Mac nut producer intends to expand

The biggest macadamia nut producer in the state plans to shell out $8.1 million for more orchards on Hawaii island.

Royal Hawaiian Orchards LP said in a regulatory filing Friday that it has tentatively agreed to buy 736 acres of orchards in Keaau from a collection of investors advised by Michigan-based Geyser Asset Management Inc.

The purchase is expected to be completed within 90 days if results from a closer study of the property are acceptable.

Royal Hawaiian said it plans to finance the acquisition through American AgCredit.

The additional orchards come as Royal Hawaiian faces a potential loss of macadamia trees involved in a lease dispute.

Scott Wallace, president and CEO of the Hilo-based macadamia nut company, said the deal will secure a new supply of nuts for Royal Hawaiian, which launched its own brand of packaged mac nut snacks two years ago after a long history of selling raw nuts wholesale to food industry giant Hershey Co.

"It will be a net new supply of nuts to us,"he said, adding that the addition won’t be immediate.

Currently, Royal Hawaiian farms about 5,800 acres of mac nut trees on Hawaii island, of which it owns about 3,000 acres.

There is some uncertainty about the continued supply of nuts under two leases that Royal Hawaiian has with one orchard owner that is involved in litigation with the company.

The two leases cover a combined 593 acres and have produced more than 2 million pounds of nuts annually, or about 12 percent of the company’s supply, in recent years.

Royal Hawaiian and the lessor, the Edmund C. Olson Trust, have sued each other over the leases, which the Olson Trust wants to terminate.

Though Royal Hawaiian said it intends to vigorously challenge the landowner’s effort to cancel the leases early, the company said it could lose the orchards in 2019 when both leases can be ended under contract terms.