One of Hawaii’s last remaining dairy farms is asking the state for help building its own milk processing facility. ADVERTISING One of Hawaii’s last remaining dairy farms is asking the state for help building its own milk processing facility. Big
One of Hawaii’s last remaining dairy farms is asking the state for help building its own milk processing facility.
Big Island Dairy, located in Ookala, says the $10 million in special purpose revenue bonds it is requesting would help it secure low-cost loans for the plant, which it sees as helping stabilize the industry.
“A parity price with mainland has not been feasible for the many dairies that were in Hawaii before us, and is not feasible for Big Island Dairy,” Derek Whitesides, one of the dairy’s owners, wrote in testimony submitted to the state Legislature. “There simply isn’t enough revenue to offset the high expenses associated with operating a dairy in Hawaii.”
The request follows the dairy receiving a waiver from the state more than a year ago, allowing it to sell its milk to Meadow Gold, currently the state’s only milk processor, at prices below the state’s quota.
Whitesides, who didn’t return a phone call requesting comment, told lawmakers the processor had said it would no longer accept milk at the quota price, which is higher than the price of milk imported from the mainland.
A trio of bills have been introduced this session to authorize the issuance of bonds for the dairy.
The House Finance Committee will today take up one, House Bill 1982.
The dairy is one of two left in the state, with the other being Cloverleaf Dairy in Hawi. Owner Ed Boteilho declined to comment when reached by phone Tuesday.
In his testimony, Whitesides said the dairy industry has slowly diminished in Hawaii in the last 30 years, when the state produced all of its own milk, with high feed and energy costs among the contributing factors for the decline. Local dairies account for about 20 percent of milk sold in the state, he said.
The state is allowed to issue special purpose revenue bonds for private capital improvement projects if they are in the public interest, according to the state Department of Budget and Finance. The bonds are sold to private investors who provide the funding in exchange for tax-exempt or taxable interest payments, the department says on its website. They don’t affect the state’s credit rating, according to Budget and Finance.
Scott Kami, head of the department’s finance administration, said the state would not be on the hook for the bonds.
If one of the bills is approved, issuance of the bonds would depend on a “satisfactory credit underwriting review,” the department told lawmakers.
Hawaii Board of Agriculture Chairman Scott Enright said lawmakers passed a bill a few years ago allowing the bonds to be issued for agriculture projects. This would be the first to take advantage.
Enright, also from Ookala, said the facility would allow the dairy to market its milk as “island fresh.” He said some of the locally produced milk currently gets mixed with milk from the mainland.
Whitesides said milk shipped from California can be up to 14 days old by the time it hits store shelves.
Enright said the bills were introduced as part of the Gov. David Ige’s legislative package.
“It shows the level of support this administration has for a diverse agriculture economy,” he said.
While lawmakers consider providing help with financing, Enright said the dairy is already moving forward with its plans.
“I think they want it up by early September,” he said. “The building plans should be in to the county next week.”
Enright said there is no requirement that the dairy make its own processing facility available to Cloverleaf. But he said they work “closely together” and he expects the other dairy to have access.
In addition to Enright, the measure has received support from farming organizations and the Ulupono Initiative, which sought to buy Cloverleaf.
Animal Rights Hawaii and an individual submitted opposing testimony.
Email Tom Callis at tcallis@hawaiitribune-herald.com.
