Nearly 60 small farmers on Oahu could become eligible for state financial benefits under a move by a major Hawaii landowner that has applied to dedicate farmland for potentially perpetual agricultural use under a relatively new state law.

Landowner Castle & Cooke Homes Hawaii Inc. petitioned the state Land Use Commission last week to designate 902 acres in Waialua, Wahiawa and Mililani as important agricultural lands deserving protection and qualifying for state benefits including tax credits.

The company is the first to seek such designation for land on Oahu but follows similar applications made by Alexander & Baldwin Inc. in 2009 for 27,105 acres on Maui and 3,773 acres on Kauai, and by Molokai Ranch/Molokai Properties Ltd. on Nov. 30 for 4,919 acres on Molokai.

Castle & Cooke spokesman Carleton Ching said the company doesn’t intend to tap any of the benefits established under the law, Act 233, enacted in 2008. He said the application will help sustain agriculture on the land that is mostly leased to small farmers.

Under the law, tenants leasing land approved by the LUC as important agricultural land can also apply for some benefits such as low-interest loans and state tax credits for farm-related investments on the land.

Incentives include $7.5 million in annual tax credits for investments in agriculture facilities, a $2.5 million loan guarantee program and expedited ag processing facility permits. Landowners also can build employee housing on prime ag land under the law.

Another, more controversial benefit allows owners of prime ag land to urbanize land equivalent to 15 percent of the acreage protected, allowing residential development as a trade-off for protecting farmland from future potential development.

But so far, all the applicants under the law have waived any rights to claim the benefit for urbanizing land.

David Arakawa, executive director of the Land Use Research Foundation, which lobbied for the law with the Hawaii Farm Bureau Federation, said the law is being used as intended by the Legislature to not only preserve farmland for farming, but to help ensure that farming remains economically feasible in Hawaii.

"It’s great to see (the law’s intent) coming to fruition," he said. "It’s not a land-use initiative. It’s not about kapu-ing land for ag. It’s an economic initiative. It’s about making farming viable."

Almost 60 independent farmers lease about 500 acres of the land Castle & Cooke intends to protect, according to the company’s application.

The biggest parcel in Castle & Cooke’s application is 242 acres in Waialua leased to six farmers growing about 30 crops, including asparagus, dragon fruit, okra, potatoes, taro, tropical flowers and zucchini.

About 50 farmers lease 232 acres known as Mililani Ag Park and grow roughly 30 crops, including bananas, beets, mushrooms, peanuts, tapioca and turf grass.

In Wahiawa, Castle & Cooke is seeking important agricultural land designation for two parcels.

The first Wahiawa parcel is 223 acres and predominantly occupied by the Tanada Reservoir and gulch that provides irrigation water and drainage for a small portion of the site as well as 2,500 acres of land mostly farmed in pineapple by Castle & Cooke affiliate Dole Food Co. Of the 223 acres, 31 acres are farmed in crops that include cacao, koa, lychee, mango, plumeria and pineapple.

The second Wahiawa parcel is 205 acres and isn’t being farmed. However, Castle & Cooke said in its application that the property was cultivated in pineapple for nearly 100 years until 2001 and is being evaluated for biofuel crops, seasonal crops, forestry, sugar cane and ranching, among other things. Connecting to the municipal water system would be necessary to irrigate the site.

Other large landowners are expected to file similar applications before July 1, when county governments can begin trying to designate public and private land for protection under the law.

So far, A&B is the only one to receive LUC approval to designate its land as important ag land. The company plans to claim about $200,000 in tax credits related to $1.25 million spent on processing facility upgrades and equipment at subsidiaries Hawaiian Commercial & Sugar Co. and Kauai Coffee Co. If approved, the tax credits would be received over three years.