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Sugar's Last Stand

Hawaiian Commercial & Sugar Co. remains an agricultural giant as it looks to the future

By Nanea Kalani

POSTED:
LAST UPDATED: 12:55 p.m. HST, Feb 12, 2014


PUUNENE » The steady roar of motors and fans pulsates through the dim, cavernous factory along dusty Cane Haul Road.

An elaborate jungle gym of pipes, conveyor belts, giant rollers and mills stretches the length of the humid building. The damp space smells of wet bark and warm molasses. Stubborn red dirt leaves its mark everywhere.

Outside, tattered smokestacks spewing thick ribbons of steam hint at life inside Hawaiian Commercial & Sugar Co.'s nondescript factory, where sugar has been made for more than a century.

At the HC&S plantation, generations of Maui residents helped shape the island's economy. And it's still one of the largest employers today, with an annual payroll exceeding $35 million for 800 full-time employees ranging from field and irrigation workers to lab technicians and mechanics.

The 143-year-old company runs the state's last surviving sugar mill, having outlived the dozens of kingdom-era plantations that fueled Hawaii's economy for 12 decades — at one time collectively exporting hundreds of millions of tons of sugar each year.

"We've enjoyed a lot of advantages," said Rick Volner Jr., the plantation's general manager.

The 39-year-old, brown hair already graying at the sides, has been with HC&S for 16 years — a third-generation employee whose great-great grandparents emigrated from Portugal to work some of Maui's first cane fields.

He credits the longevity of HC&S to "the right mix of water, land, growing conditions, people and economies of scale."

The plantation's 36,000 acres of crops constitute the state's largest farm. The vibrant green fields — in shades of emerald, chartreuse, mint and honeydew — blanket Maui's low-lying isthmus like a massive patchwork quilt over Paia, Haliimaile, Puunene and Waikapu.

The swaths of cane preserve sweeping views of the Central Valley and northern coastlines — a visual reprieve from surrounding residential and commercial developments that have sprouted as the Valley Isle's population has swelled.

"If you've lived long enough to have flown into Oahu when sugar was being grown, you would look down and see green, green, green. Now, it's gray, gray, gray with rooftops," said Stephanie Whalen, executive director of the Hawaii Agriculture Research Center. "When you fly into Maui, that Central Valley is all green. Without HC&S, it wouldn't be."

After more than 140 years in sugar cultivation, those fields could soon be planted with biofuel-rich crops as HC&S continues pursuing a potential future in alternative energy.

The transformation would signal the demise of Hawaii's last sugar plantation — but not the end of HC&S.

"We understand the importance of not just sitting still and just continuing to do the same things that we've been doing for 140 years. And we understand that we do have to change," Volner said.

OVER THE PAST 15 years, the company has seen fellow large-scale farms on Maui quit the ag business. Haleakala Dairy shuttered its factory in 1998, Pioneer Mill closed down its Lahaina sugar plant in 1999 and Maui Land & Pineapple discontinued its pineapple operations in 2009.

As recently as 1990, 55 farms across the state were producing 6.5 million tons of sugar cane. HC&S became the lone sugar producer in 2009 when Gay & Robinson on Kauai shut down after 120 years.

"We're in the business of agriculture. Currently, sugar cane is the crop. But that doesn't mean that that's what we'll be doing five, 10, 15 years from now," Volner said. "We've got some pretty exciting work we're doing with alternative crops, with different renewable-energy crops."

With help from the U.S. Department of Agriculture, the University of Hawaii and others, the company has been experimenting with different grass species, including sorghum and napier grass, and determining whether HC&S can viably refine them into biofuel — possibly green jet fuel.

"Through this whole thing, the key is making sure that as we make decisions on selecting a crop we have some level of certainty that it's sustainable in the long term," said Mae Nakahata, HC&S' longtime director of agricultural research and crop control. "On the energy side, if we go down that road, the investment is going to be huge. It's not your $10 million, $15 million investment; it's more like $100 million-plus."

She said the challenge is finding a crop that can be produced both "reliably and affordably."

"If you don't have an affordable feedstock, you're not going to have affordable energy. And that's not in anyone's best interest," Nakahata said.

