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Kona industry also suffering with low prices.

The Kona coffee industry in Hawaii is basically in flux. Hawaii is probably the highest cost producer in the world as it is the U.S. and in addition, the state of Hawaii has one of the highest costs of living in the country. The farmers almost without exception use coffee as an income supplement in order to get by and the price level is getting to the point where other endeavors are more attractive. The effect of current prices is that production has fallen from the traditional 20,000 bags to about 1012,000. Weather also played a role in the current reduction but price to the farmer has been the overriding cause of decline.

High labor costs, high land costs, and the extraordinary local cost of living prohibit the purchase of cherries at the current world depressed prices. Opening bids for coffee in cherry form is 48/lb. or $1.08 kg. It would be difficult to find another source paying this much to the grower.

In order to maintain the industry in Hawaii, Kona coffee has to gain an image as a superior style of coffee. It already retails for a premium in mainland U.S. and in places like Japan where roasters and consumers are willing to pay for quality. The difficulty seems to be that the local roasters are not willing to support the local green trade to the extent necessary to guarantee continued production. Currently, for a blend to earn the privilege of putting "Kona Blend" on the packaging, there must be a minimum of 10% Kona in it. In order to move the amount of coffee necessary to maintain the historic 20,000 bag production, the "kona blend" designation must be at least 20%. The Kona Council currently has petitions with the FDA asking that the labeling clearly indicate the percentage of Kona coffee in the blend and the governor of Hawaii and the Congressional delegation are lending support to the effort.

The rational behind the effort is that a blend with a low percentage of Kona coffee can take advantage of the name Kona, but at the same time, denigrates the image of the coffee by utilizing so little of the growth. The name Kona does lend prestige to a blend with tourists after they return home and the producers are worried that a cheap blend will be a disappointment to the consumer after tasting the real thing in Hawaii. Also there is the local factor that the roasters are not supporting the local industry 100%.

Like roasters everywhere, the Hawaiian ones like to maximize profits. The Kona blend brands demand a high price in the local trade and earn a high profit for the retailer. A rough estimate is that a cup of Kona blend costs about 10 and retails for $3-5.00. The profit is similar for the roaster as the cost of a blend of Kona and other origins is only a fraction of 100% Kona.

It is a situation of the"consumer beware," but, also of killing the goose with the golden egg."

by George Lockwood
COPYRIGHT 1992 Lockwood Trade Journal Co., Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Title Annotation:coffee industry's economic condition in Hawaii
Author:Lockwood, George
Publication:Tea & Coffee Trade Journal
Date:Oct 1, 1992
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