The only commercial miller of wheat flour in Hawaii, Hawaiian Flour Mills, will close in the fall, its parent company said Thursday.

Pete Frederick, president of Pendleton Flour Mills LLC, said the mill company and the state Department of Transportation could not agree on terms for a new lease for the land and facilities at 703 N. Nimitz Highway near Honolulu Harbor.

"We’ve worked with a lot of really good folks over there trying to come to terms," Frederick said.

The state DOT confirmed in a written statement that it has been making changes to leases, including having tenants take responsibility for the equipment that is used for tenant operations. The flour mill would have been required to take possession of its grain silos. The DOT said the state will be looking for another company to take over operations.

"At the end there were some provisions we just couldn’t agree to," Frederick said, citing the silo clause and the state’s planned relocation of berths for wheat shipments that currently offload next to the mill.

"We understand the state’s position in terms of wanting to improve the harbor," but having to unload wheat from another pier "was an unacceptable term with which to operate," Frederick said. The mill company has withdrawn its lease application.

The flour mill has operated on Oahu for some 50 years, Frederick said, though under different ownership, and its 13 employees have worked at the mill for many years.

Pendleton Flour Mills, doing business as Hawaiian Flour Mills, or HFM, has the only commercial wheat flour-producing mill in Hawaii. Another Oahu mill, Hoku Products Pacific LLC, produces flour using dried taro under the brand name Hawaiian Alii Taro Flour.

"We’ve been proud to be a part of the fabric of supplying food ingredients to Hawaiian customers for a long, long time," Frederick said. "We have a lot of great customers, and they’ve all been notified about it."

The current lease expires March 31, but the company requested an extension through the end of the year to allow for an orderly wind-down of operations. Frederick said the mill will likely close "sometime in the fall."

The flour mill is jointly owned by Tennessee-based Milner Milling and Oregon-based Kerr Pacific Corp. Kerr Pacific also owns HFM Foodservice, a broad-line distributor to the food service industry in Hawaii, the Marshall Islands, the Marianas and Guam.

There will be "zero impact to the food service operation," said Kerr Pacific President Chris Labbe. Once the Hawaii flour mill shuts down, HFM Foodservice will shift to distributing flour products from mainland mills, Labbe said.

For bakeries and other food-service operations statewide that receive flour directly, shipping heavy flour from the mainland may increase prices for Hawaii consumers.

Love’s Bakery President Mike Walters doesn’t want consumers or their wholesale customers to worry. "We have five or six months" to work out new suppliers, he said. It is premature to speculate on whether prices will increase, he said.

"Love’s is not in dire straits," said Walters. The company has begun researching the costs of shipping in flour from the mainland.