Whalen, whose nonprofit formerly was the Hawaiian Sugar Planters' Association, a trade organization, said converting to a biofuel producer could prove lucrative for HC&S.

"You really have to look at the value of these promising technologies," she said. "It's not easy. People have to understand that the sugar cane industry here has always been very efficient. It creates energy, molasses and sugar, and you really didn't have anything left over. Companies that went out of business couldn't make it with those three products."

HC&S hasn't abandoned its core sugar business in the meantime. Nakahata's work also focuses on developing sugar cane strains that produce the most sugar from the plant. And the Hawaii Agriculture Research Center helps with the plantation's breeding program to improve crop yields.

"Right now, I believe sugar cane has a place," Nakahata said.

In fact, Volner said the company is on track to have its best production year in 10 years. Last year, HC&S produced 178,300 tons of raw sugar and pulled in profits of $20.8 million on revenues of $182.3 million.

"This year, if we finish strong — and it's always an ‘if' in farming — we're on track to get to 200,000 tons, which is where we'd like to at least get to consistently every year," Volner said.

HC&S' biggest customer is C&H Sugar Co. of Crockett, Calif., whose pink-and-white packages are a familiar sight in Hawaii grocery stores. About 90 percent of the raw sugar produced annually is sold to C&H, which melts down and reprocesses the sucrose into white food-grade sugar.

The rest is made into specialty sugars sold under HC&S' Maui Brand label, and to other distributors that repackage the sweetener. The mill also makes evaporated cane juice for industrial uses (like beverage sweeteners) and molasses, which is sold to mainland and local ranchers for cattle feed and as a soil nutrient.

STAYING AFLOAT in the competitive sugar business in recent years has required reinvesting in the business to increase efficiencies and production. The company sustained millions in financial losses in 2008 and 2009 before turning a small profit the following year. By better managing its field operations, the company says it's seen a 40 percent increase in sugar yields per acre over the past three years.

Whalen said those reinvestments are key for any farm.

"In agriculture, where margins are really small, you need to have enough volume to be able to fund infrastructure needs and renovations," she said. "Sugar is a high-volume, low-margin crop."

Volner said the plantation has also been maximizing its acreage to boost production after downsizing in recent years due to crippling drought conditions on Maui.

"Sugar's a commodity. Somebody else sets the price. You can't control that," he said. "The one thing you can control is production levels. So by having more acres in production, you have a better chance of having a higher production volume, which will offset some of our fixed costs."

Late last month, domestic sugar settled at 20.95 cents a pound — a five-month high — on the ICE Futures U.S. exchange in New York.

Prices have fallen 25 percent over the past year as good weather and a surge in Mexican imports create a large oversupply on the domestic market, the Wall Street Journal reported Aug. 28.

As it pursues other opportunities, HC&S has pledged to keep the Central Valley preserved in agriculture, regardless of the plantation's ultimate future.

In 2009, it designated more than 27,000 acres of farmland — the portion it owns of the 36,000 acres in cultivation — as so-called "important agricultural lands" under state land use law.

"We're very upfront and open about being committed to agriculture here on Maui. We were the first landowner on Maui to do that, to use that state designation, and that basically says that those lands are going to stay in agriculture for perpetuity," Volner said.

The designation would transfer to any future landowner.

STILL, THE COMPANY has its share of critics who claim the sugar plantation is a land-banking front for its parent company, real estate giant Alexander & Baldwin — one of the original Big Five of Hawaii's plantation era and fourth-largest landowner in the state today.

"If we truly were banking that land for development, just look at what we've done as far as the (agricultural) designation. There's some pretty onerous conditions on it," Volner said. "To undesignate it requires two-thirds' vote by the Legislature. It's hard to get the Legislature to agree to anything, let alone a two-thirds' majority."

HC&S also has its hands full with community opposition to its pre-harvesting practice of setting fields ablaze to burn off the leafy tops of the cane, sending plumes of smoke and ash into the air. With its crops staggered on a two-year harvest cycle, half of HC&S' fields are harvested every year.

The burning, and the soot it leaves behind, prompted Christina Mnatzaganian to launch a study in 2011 on the possible health effects while completing her residency for medical school at Maui Memorial Medical Center.

