result of declining capital investments and greater efficiencies that have lowered operations’ costs, industry executives say. USDA


“Every farmer has different requirements,” said Emmanuel Zibakalam, the lobbyist for the Hawaii Crop Improvement Association, a trade group for biotech agriculture companies. “You’re going to see different requirements in different areas geographically.”

“We have to develop what’s necessary for those farmers to succeed,” he added. “And that’s what we’re trying to do. We’re taking the needs of a farmer and translating it into a product that helps them succeed.”

Industry Remains Highly Divisive

The seed industry has been a flash point for controversy in Hawaii for years, despite it being the state’s biggest crop.

After seeds, the latest USDA data show the next most lucrative crop, coffee, had a value of $50.1 million and macadamia nuts were just more than $42 million. That makes the seed industry’s value greater than that of the next two crops combined.

But many question whether the industry’s benefits outweigh costs to the environment and risks for workers.

For example, concerns over the seed industry led the Kauai County Council to pass a 2013 ordinance aimed at controlling pesticide use, and Hawaii island and Kauai banned GMOs entirely. All three county laws eventually were struck down by the 9th U.S. Circuit Court of Appeals.

Federal regulators have stepped in to police pesticide violations. In 2018, the U.S. Environmental Protection Agency settled claims against Syngenta Hawaii for exposing dozens of workers on Kauai to a dangerous pesticide in two separate incidents for $150,000, plus $400,000 to be spent on worker protection training sessions.

On Thursday, the industry suffered another black eye when Monsanto agreed to plead guilty to a misdemeanor offense of unlawfully spraying a banned pesticide on corn seed and research crops in Kihei, Hawaii, in 2014.

Monsanto will pay $10 million under the plea deal – a $6 million criminal fine and $4 million in community service payments to Hawaii government entities, the U.S. Department of Justice announced.

Monsanto admitted in the court documents it used the pesticide even though the company knew its use was prohibited and that it told employees to re-enter sprayed fields seven days later – even though Monsanto knew that workers should have been prohibited from entering the area for 31 days.

The seed companies have been willing to operate in Hawaii amidst such political opposition and a tough regulatory system because Hawaii has striking competitive advantages over other locations.

Advantages include not just Hawaii’s climate, an oft-cited attribute that gives the seed companies three growing cycles each year.

Also key, Zibakalam said, is a stable government, strong U.S. intellectual property laws and infrastructure sometimes lacking in countries with multiple growing seasons.

“You can think of a lot of other places along the equator that may be cheaper to do business in,” he said. “However, they don’t provide the same protections.”

Which brings up an obvious question: Why has there been such an apparent decline in the seed industry in Hawaii, as reported by the USDA, if the state has such a competitive advantage over other places?

Dan Clegg, Hawaii business operations lead for Bayer Crop Science, said it is essential for the industry to provide value to farmers. Stewart Yerton/Civil Beat/2019

Laurie Yoshida, a spokeswoman for Corteva, said the USDA numbers are somewhat misleading.

Although the report’s headline says, “Hawaii Seed Crop Value Decreases,” Yoshida said the report doesn’t simply describe a sales price for the seeds. Instead, she said, it reflects the value of economic activity to produce the seeds, or varieties, known as “lines” in industry terminology.

“You might be producing more seeds or more lines, but you don’t have as much investment,” she said.

A footnote in the USDA report supports Yoshida’s interpretation. It says, “Value is based on sales or gross operational budgets.”

Accordingly, Zibakalam said the apparent peak in Hawaii seed crop value in 2009-2012 was the result of not only producing and selling more seeds than now, but of making infrastructure investments that have tapered off.

Industry consolidation has led to more efficiencies, allowing companies to scale back workforces, she said.

The industry now employs 1,150 full and part-time workers, Zibakalam said.

He added that a “number of employees in Hawaii’s seed industry hold bachelors and/or advanced degrees in various science and technical disciplines, including engineering, entomology, agronomy, crop science, plant breeding, plant pathology, computer science, biotechnology, and environmental science,” in addition to business management skills.

The companies have also gotten better at not producing more seeds than needed, said Dan Clegg, Hawaii business operations lead for Bayer. Given the high costs of everything in Hawaii, Clegg said, it’s important to tighten business operations as much as possible.

The cost of seeds is a major operating expense for farmers, according to a 2019 study by the Center for American Progress. Ceter for American Progress

“Hawaii under the best circumstances is not cheap to operate,” he said.

Ultimately, Clegg said, the industry must put itself in the shoes of corn growers. Farmers face a tough market. Commodity corn prices are stuck at less than $4 per bushel, about half what prices were in 2012. Meanwhile, seeds are among the highest operating expenses farmers deal with.

And according to a May 2019 report by the Center for American Progress, consolidation in the seed industry has coincided with rising costs of seeds for farmers.

According to Bayer’s Clegg, the industry is well aware of the costs to farmers and strives to engineer seeds the farmers will want.

“You have to look at it from a farmer’s perspective: why would a farmer pay for that bag of seed? They want to know exactly what’s their germination rate, every single detail about why that has value to their operation,” he said. “And we have proved that every day as an industry.”

“Hawaii’s Changing Economy”  series is supported by a grant from the Hawaii Community Foundation as part of its CHANGE Framework project.

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