Parker Ranch seeks ag designation for 56K acres

Parker Ranch has joined several other large Hawaii landowners applying to preserve agricultural land in perpetuity under a 3-year-old law that qualifies them for state benefits including tax credits.

The ranch surrounding Waimea on Hawaii island petitioned the state Land Use Commission in June to designate 56,772 acres — close to half the ranch’s land holdings — as important agricultural lands.

A hearing on the application is scheduled for today in Waikoloa.

The ranch’s application is the sixth such petition submitted to the commission, and is the largest in terms of the acreage involved. The petition also could be the first to test whether land better suited for cattle than crops qualifies under the law.

Molokai Ranch owner Molokai Properties Ltd. sought commission approval in January to preserve 4,919 acres used for cattle ranching under the law, but the company withdrew its petition in March before a hearing on the matter.

The Important Agricultural Lands, or IAL, law passed in 2008 established financial incentives for landowners to preserve property for perpetual agricultural use if the property qualifies under certain criteria.

Incentives include $7.5 million in annual tax credits for investments in agriculture facilities, a $2.5 million loan guarantee program, expedited ag processing facility permits and allowance of employee housing on prime ag land.

There is also a controversial benefit that allows owners of prime ag land to urbanize land equivalent to 15 percent of the acreage protected for development, including housing. However, all applicants to date including Parker Ranch have waived rights to claim this benefit.

Prime soil and growing conditions are among criteria for acquiring the IAL designation, but landowners can qualify under other conditions that include having land in active agricultural production and land associated with unique uses.

Parker Ranch in its application said the 56,772 acres isn’t prime for growing crops, but the property sustains core ranch operations that produce 7.5 million pounds of beef annually.

A piece of the property covering 5,594 acres is also being used to grow eucalyptus for timber under a lease with Cambium Pinnacle Inc. About 60 percent of this area is open to cattle grazing, and the ranch plans to expand the dual use.

"Parker Ranch’s special place in the agricultural industry in Hawaii constitutes a unique agricultural use in Hawaii," the ranch’s petition said. "The history of Parker Ranch is the story of how ranching has been successfully married to its lands for over 140 years."

Parker Ranch was established in 1847 between the Kohala mountains and Mauna Kea, and claims to be the fifth-largest cow-calf operation in the United States.

The ranch is a subsidiary of the nonprofit Parker Ranch Foundation Trust established in 1992 after the death of Richard Smart. Smart, a sixth-generation descendent of ranch founder John Parker, set up the trust to benefit four charities — North Hawaii Community Hospital, Hawaii Preparatory Academy, Parker School Trust Corp. and the Hawaii Community Foundation.

The ranch, which owns roughly 130,000 acres, said restricting its core lands to agricultural use in perpetuity will help ensure the continuation of livestock production for many generations to come.

Parker Ranch owns roughly 26,000 head of cattle, but ships most calves — close to 9,000 annually — to the mainland for fattening and slaughter, the petition said. About 1,200 head a year are slaughtered locally for hamburger, including about 200 marketed as grass-fed beef.

The petition said high feed and transportation costs have made exporting cattle to the mainland less beneficial, elevating prospects for raising more cattle for consumption in Hawaii.

"Whether the future markets and economy will encourage or necessitate the practice of grass-finishing cattle in Hawaii is uncertain, but the value in preserving and supporting, through IAL incentives, a critically important institution like Parker Ranch to ensure the state’s food producing capability is immeasurable," the petition said.

If approved, the designation for Parker Ranch land would follow four other such designations the commission has granted.

Alexander & Baldwin Inc. received commission approval in 2009 to protect 27,105 acres on Maui used by subsidiary Hawaiian Commercial & Sugar Co. and 3,773 acres on Kauai used mostly by Kauai Coffee Co.

Castle & Cooke Homes Hawaii Inc. won approval in March to designate 679 acres on Oahu, though 223 acres predominantly occupied by a reservoir and gulch providing irrigation water and drainage to other farmland was rejected.

In May, Mahaulepu Farm LLC, an affiliate of Grove Farm, won the designation for 1,533 acres on Kauai mostly leased to eight farmers and ranchers.