"I'd be driving and black ash would be raining down. I would wake up and it would smell like a campfire," said Mnatzaganian, now a junior specialist at the University of Hawaii at Hilo's College of Pharmacy.

"Aside from getting congested whenever the fields were burned, I noticed a film on my car, my floors. It was not your normal brown dust. I could not get my house clean from the residue," she said. "I thought, if it's coating my floors like this, what's it doing to my lungs?"

With the state Department of  Health taking the lead on the project, Mnatzaganian said a team of researchers analyzed pharmacy data for acute effects — prescriptions for respiratory complications and eye irritations — on burn and nonburn days in areas where people may have been exposed to cane smoke.

The study is still ongoing, she said, and it's too early to reach an accurate conclusion of the data so far.

The project came to a standstill last year when researchers tried to obtain patient information from Maui Memorial and other medical clinics to expand the study beyond pharmacy prescriptions.

"We're still pursuing it and exploring other avenues to continue the research," she said.

HC&S OFFICIALS say the long-standing burning practice is critical to the company's bottom line.

Burning the leafy trash reduces the amount of plant material that's harvested and transported to the mill. It also helps concentrate the amount of sugar in the cane stalks.

The company has looked into alternative harvesting methods, but "the burning process that we've used for over a century continues to be the most viable means" for the crop, Mark Lopes, manager of harvesting and land preparation, recently wrote in a letter posted on HC&S' website. Unlike other countries that can mechanically harvest, he wrote, "Maui's unique climate, topography and geography limit our options."

Irene Bowie, an environmental advocate and director of the Maui Tomorrow Foundation, said HC&S needs to adapt to 21st-century sustainable practices, especially in light of the suspected adverse health impacts of cane smoke.

"I've seen their smoke blown all the way out to Kahoolawe. But whenever you take issue with their practices, the company says we'll lose our green fields and 800 people will lose their jobs," Bowie said. "I think we can do a better job and there can be a happy medium."

Bowie cited Australia as an example, where sugar cane is mostly harvested green, without burning.

Residents and community groups have protested the burning and sought help from the state Health Department's Clean Air Branch to crack down on the plantation's smoky harvesting.

HC&S holds an annual agricultural burning permit from the branch that expires in March.

The health department said the permit conditions include notification requirements, when and what time burning can occur, what can be burned and what fields will be burned during the burn season. The permit also includes measures to minimize dust and smoke fallout at schools, highways, airports, and other sensitive areas, a department spokeswoman said.

"To make complaints about violations, the department says they need complete and accurate information to act — time, location, photos," Bowie said.

Her foundation is developing a smartphone app to help facilitate real-time complaints. "This will really allow the community to become involved and give accurate information," Bowie said.

Maui Tomorrow also launched a Clean Air for Keiki campaign (cleanairforkeiki.org) to educate the community and allow people to send complaints to the Health Department, U.S. Environmental Protection Agency and county officials. The website says the prevalence of asthma among Maui County children is higher than the state average, citing 2010 data from the U.S. Centers for Disease Control.

HC&S says it is mindful of the impacts.

"We all live, work and play here, too," Volner said. "We're not going to do something that'll hurt the public. We take all the precautions that we can."

BACK AT the Puunene Mill, a massive tournahauler tractor rumbles by with charred cane spilling out the sides of the trailer.

The factory runs 24 hours a day, every day, during the nine-month harvest season. A red light atop a smokestack blinks slow and steady, like a sluggish heartbeat.

CLICK TO ENLARGE.






