It was a very sad day in January when Alexander & Baldwin announced that the Hawaiian Commercial & Sugar Company (HC&S) was transitioning out of farming sugar and will instead pursue a diversified agricultural model.
This will close the last sugar plantation on Maui (and in the state of Hawaii), which produced sugar on 36,000 acres and employed 675 people. After 145 years of producing sugar in Hawaii, the last harvest will be completed late in 2016.
“No one factor drove this decision, but a lot of factors contributed to it,” said Christopher Benjamin, A&B president and CEO. He ran HC&S as its general manager from 2009 to 2011. “I would say that sugar prices, the challenges we’ve had with weather of late, the challenges of harvesting and some of the community opposition to cane burning and water use—all of those things played a role, but no one thing drove this.”
Under the new diversified model, the plantation is planned to be divided up into smaller farms with varied agricultural uses, potentially including energy crops, food crops, support for the local cattle industry and the development of an agriculture park.
The sugar industry was once the economic backbone of Hawaii, with production and processing on four of its islands. Much of the state’s history and population has deep roots in the industry. In 1999, production ended on the Big Island of Hawaii and Oahu and left only one mill on Maui. In 2009, sugar operations ended on the island of Kauai.
Over my career, I have witnessed the collapse of the Hawaiian industry, as well as numerous beet factories and cane mills and refineries. Each closure is painful for the people and the communities that depended on the industry. From a political perspective, the Hawaiian delegation has always played an important role in leading the charge against attacks on U.S. sugar policy. The two senators and two House members have been fierce defenders and worked incredibly hard to get their colleagues to support the sugar provisions in the farm bill. So with the loss of the Hawaiian industry and the further contraction of sugar’s economic footprint and political base, it now shifts an even heavier burden to the remaining beet and cane states to step up and work even harder to maintain our policy.
Primary Season
March is a very important month in many respects.
In the political world, a number of primaries and caucuses will have been held, and the Republican presidential candidate field will have greater clarity. Those primaries will further define the congressional races to watch in November. They will also be the best indication of the mood of the electorate, which has an impact on the legislative agenda going forward. Also at this point in the eighth year of a sitting president, political appointees who will lose their jobs next January have one eye on their next career move. Those opportunities will often come before next year, so there is a cascading effect of leadership in the various agencies as their leaders vacate their offices.
Sugar Forecasts
In the sugar world, March is a key month to look at supply and demand for the remainder of FY2016. Given that most of the beets will have been sliced by the end of the month, the conditions of the piles and the quality of beets being processed is no longer a speculative endeavor, but a statistical certainty. The March estimates will determine whether Mexico will get further access to our market; or if it does not have sugar, is there a need to increase imports from other raw sugar suppliers to balance the market after April 1?
This is typically the last time during the fiscal year that adjustments are made to increase imports. The beet and cane industry have been working closely with the administration to assure that they have the best data available to make accurate forecasts and good decisions regarding further imports.
The next most important month will be July and the estimates of the 2016 crop, which will provide an estimate of anticipated imports needed from Mexico. Mexico will be guaranteed 70 percent of that amount, with adjustments made in December and March of 2017 to fill the remaining 30 percent.
Stable Beet Acres
From a legislative perspective, appropriations bills are formulated in March and begin to make their way through the congressional process.
While House Speaker Paul Ryan has pledged to move bills through “regular order,” there is always a major challenge in finding both time and agreement to pass all of them, and they are subsequently rolled into a year-end omnibus bill. There are fewer legislative days this year because of the political conventions and more time to campaign at home. It is hard to see how very many individual appropriations bills can be passed. Having said that, however, there is still a very high probability that sugar policy opponents will work hard to get votes on a harmful bill or amendment. Same challenges, different year.
From a production perspective, the question is, “How soon will we be able to get into the fields, and is there adequate irrigation water in the reservoirs?”
We will also have the planting intentions at the end of March, but do not expect to see any significant change in our acreage for 2016.