A state board approved transferring a dairy farm’s land lease Friday as part of a tentative deal to convert one of Hawaii’s last two major milk producers into an operation that makes organic cheese, yogurt, butter and ice cream.

The Board of Land and Natural Resources unanimously consented to transfer a lease for 880 acres of state land on Hawaii island from Ed Boteilho Jr., the owner of Cloverleaf Dairy, to another experienced dairyman, Kees Kea.

Boteilho, who has a pending arrangement to sell his dairy to Kea, said the financial viability of the farm was ruined when milk processor Meadow Gold Dairies pressured the state Board of Agriculture to abandon minimum wholesale milk price controls last year.

“It’s either (sell) or close down,” Boteilho told the land board at Friday’s hearing. “We cannot keep going.”

If the $2 million sale is completed, Kea intends to continue producing milk until he can switch to the value-added products, including cheese, that are expected to make the farm viable.

“That’s what we have to do,” Kea said after the hearing. “That’s the only way we can survive.”

Kea, who plans to operate the business with his son, Cornel, under the name Mauna Kea Moo, said he anticipates the sale will close by the end of the year.

Kea also has a lease from the Department of Land and Natural Resources for 1,400 acres of former sugar cane plantation land on Hawaii island. He acquired it in 2014 with the intent to establish Mauna Kea Moo there with about 600 cows. He said he hasn’t determined how he will use that land if the purchase from Boteilho is realized.

Cloverleaf has 13 employees and about 700 cows.

If the purchase and transition are successful, it would be another major shift in the local dairy farming industry, which has been in severe decline in recent decades.

Until 1985, Hawaii dairy farmers supplied 100 percent of the state’s milk supply, and farmers were aided by minimum wholesale prices.

Imported milk began flowing into the state following a legal battle in the wake of a 1982 industry disaster in which heptachlor was found in milk from cows that had eaten the tops of pineapple plants treated with the pesticide.

Though minimum price controls linked with the price of imported milk helped insulate local dairy producers from competition with mainland milk producers, the number of Hawaii dairies dwindled as they struggled with the challenges of rising feed, labor and transportation costs, as well as operating on marginal land because of urban growth.

Eight Hawaii dairy farms have closed since 1999. The last on Oahu was Pacific Dairy in Waianae, which folded in 2008. Today, imported milk represents about 80 percent of what is consumed in Hawaii, according to the state Department of Agriculture.

Price controls for Hawaii milk were established in the Milk Control Act of 1967, which was designed to give farms fair financial returns and eliminate “unfair, destructive and demoralizing trade practices” in the industry where milk producers and processors had been at odds over production supply and prices.

The Milk Control Act, however, didn’t force processors to buy milk from local dairies.

Meadow Gold, the only milk processor in the state, threatened to quit buying local milk last year unless the minimum price requirement was relaxed. The company, an affiliate of Texas-based Dean Foods, said it couldn’t sustain paying significantly more for local milk especially with lots of new competition from other companies importing milk from the mainland. So last year, the state Board of Agriculture approved lifting the minimum price requirement.

Boteilho, 72, warned then that he wouldn’t be able to keep Cloverleaf open without the support. On Friday, he added that no one in his family wanted to take over the dairy, which has been in business 53 years.

“We’re a small company and have been taking a lot of hits,” he said. “We want to see the farm continuing.”