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eoe wrote:
Cane burning is just Superferry Part 2. A bunch of transplant, trust fund activists with nothing better to do, armed with no facts but plenty of opinions, try to run a viable business into the ground. These activists complain about respiratory issues and instead of looking at the mountain spewing 70,000 tons of SO2 a day, they look at something that for any given location, generates a little smoke a handful of times a year. Is cane smoke good for you? Probably not. Is it responsible for causing (not triggering, causing) asthma, cancer and "killing" people as the cane-haters say? Probably not. Seriously - look at the names involved. The same people who opposed superferry are the same ones protesting GMO and the same ones who opposed the runway lengthening project and now have moved on to their next "threat to our way of life" project - sugar cane.
on September 8,2013 | 05:03AM
Puuloa wrote:
Nailed it on the head. Time to say "aloha" to these transplants. They buy up their piece of paradise and then decide they need to change it to be more like California where they came from. Bunch of granola "Hawaiian at heart" do nothings whose only impact is to make it so expensive to live in Hawaii that the locals gotta leave to make room for more of them. No forget...they are also anti-telescope and now anti-development.....so long as they bought their house, they don't want any more built.
on September 8,2013 | 08:24AM
geralddeheer wrote:
The real "Maui Miracle" is HC&S. They found a way to profitably stay in business, keep people working, and preserve valuable open space. I hope that those who hate cane burning stop driving automobiles and smoking (any kind of smoking). After all, even with all the innovations in the automotive industry, cars are more dangerous environmentally than cane burning.
on September 8,2013 | 09:27AM
al_kiqaeda wrote:
I wish that sugar would stay as PURE All-Hawaiian Cane Sugar that we -- and visitors -- could buy.
on September 8,2013 | 01:12PM
Leinanij wrote:
No miracle. They just use up all our water and sell it back to us at a profit.
on September 8,2013 | 02:25PM
geralddeheer wrote:
Agreed, sugar cane is a water-intensive crop. The 'selling it back to us' over simplifies the situation. For example, since HC&S is an energy producer, in effect, 'our water' is reducing dependence on foreign oil as well as keeping people working. Trade-offs are important, obviously. Even factoring water usage, when everything is on the table, HC&S is a net positive for us. As an aside, our water problem is solved with more energy. We can have all the fresh water we want; unfortunately is costs too much to desalinate; as I understand it, the energy required is considerable. For us, water/energy may be even more closely linked. HC&S is part of the solution. Making them the enemy is counter-productive. Holding them accountable is fair.
on September 9,2013 | 11:02AM
eoe wrote:
Forgot about the telescope, good point.
on September 8,2013 | 10:25AM
thanks4reading wrote:
Actually what I think the activists are arguing for is the modernization of the industry by replacing the burning phase (as done somehow in australia). I think that the sugar industry is up to the challenge. Looks like they have made many improvements to the process over the last 150 years. They will figure this out..
on September 10,2013 | 07:16AM
Kaluu wrote:
Very interesting article, Star Advertiser. Coming from one of the other former sugar-producing islands, I had no idea that Maui was still doing so well with the industry.
on September 8,2013 | 05:45AM
DinkyDao wrote:
Article is well-written. Activists against sugar production always forget to include its positives in their arguments. Sugarcane is one of the most efficient methods for removing carbon products (monoxides and dioxides) through photosynthesis. It provides for renewable fuel for energy conversion.
on September 8,2013 | 06:03AM
fishnfool wrote:
...and 800 badly needed jobs in a place totally dependent otherwise on tourism. Well said, Dinky..
on September 8,2013 | 06:31AM
Puuloa wrote:
And that's a huge issue for Hawaii....jobs. You never hear these transplants talk about the economic impact to local families. Between sugar and seed, almost 3000 jobs - well paying, great benefits, for all skill levels. We need HCS. We need the seed farmers (GMO, convention or otherwise).
on September 8,2013 | 08:26AM
Leinanij wrote:
No it's not, but the SA refuses to allow my comment on A&B's draining Maui's streams for profit. Can you speak to that? How is sugar cane worth the millions of gallons of water it uses every day and the millions of dollars in profit that A&B gets for selling our water back to us? Are you Native Hawaiian and have had the water in your stream dry up because of A&B? Do you live on Maui and breathe the smoke? Plantation minds like yours always forget to think about negative impacts.
