By Stewart Yerton
The report by University of Hawaii economists follows a critical report by the Hawaii State Auditor.
A week after a scathing audit concluded that the Hawaii Agribusiness Development Corp. is failing to fulfill its mission to transform Hawaii’s agriculture industry, the University of Hawaii Economic Research Organization reached the same conclusion in a report released Thursday.
“It’s a fiasco as far as I can see,” Sumner La Croix, a professor emeritus of economics said in an interview.
Although La Croix acknowledged the state agency has succeeded in buying up farm land, he said there’s little indication that the land is being put to good use to grow produce.
“The little bit it’s doing, it’s extremely expensive,” he said of the ADC. “If land-banking is its mission, it’s been moderately successful.”
The report comes as the COVID-19 crisis, which battered tourism, has renewed interest in diversifying Hawaii’s economy.
Titled “Reviving Agriculture to Diversify Hawaii’s Economy,” the 34-page paper examines the corporation as one of Hawaii’s main programs established to transform agriculture in the state after the demise of the pineapple and sugar plantations, which once made agriculture a significant source of jobs and revenue.
But, as the paper notes, while the plantations have mostly gone away over the last 40 years, the ADC has done little to help fill the void since it was set up 25 years ago.
According to UHERO, when adjusted for inflation, Hawaii’s crop values plummeted by about 73% over the past four decades, to $583.5 million in 2017 from $2.15 billion in 1980. UHERO attributed that primarily to “massive decreases in the value of sugar, pineapple, and livestock production.”
Although the ADC has succeeded in buying land and irrigation systems, particularly on Kauai and Oahu, it is not clear that the corporation has put the land to good use.
“Its other activities beyond acquiring land are kind of vague,” said La Croix, who co-authored the report with fellow economist Jim Mak. “We’d like to know what they are doing.”
Only recently did the agency begin producing annual reports to the Legislature, UHERO noted. And the ones ADC has begun to produce are not very good, La Croix said.
“Their annual reports are absolutely dismal,” he said.
UHERO’s damning report comes after an equally negative assessment by the Hawaii State Auditor, which found an agency in disarray, marked by poor record-keeping and a board of directors that did not even seem to understand its purpose.
Among other things, the auditor found, the agency didn’t produce a legally required plan defining goals, objectives, policies, and priority guidelines because its executive director, Jimmy Nakatani, said he had the information in his head. Nakatani had previously resisted being audited, saying the ADC was too busy.
“ADC has not become the entity the Legislature envisioned – one that would develop an agriculture industry to stand as a pillar of the state economy, alongside tourism and the military,” the audit said. “After nearly 30 years, the economic void created when plantations ceased production remains mostly unfilled.”
Myra Kaichi, a former deputy attorney general who serves as the ADC’s senior executive assistant, said she had seen the UHERO report and declined to comment until she and executive director Nakatani could confer with the board in February.
“After the scathing audit, I’m not inclined to talk to anyone until I get direction from the board on how to handle this,” Kaichi said.
Doubling Food Production Won’t Feed Everyone
Although UHERO directed some of its harshest criticism to the Agribusiness Development Corp., the report’s scope is significantly broader. It also looks at the state’s important agricultural lands program, a state-level land classification scheme designed to maintain the best agriculture land as agriculture.
UHERO found certain aspects of the program, such as a tax credit incentive, had been underwhelming.
“So far, the IAL tax credit has benefited very few producers and, until actual production data on IAL lands become available, it appears to be much ado about very little,” UHERO reported.
“This doubling food production – it’s not going to be a way to feed everybody here,” he said.
The report, which provided a sweeping overview of Hawaii agriculture, also briefly discussed topics like aquaculture, large-scale greenhouse operations and urban farming.
Although Gov. David Ige has discussed doubling food production by 2030, La Croix said that likely will not amount to much given the state of the industry. The idea that Hawaii can grow enough food to feed itself is unrealistic, he said, in part because some people inevitably will want food that can’t be produced here. And some things might be able to be made more cheaply elsewhere, he said, an important factor in high-cost Hawaii.