The end of sugar in Hawaii

An era — and an industry that employed generations of Hawaii residents — is coming to an end this year.

The owner of the last sugar plantation in the state has decided to quit farming what was once Hawaii’s biggest crop in a move that will lead to layoffs for nearly all of the Maui farm’s 675 workers and mark the end of the long, sweet industry in the islands.

Alexander & Baldwin Inc. announced Wednesday that it will phase out sugar cane farming at its Hawaiian Commercial & Sugar Co. subsidiary over the next 12 months and carve up the 36,000-acre farm covering much of Central Maui with an aim to produce diversified crops on multiple smaller farms.

Layoffs are expected to start in March, and the last harvest will happen at the end of the year. About half the crop, which won’t mature by the end of this year, will be left in the field or plowed under.

A&B leaders said the decision to shut down HC&S was reached with “great regret” and was based largely on A&B’s agribusiness division — mainly HC&S — losing $30 million last year with no turnaround in sight.

“This is a sad day for A&B,” Chris Benjamin, the company’s president and chief executive officer who ran HC&S as its general manager from 2009 to 2011, said in a statement.

“It is a sad day indeed,” added state House Speaker Joe Souki, who represents districts on Maui, in a statement. “So many of us have grown up in the shadows of sugar operations on Maui — with our grandparents and great-grandparents having worked the fields to provide for their families.”

Not everyone on Maui is sad to see sugar cane farming stop. Many residents complain about HC&S burning the fields as part of harvests, while others including Native Hawaiian taro farmers have battled the plantation over irrigation water rights.

Still, HC&S is one of the largest private employers on Maui, making its closure a big blow for the community.

A&B said about 30 HC&S employees will be retained after the last harvest to maintain infrastructure and continue operating East Maui Irrigation Co. Other employees will be laid off starting in March as their specific functions are completed, though about half the workforce should be employed till the last harvest at the end of the year.

Many other businesses also derived income through HC&S, from material suppliers to rum producers.

“It’s a domino effect through this community,” said Koa Martin, a 41-year old HC&S millwright.

Martin, who has a brother working at HC&S, said the mood at the plantation was somber Wednesday as company officials began informing employees of the plan.

“A lot of us been here 20, 30, 50 years,” he said. “Some of us have been here for all of our life.”

Martin, who followed his dad and grandfather working at HC&S, said generations of families on Maui are losing a part of their culture and history.

Even more broadly, A&B’s move will end more than a century of plantation-scale sugar production in the islands. Ceasing sugar production also will sever a 146-year-old living link upon which A&B was established, and leave Maui as the place where the industry began and ended in Hawaii.

Samuel Thomas Alexander and Henry Perrine Baldwin established A&B in 1870 after buying about 570 acres in Makawao and planting sugar cane that year. The company acquired or merged with other sugar plantations, including HC&S, and grew to become of one of Hawaii’s “Big Five” companies that dominated commerce for decades.

“A&B’s roots literally began with the planting of sugar cane,” Stan Kuriyama, A&B’s executive chairman, said in a statement. “Much of the state’s population would not be in Hawaii today, myself included, if our grandparents or great-grandparents had not had the opportunity to work on the sugar plantations.”

For more than a century, sugar cane farming was such a big business in Hawaii that the companies with the largest plantations dominated commerce in the islands. Thousands of immigrants from China, Japan, Portugal, Korea, the Philippines and other countries were brought to work on the farms. But over the last 40 or so years, plantations on all of the state’s major islands faced intense challenges to stay competitive with more cheaply produced sugar from foreign and mainland farms.

More than 100 Hawaii sugar cane farms closed between 1985 and 1995. A few hung on, the biggest of which was HC&S.

Maui lost its second-to-last sugar plantation in 1999 when Amfac shut down the 6,200-acre Pioneer Mill farm. Amfac followed that by ceasing production on 20,000 acres on Kauai. And when another Kauai farm, Gay & Robinson, shut down its 7,000-acre operation in 2009, HC&S was the lone Hawaii sugar plantation standing.

HC&S had adjusted with the times and endured some big financial losses, the biggest of which prior to last year was $28 million in 2009.

Even with the projected $30 million loss last year from farm operations, A&B was on track to earn a profit due to its real estate investment and development. The company reported a $43 million profit for the first nine months of last year, which included an $11.8 million operating loss from agribusiness.

CEO Benjamin, however, said that each time HC&S finances soured prior to last year, there appeared to be ways to recover, including changes in equipment, farm practices, labor savings, new products and higher sugar prices.

“We’ve always taken a long-term view on sugar,” Benjamin said in an interview. “In the past we’ve seen a path to improvement. We just don’t see that path right now.”

Kuriyama noted that A&B has run HC&S 16 years longer than Pioneer Mill but the business is forecast to produce continued significant and unsustainable losses. “We have made every effort to avoid having to take this action,” he said in a statement. “We must now move forward with a new concept for our lands that allows us to keep them in productive agricultural use.”

A&B’s plan is to use its 36,000 HC&S acres for possibly cattle grazing, orchards, agroforestry and biofuel crops but not seed corn. A&B also said it plans to establish an ag park with plots for lease to local farmers interested in growing food crops, and that preference will go to HC&S employees.

“A&B is committed to looking for optimal productive agricultural uses for the HC&S lands,” Benjamin said in his statement.

The company has previously researched the potential for biofuel crops that can be grown to produce energy. Such crops that can produce biogas include sorghum, Bana grass and Napier grass, and will move from a plot test to field-scale testing. A&B said it signed a confidential memorandum of understanding with local and national partners to explore market opportunities for biogas. Preliminary discussions with entities to produce biodiesel from other crops such as sunflower, safflower and soybeans also are underway, A&B said.

Using HC&S land to produce local grass-fed beef is something else to be examined, with a trial this year with Maui Cattle Co.

It remains to be seen if the transition plan will succeed and how long it could take.

Gov. David Ige said in a statement that he received the news of the planned shutdown with sadness but views the transition plan as a “golden opportunity for the state to focus on renewable energy and food security.”

Maui Mayor Alan Arakawa said in a statement that A&B’s experiments with growing replacement crops including taro, papaya, avocado and plants with biomass that can be used to produce energy give him confidence that agriculture will remain very much alive on Maui despite the impending death of sugar cane.

“Today marks the end of an era but also a new beginning for Maui as we work toward food and energy sustainability with HC&S and Alexander & Baldwin,” he said. “We knew that this day was inevitable.”