on September 8,2013 | 02:19PM
Upperkula wrote:
Hey crawl back under the rock that you came from. Sugar is in our history Sugar is our life.If you were to close down the sugar mills what would be put in its place? House thats right house, that would use millions of gallons of water that go into out sewage plants and pumped out to sea.
on September 9,2013 | 05:00PM
cartwright wrote:
They don't market their product as a value-added Hawaiian specialty. With the rich history of Hawaiian sugar plus marketed at a larger rate as unbleached, raw product they can get their higher profit margins. And then can finance better machinery and optimize their environmental impact more. They can grab a more lucrative market share by going against the common, cheap GMO corn syrup sugars. Any product added with 'Made With Hawaiian Raw Cane Sugar/GMO-Free' would sell better than generics.
on September 8,2013 | 06:23AM
ThinkFirst wrote:
Actually, they do market a product called "Maui Brand Raw Sugar" (http://www.mauibrand.com/) - it's really good; at restaurants, it's in the brown packages and I've seen. It in grocery stores, in sturdy zip-close bags. My favorite for tea and on fruit. More flavor than the white sugar.
on September 8,2013 | 07:24AM
al_kiqaeda wrote:
Thanks Think!
on September 8,2013 | 01:13PM
Puuloa wrote:
Why is it that you feel the need to dictate someone else's business plan? What is with you greenies? Why does everyone have to live your lifestyle and eat only the food that you eat and believe in only the things that you believe in? You stick out like a sore thumb: Cartwright....totally mainland transplant trying to change Hawaii to look like the California that you came from.
on September 8,2013 | 08:28AM
cartwright wrote:
Wrong. My background is marketing consumer products. I also chose to move to the mainland and overseas to get better at it. Returning to the islands I see that you locals fall prey to the mainlanders and foreigners greed and exploitation all to willingly.
on September 9,2013 | 07:14AM
false wrote:
I'm surprised they haven't tried to shut the company down with the "Sugar is bad for you" argument.
on September 8,2013 | 06:35AM
mikethenovice wrote:
Sugar is not bad. It's the "overconsumption" that is bad. Like with any other food group. Too much of anything is bad for you. No such thing as bad food. It's the portion size control that is the key.
on September 8,2013 | 07:47AM
Puuloa wrote:
Oh - please don't give the anti's any ideas! They already use that argument with GMOs!
on September 8,2013 | 08:29AM
Leinanij wrote:
You said it, I didn't. Is that because you know it to be the truth but you just can't stand when people disagree with you?
on September 8,2013 | 02:29PM
antya wrote:
Waialua Sugar Company, recently the subject of a community-based illustrated and live-actor presentation in Haleiwa town, had consistently a higher tonnage per acre than even these great results, due to more easily available water from the huge Wilson Lake dam and extensive up-country water tunnels, the best-in-Hawaii interconnected water system of pumps and reservoirs and siphons, and its relentless, employee-managed program for labor efficiency, along with mill & transport equipment improvements. Economies of scale (Waialua was only 10,000 irrigated acres), and conflicting demands for uses of capital (Dole, after takeover by Murdoch, was primarily a real estate development company), meant the capital improvements discussed for Maui were neither feasible (not enough acreage) nor desirable (company had higher-return uses elsewhere), so it closed. Waialua tried the mechanical harvesters and they failed -- Hawaii's rocky soils chewed up the cutting heads so badly and so often that the repairs weren't worth it.... Maui likely has the same situation....Waialua residents had become fond of the 'Hawaiian snow' ashes falling, and the need to clean house was understood as part of living in the country.....Let Maui burn the fields --- it's closely watched and permitted --- and let the malihini learn to love the crackle of the fires and the drifting ash --- we in Waialua miss it dearly .... ! Keep the Country Country !
on September 8,2013 | 07:14AM
cojef wrote:
Love your postion for keeping the sugar cane industry alive, and the traditional 'Hawaiian snow' falling. Originally from Kauai and was sorry to see the Gay and Robinson sugar business tank. Worked in the canefields during summer break, hoeing weeds back in the late 30's, then the pineapple fields, graduating to the next level, canneries. A cherished period of my life.
on September 8,2013 | 07:43AM
Puuloa wrote:
But isn't that the issue? Local traditions going, going, gone because of these transplants to Hawaii who never grew up understanding the joy of living in rural areas of the island? Now they move there and buy up million dollar homes driving the prices up so much that our local families can't afford to live there anymore. So we move out and they move in, and as soon as they do, they try to change everything to accommodate their green (and I mean $$) lifestyle.
