Of the $3 million allotted to the federal program last year, farmers in Hawaii received over $1.2 million.
Ken Love grows over 300 species of exotic tropical fruits on his farm each year. The longtime executive director of Hawaii Tropical Fruit Growers then sells his produce, including mango plums, durian and other seasonal items at a roadside stand to passersby.
A master preserver trained in food safety and sustenance, Love also turns those fruits into jellies and jams. But even for him finding the necessary supplies, like sugar and jars, has become a major expense due to the difficulties of transporting them from the mainland.
“The cost of shipping is what’s driving the increase on all prices,” he said.
Love has cut back on transport costs by diversifying his output and selling directly to customers, but he thinks the high shipping fares are still hurting more than just producers.
“It’s the farmer that gets squeezed, and ultimately the consumer who’s buying our produce,” Love said.
Many farmers in Hawaii arefeeling the impact of the high cost of transporting goods and the items used to produce them amid supply chain problems that worsened during the coronavirus pandemic.
“The lingering problem we have in the supply chain is a real run up in pricing, and that hasn’t gone away,” said Mike Hansen, president of the Hawaii Shippers Council.
A program by the U.S. Department of Agriculture is helping farmers offset these costs. The agency reimbursed farmers $3 million in 2022 and increased the funds allotted to the program to $4 million this year. But it’s the only program of its kind, which limits its impact.
Other factors, like inflation and labor costs, have contributed to rising prices, but 39% of farmers, ranchers and allied operators surveyed by the Hawaii Department of Agriculture in 2020 said shipping costs posed a barrier to expanding their operations, especially on Maui, Kauai and Hawaii island. These are the department’s most recent available figures on this point.
Few Shipping Companies
The problem is exacerbated by a dearth of competition in the island state’s shipping industry.
Ocean shipping is more common among farmers in the state, and many also believe that the Jones Act drives up their costs. The law mandates that commerce between domestic ports be carried out by ships constructed in the United States, which cost four to five times more than those made elsewhere.
Young Brothers, which as a state-regulated monopoly is the only company that provides interisland shipping services, was allowed to increase its rates by about 46% in 2020. That increase translated to higher costs for farmers, many of whom were already heavily burdened by the pandemic.
Young Brothers did not respond to a question about whether it has plans to decrease the rates.
Instead, the vice president of operations Chris Martin said in an emailed statement that the company offers farmers a 30% to 35% discount on shipments of agricultural products grown in the islands.
“In the past five years alone, this discount program saved Hawai‘i farmers statewide nearly $10.7 million,” he said.
Other companies have also increased prices over the past few years, in part because of high fuel costs.
Matson and Pasha provide agricultural shipping services to the U.S. mainland. Matson’s rates generally increase between 3% and 4% at the beginning of each year to keep pace with inflation, the company said.
Air transport providers include Aloha Air Cargo, Pacific Air Cargo and Hawaiian Airlines Cargo, among others. Hawaiian Airlines increased its rates earlier this year to “offset higher costs of fuel, labor and inflation,” according to a statement by the company.
The high transport fees put farmers in Hawaii at a disadvantage, especially when compared to their counterparts on the mainland.
“The cost of production and transportation are largely borne by the producer and governed by the relatively cheap costs of imported goods, which aren’t produced under the same economic conditions,” said Hunter Heaivilin, advocacy director at Hawaii Farmers Union United, which represents family farmers and ranchers in the state.
‘Every Little Bit Helps’
Noe Neumann runs Lokoea Farms in Haleiwa, which specializes in citrus fruits and primarily sells to local supermarkets and restaurants. Her father began planting trees on the land in 2000, and she joined the operation 15 years later.
Neumann was among the 443 farmers in Hawaii who applied to the USDA’s reimbursement transportation cost payment program in 2022 and received a payment of about $500.
“Every little bit helps,” she said.
Of the $3 million allotted to the RTCP program last year, farmers in Hawaii received over $1.2 million. The average payment was more than $2,800 per applicant, while overall payments ranged from $2.83 to $7,454.26, according to the USDA. Farmers and producers from Puerto Rico, Guam, and other areas outside the contiguous U.S. are also eligible to apply.
But while it’s the department’s “most popular program,” the application is “extremely complicated,” said Jason Shitanishi, county executive director of the USDA’s Farm Service Agency.
The price of many products in the state includes a shipping surcharge, and applicants must provide proof of the transport costs incurred for each item, meaning it requires a fair amount of record-keeping.
Farmers can expect about 5% of their total submitted costs to be reimbursed, Shitanishi said.If the total amount requested by all applicants exceeds the available funds, the payments are capped, which is why the program did not exceed $8,000 per applicant last year.
TheHDOAhas “not been successful,” in creating similar programs, said Matthew Loke, an agency administrator. “But we would like more federal and state subsidies to offset the cost of transportation for agricultural products (being shipped) interisland, as well as to the mainland.”
Farmers in Hawaii are often overlooked when it comes to federal program payments, in part becausethose grants are mostly awarded to large farms, and most farms in the state are small operations that earn below $250,000 per year, according to the most recent data from the USDA.
This particular program “is the only one ever specifically designed for people outside of the contiguous United States,” Shitanishi said, which is why farmers in Hawaii received most of the funds.
The bills were developed through discussions with food hubs, which source items from local producers and distribute them to retail or wholesale customers, including individuals, other food hubs, resorts, restaurants and hospitals. Hawaii’s 14 food hubs support 1,337 farms and serve over 14,000 customers per year.
These hubstake on the cost of shipping farmers’ goods, allowing individual farmers to focus on production instead of distribution. Because they handle a larger quantity of goods, they benefit from a higher-volume pricing strategy.
Still, the transportation costs present a barrier.
“It’s an additional cost of anywhere from 70 cents to $1.50 per pound added to every produce item that we transport,” said Maureen Datta, the owner of Adaptations, the state’s first food hub. “And sometimes that’s doubling the expense of that item.”
“Hawaii Grown” is funded in part by grants from the Stupski Foundation, Ulupono Fund at the Hawaii Community Foundation and the Frost Family Foundation.
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