The rain came down. The price went up, and Hawaiian Commercial & Sugar Co. finished the year with a much improved crop.
The final raw sugar shipment was loaded at Kahului Harbor’s Pier One on Wednesday and Thursday.
The harvest was just shy of 172,000 tons, much better than the 127,000 tons in 2009, but well short of the 200,000 tons the plantation can make in a good year.
In a telephone interview from New York on Thursday, HC&S General Manager Chris Benjamin said that although there is still “a ways to go,” the improved crop and better world prices take the immediate pressure off the plantation.
A year ago, after experiencing heavy losses attributed to a long drought, the directors of Alexander & Baldwin took a hard look at HC&S. The 37,000-acre plantation was the origin of the A&B conglomerate, but today it accounts for only about 7 percent of revenues.
The board approved continuation of the business only until the end of this year, pending improved results.
Financial results won’t be published until next year, but Benjamin said he believes that the board is already satisfied that the operation is on the right track.
At this week’s price of nearly 40 cents per pound of raw sugar (in New York), the crop would be worth more than $130 million, not counting molasses and electricity byproduct revenue, plus the premium for the part of the crop sold as specialty sugars.
However, HC&S will not get nearly that much, because the price has varied considerably during the year. The company does not participate in the federal sugar price support program, so it takes its chances on the world and domestic markets.
“There has been a lot of volatility,” Benjamin said. “Fortunately, the general trend is up,” and he is hopeful that it will continue strong for a while. But trying to foretell prices more than a short distance into the future is hopeless.
That’s one of the reasons HC&S is looking to move into energy production, “so we can lock in some future pricing,” he said.
For the immediate future, though, HC&S is growing sugar to eat.
Utilities, with their regulated pricing, are willing to sign delivery contracts for decades, unlike the members of the Sweetener Users Association, the businesses that buy sugar as an ingredient in processed food.
In Hawaii (but not in Texas or Louisiana) sugar is a two-year crop.
The acres harvested this year were planted in 2008, a drought year, but enjoyed somewhat better rain in 2009. This past year was dry again, but the somewhat better
weather was responsible for most of the increase in the crop.
“I believe our yield per acre was up about 32 percent, and production is up 35 percent,” Benjamin said. So, weather is the main reason.
Last winter, the mill shut down for an extended refit, and there were some gains in recovery, about 4 percent. “Every little bit helps,” he said.
Benjamin called the 2010 output “a good important step forward in getting back to where we need to be.”