on September 8,2013 | 08:32AM
cartwright wrote:
Now you contradict yourself: VAlue added ag products achieve higher prices and would therefore llow locals to stay in their towns. But you can't have generic commodities and be competitive. VAlue added means nowadays to b e organic, high quality, GMO free, award winning, etc. Who benefits the most from it: Local small farmers, stable ag-job market, money stays within community, stable real estate. There's no quick but a steady buck to be made. That's not green or hippie logic, but called protection of regional geographic agriculture.
on September 9,2013 | 07:19AM
soundofreason wrote:
Well written article.
on September 8,2013 | 07:25AM
mikethenovice wrote:
soundofreason. Well written comment here!
on September 8,2013 | 07:44AM
soundofreason wrote:
;)
on September 8,2013 | 09:28AM
mikethenovice wrote:
Cuba went through the same thing with their sugar industry. They did not sit still. They focused on the visitor industry like Hawaii did. Only Detroit hid under the bed sheets. Wake up Detroit and earn your pay. Don't just look at each other. No one is going to pay you to look at each other.
on September 8,2013 | 07:50AM
kennysmith wrote:
if your statedon't care about keeping co like this going you all will see your state take a big dump, the state don't care about suger no more. they only want money in there pockets only.
on September 8,2013 | 09:33AM
Leinanij wrote:
Mo bettah A&B get money in their pocket only, yeah?
on September 8,2013 | 02:10PM
sluggah wrote:
I guess you think we all should have government jobs or be on welfare. Attitudes like that illustrate why Hawaii is the lowest rated state to do business in.
on September 8,2013 | 03:44PM
serious wrote:
It will not survive. With the tariff they pay via the Jones Act, they can't compete with foreign producers. Our federal delegation should act on this ACT.
on September 9,2013 | 03:42AM
Leinanij wrote:
Sugar is a thirsty crop. According to records, in 1931, HC&S was pumping up to 45% of the irrigation water, or 144 million gallons a day, out of the aquifer to feed its crops. One ton of sugar takes 4,000 tons of water to produce, so HC&S is using over 700 million tons of our water to make its $20 million profit. Due to plantation water politics, HC&S and Wailuku Water Company (the former Wailuku Sugar plantation that doesn’t grow sugar cane anymore) drain Maui’s streams dry and sell the stream water to the public for private profit. According to the Hawai‘i constitution, the State shall conserve and protect Hawai‘i’s natural resources, including water, which are held in trust by the State for the benefit of the people. By allowing HC&S and A&B to continue profiting off our public trust resources, we are allowing them to deplete the resources required by Native Hawaiian farmers and future generations.
on September 8,2013 | 02:08PM
iwanaknow wrote:
So....................less sugar, more windmills?
on September 9,2013 | 05:44PM
ya_think wrote:
Like it or not have you noticed that most of the transplants and environmental people are women? What up with that??
on September 8,2013 | 02:28PM
Slow wrote:
I remember an old Ewa Beach lady telling me "We loved our black snow." Auntie loved her Winstons, too. Nevertheless, having lived on Maui, the smoke is not an issue. Maui is a consistently windy place (the international windsurfers still choose Maui), with the trades accelerating through Maui's Central Valley. Woosh, gone. Congratulations for surviving, HC & S. BTW, I checked the website of Maui Tomorrow Foundation (the first opponent in the remarkably well-researched and written story...mahalo SA). Odd that there are lots of names listed, not a single one Hawaiian, Japanese, Chinese, Portugese, Fillipino, etc. Thank you for your input, trust fund transplants. Go back to LA.
on September 8,2013 | 08:06PM
hanaboy wrote:
Growing up on a sugar plantation on Hawaii is a cherished part of my childhood. Unless you did the same, no amount of explaining can capture that old time plantation days. Doors were never locked, no such thing as bullying, kids were active outdoors, everyone had their own vegetable garden, mango, guava and advocado trees all around, crystal clear streams to swim in, watching the cane haul cranes and trucks right outside your kitchen window, and waving to the crop dusters as they flew overhead. Ah, the memories, and it's so sad that my kids and grandkids will never know what it meant to live a simple life!
on September 9,2013 | 04:17PM
Shotzy wrote:
While their complaining, please offer your suggestion to replace Sugar Cane with What ? Also what industry do you plan on making up all those jobs with ? Some people just don't have anything better to do. Get real already.
on September 9,2013 | 08:49PM
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