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Find a niche for home-grown milk

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Hawaii reached a turning point with its sugar and pineapple industries when it became clear the realities of global markets had made that business model a thing of the past.

A similar upheaval, though on a smaller scale, seems inevitable now with the state’s dairy industry, which is down to its last locally owned dairy farm — and whose slim chance for survival might be a downshift to a smaller niche in the category of locally produced foods.

Unfortunately, the drama is occurring in the context of a small market dominated by a corporate player, Meadow Gold Dairies, which exerted pressure to drive down the price of island milk. State agriculture officials evidently felt that pressure, unanimously approving a 23 percent drop in the state-imposed minimum price paid to Cloverleaf Dairy for its wholesale milk. Cloverleaf, on Hawaii island, is the last isle-owned dairy; the only other major milk producer here is Big Island Dairy LLC, owned by an Idaho dairyman.

Meadow Gold clearly was making a business decision that it needed to lower its overhead for its product, given its competition with other processors who, like Meadow Gold, also use mainland milk. Mainland milk accounts for 80 percent of the milk consumed here, so price competition is heated.

And now Cloverleaf faces its own business decision on whether it should shut down. The better outcome would be if it could rebrand its milk, cheese and other dairy foods as the fresher product for which customers would be willing to pay a higher price. That’s been possible within various organic produce categories, but the marketing process may require more time, and money, than Cloverleaf has.

Other farmers were reportedly pressured to back up Meadow Gold in this campaign, fearing the loss of a big customer. And the state Board of Agriculture didn’t see a way out of reversing its policy of price supports, since Meadow Gold has resolved not to buy the local product at its current price and clearly has other options.

“We can’t force Meadow Gold to buy milk that they don’t want to buy, and they’ve stated that they’ll no longer purchase milk at the milk-controlled price,” said Scott Enright, department director and chairman of the agriculture board.

For its part, Meadow Gold has benefited from a longstanding history in the islands; many people don’t realize how much of its product line on store shelves comes from the mainland. Its executives maintain that it’s been patient in dealing with the price support, saying that it had hoped local farmers could achieve greater efficiencies and lower the price without this latest push.

That may be wishful thinking in a state where the costs of land, labor and cattle feed make such efficiencies elusive for the farmer.

However there’s no denying the simple facts of competition. Meadow Gold’s business rivals have won recent retail supply bids, based on lower prices for mainland-produced raw milk, said Jamaison Schuler, a spokesman for Dean Foods, the Texas-based owner of Meadow Gold.

Fifty years ago the state established a rule enabling it to set a minimum price but not to force milk processors to buy local milk. But even with that support, the landscape for Hawaii’s dairy industry has been a shrinking one for many years.

“We had 40 dairies 30 years ago,” Enright observed. “We’re down to two. That’s capitalism.”

Enright is under no illusions about the prospects for sustaining an especially costly agricultural sector in Hawaii, and the rest of the public also should face that future with eyes wide open. Locally produced milk and dairy foods stay fresher longer, and many will say they taste better, too.

The industry, if it is to survive, will need to educate the consumer about the advantages of the homegrown product and persuade the discerning shopper that it’s worth the premium price.

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