HONOLULU – Worried Hawaii farmers and ranchers told state lawmakers Thursday that breaking up Young Brothers Ltd.’s regulated interisland shipping monopoly could result in higher prices and less locally produced food.
They said the Public Utility Commission’s decision allowing Pasha Hawaii Transport Lines to carry cargo through the islands on a trial basis through 2013 could force rate increases and the elimination of unprofitable shipping routes.
“Loss of farmers and ranchers to increased transportation costs isn’t fear of the unknown,” said Warren Watanabe of the Maui County Farm Bureau. “It will happen.”
Young Brothers plans to appeal the regulatory decision to the Intermediate Court of Appeals, said Roy Catalani, the shipper’s vice president for strategic planning and government affairs. But the company may seek rate increases to sustain its business.
The Public Utilities Commission denied an initial appeal on the eve of Thursday’s hearing before the Senate Committee on Commerce and Consumer Protection.
“This has the potential of killing agriculture,” said Dean Okimoto, owner of Nalo Farms on Oahu. “We have to have agriculture on all islands. They have to be able to get their product to this island in an affordable fashion.”
Panel chairwoman Roz Baker criticized PUC Chairman Carlito Caliboso for the three-member regulatory body’s unanimous decision.
Young Brothers will be at a competitive disadvantage because Pasha’s routes exclude the islands of Molokai and Lanai, and because Pasha is unlikely to carry produce and livestock, said Baker, D-Honokohau-Makena. Instead, Pa-sha will transport vehicle freight and bulky items.
“You’re not requiring them to serve where the competition is serving . . . so they get to come in and skate where the other company has not,” Baker told Caliboso. “It’s too risky. The detrimental effects are too real and too potentially devastating to our economy.”
Pasha officials defended the ruling, saying the commission considered testimony and evidence during the 19 months it took to reach a decision.
“We have always believed that our proposed intrastate operations would bring benefit to the people of Hawaii by introducing a choice of carriers and access to Neighbor Island service,” Pasha Hawaii CEO George Pasha IV said.
But farmers remained unconvinced that more competition would benefit anyone besides Pasha.
“At first blush when I heard about this, that a competitor was going to open up against Young Brothers, I was a little relieved,” said Chad Buck, president of the Hawaii Food Service Alliance, which provides milk, eggs and bread to the Neighbor Islands. “Then I found out they wouldn’t have to play by the same rules. They could go to only the busy islands.”
If Young Brothers can show it’s being harmed and it asks for a rate increase, the commission would re-evaluate its decision allowing Pasha to operate interisland shipping lines, Caliboso said.
Farmers have some protection because Young Brothers can’t raise rates or eliminate shipping routes without regulatory approval, he said.