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Kona farm prices soar as green prices drop.

Kona farm prices soar as green prices drop

As an increasing number of processing companies and individuals scrambled to secure Kona coffee, cherry prices to farmers hit $1.00 per pound in early September. Although these new companies seemed confident of a bull market with ever-raising prices, others wondered if conducting a price war while world prices for green coffee plummeted to under 80 cents wasn't a bit like ostriches sticking their head in the sand. Coffee is now a "glamour" industry in West Hawaii, attracting entrepreneurs of various shapes and sizes as well as farmers and coffee industry interests. At last count there were 27 companies or persons in Kona buying coffee from farmers and selling green or roasted coffee.

The new companies and the individuals who run them come from varied backgrounds. One advertises "organic Mauka sun-dried beans" on the local radio station. Another sells roasted coffee from three converted milk vans on Alii Drive next to the Kailua-Kona hotels. One large player is backed by a $50 million Honolulu cigarette wholesaling and vending business which bought out an office coffee service company. Another is said to "own a whole town" in Alaska.

Some of the new ventures have had less than ideal beginnings. One company which bought a sizeable market share expected to buy a pound of coffee cherry and after processing receive a pound of parchment. It wasn't until after they had spent many thousands of dollars that they realized it takes four pounds of coffed cherry to make a pound of parchment. Another grower/entrepreneur had to run out of his pulping mill and leave a business meeting early as he nervously eyed the marijuana-spotting helicopter circling his farm (Hawaii's marijuana industry is said to be second only to tourism). Another company purchased coffee milling equipment in Costa Rica, then bought land with no commercial easement or access road, which was also the site of ancient Hawaiian ruins. Their permit application is now stalled in the Hawaii County Planning Commission. Roughly half of the 27 operations are run by small farmers who see Kona coffee as the proverbial gravy train. Demand has seemed to exceed supply over the last two years, and anyone who could secure Kona coffee has been able to sell it at a profit with no trouble. Every farmer has a relative, neighbor or friend who will sell them coffee and if not, they have been able to bid the price up without reducing their demand because the supply has been so restricted. Supply has been so scarce that roasters have been calling up farmers trying to buy their coffee directly. This kind of practice has led armers with very small acreage to build coffee mills and buy coffee from their neighbors.

As a further consequence, the large roasters with national Kona programs who buy thousands of bags are seeing their prices set by retail roasters buying three bags at a time. Contracts in which roasters agree to match the highest price paid for cherry are fueling a price war which at this point in the season has threatened to drive green prices over $7.00.

Farmers with long memories remember the booms and busts of the Kona coffee industry, which are not unlike similar ups and downs in the rest of the coffee producing world. Many are more comfortable with a consistent price which is more insulated from the pitfalls of the marketplace, but in a free enterprise economy, it is impossible to put controls on every potential buyer or seller of Kona coffee. Sooner or later, however, supply and demand curves will take over, and processors or brokers who have not developed their marketing channels will find themselves on the short end of a down market in times of a "bumper" crop.

Fortunately or unfortunately, this year's harvest is not a "bumper" crop, although estimates put it from 5 percent to 20 percent higher than last year's official harvest of around 17,000 bags (the official crop reports from the Hawaii Agricultural Reporting Service are due out September 15). Kona Kai Farms believes that last year's harvest was closer to 19,000 bags because the state could not adequately survey all of the new processors, and is estimating a harvest in the 20,000 to 22,000 bag range this year, with a good portion of the crop coming from newly planted acreage. From the early pickings so far, quality looks to be above average, with beam size at least as large as normal.

Besides the price war, the most interesting development in Kona this year is a determined effort to ease the farmer's most pressing problem: lack of reliable labor for harvesting coffee. Most of the traditional sources for labor: farmers, their families, their friends, or transient agricultural laborers have been exhausted or committed to their regular farms, making it particularly difficult for new farmers or absentee farmers to harvest their crop. Looking to solve this problem the same way as farmers in the rest of the U.S., Kona Kai Farms sent its Spanish- speaking personnel director to recruit Mexican farmworkers from California to harvest coffee. To date, eight have been working since July, seven more started in September, and 15 are scheduled to arrive by October (the start of heavy picking season). According to Kona Kai's Silvia Gutierrez, the new farmworkers are adapting well to Hawaii, where the climate is closer to their native Michuacan than southern California where they worked in the Oxnard lemon orchards or strawberry fields.

A reliable source of agricultural labor is the key to expansion of the Kona coffee industry beyond its present 2,200 acres, and Kona Kai's Farm management program hopes to encourage more coffee plantings by landowners eager to take advantage of the Kona coffee boom. Most of the seasonal coffee harvesters will remain to prune and fertilize old orchards and plant new ones between January and August, 1990. Since Kona Kai hopes to have 500 acres under its management by next coffee season, the management division has a real incentive to maximize the harvest from each farm. This should push the average yield per acre from its present 50-60 bags cherry closer to the goal of 100 bags cherry per acre (20 100-pound bags of green coffee).

Kona Coffee Festival Slated for November 4 through 11

With some long-awaited help from the Hawaii State Department of Agriculture, the 19th Annual Kona Coffee Cultural Festival should see a real upgrade in many of the traditional events centered around the peak harvest period of November 4-11. Approximately $20,000 in State matching promotional funds has been earmarked for the Kona Coffee Picking Competition, Cupping Competition, Recipe Contest, and Historical Museum. Kona Kai Farms has agreed to put up the matching funds and to co-ordinate these events. Additional funding from long-time major sponsors Superior Coffee & Foods of Bensenville, Illinois and Ueshima Coffee Company of Kobe, Japan should help make this year's Festival one of the best.

The coffee picking competition will be held Sunday, November 5 at the W.H. Greenwell Ranch in Kealakekua, with prizes for contestants in the open, pioneer (over 65), junior, keiki (under 12) and novice categories. A "pick-off" among the winners will be held on Friday, November 10 for those who missed Sunday's event. Industry members are encouraged to enter the "novice" division, and each entrant will receive an official Kona coffee picking basket for their memorabilia.

The cupping competition will be held in two stages this year. The preliminaries on Thursday, November 9 will narrow the expected 75 to 100 entries down to the final 15, with the Finals held on Friday, November 11 at the beautiful Doc Hill Estate on Keauhou Bay. Judges for the competition will include Sam Heron of Superior Coffee, Takayoshi Kimura of UCC Coffee, and Martin Elkin of Fairwinds Coffee of Concord, New Hampshire. In addition to cash prizes, the winner will receive the prestigious Thomas Kerr Memorial Trophy, honoring the late law professor/coffee farmer who symbolized the resurgence of the Kona coffee industry.

In conjunction with the cupping competition, the Recipe Contest will feature professional and amateur divisions for various food and drink recipes featuring Kona coffee. Winning recipes will be shared with the audience.

Finally, the Kona Coffee Historical Museum will include a working scale model of a traditional Kona pulping mill and rolling-roof drying deck (hoshidana). In conjunction with the museum there will be a photo contest for the best picture of an old and new coffee mill, judged by the Kona Historical Society.

Air/room/car rental packages have been arranged from various mainland locations for the week.

PHOTO : Roasters are scrambling to buy any and all Kona coffee and even cherries command high

PHOTO : prices.
COPYRIGHT 1989 Lockwood Trade Journal Co., Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1989 Gale, Cengage Learning. All rights reserved.

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Title Annotation:coffee industry on Hawaii
Author:Regli, Robert
Publication:Tea & Coffee Trade Journal
Date:Oct 1, 1989
Previous Article:Spain, a rising star of coffee.
Next Article:New firm enters Kona market with high expectations.

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