Brewing Controversy

KAILUA-KONA — The arrival of a new player in the Kona coffee game has stirred more than milk and sugar into the region’s proverbial drink.

Kona Hills LLC — under the umbrella of Kona Capital Partners and Atlanta-based Domain Capital Advisors, which according to its website manages more than $4.1 billion in various investments — is setting up the largest farm in the Kona coffee belt on roughly 1,900 acres of Kealakekua land.

The potential economic and market implications involving the introduction of such a powerful entity on such a large scale to what some local coffee farmers refer to as a “cottage industry” has commanded attention across the region.

But it’s the company’s request of the Hawaii Department of Agriculture to grant an exemption to the mandatory one-year quarantine period regarding 1.5 million In-Vitro coffee plants it plans to import from Costa Rica over the next two years that has groups like the Kona Coffee Farmers Association galvanized in opposition.

Kona Hills has asked the DOA to drop the one-year mandatory quarantine to six months.

Jonathan Ho, acting manager of the DOA’s Plant Quarantine Branch, said the most significant concern with importation on such a massive scale, coupled with the request for a truncated quarantine period, is the potential for introduction of various pests or viruses, which absent proper diligence might be missed and eventually spread.

“At this point, it’s really (about) biosecurity,” said Ken Love, executive director of Hawaii Tropical Fruit Growers. “There’s too many examples of tissue culture gone wrong.”

Mark McCormick, managing member of Kona Hills, said the request has nothing to do with rushing the company’s product to market, as its first planned harvest isn’t until late 2019.

“It really is to minimize the required nursery space dedicated to the seedlings we’re requesting for import,” he said. “There is no reason other than just the physical size of the nursery.”

Kona Hills will be required to build its own quarantine center on the property, as there is no facility in the state large enough to house the number of coffee plants the company plans to develop.

At six months, plants are typically large enough to move out of the nursery and take their places in the field, making more room for imports to follow and allowing Kona Hills to dedicate more of its land to growing its crop.

The request process

The state rarely grants quarantine exemptions but there does exist some precedent for the success of requests like the one made by Kona Hills.

“I’ve only seen it three or four times,” Ho said of requests for exemption to agricultural products of any kind. “And for coffee specifically, that I know of, the only one was done in 1990.”

Section 4-70-18 of Hawaii Administrative Rules mandates that “coffee plants or seeds for propagation … be held in a strictly enforced quarantine for a minimum of one year, or longer if necessary, in the judgment of the PQB Chief.”

However, the Hawaii Board of Agriculture does have the authority under section 4-70-6 of HAR to shorten that “under certain conditions of importation or propagation procedure.”

Ho said such requests require a three-step process, of which Kona Hills is currently navigating step two.

Technical consultants — or advisory subcommittees on things like entomology, fungi and viruses — first review the proposal on technical merit, which Ho said is their sole consideration. Kona Hills has cleared that step.

Next comes a review by the DOA Advisory Committee on Plants and Animals, which convened Tuesday to offer its judgment.

For any official decision, five members of the nine-member committee must vote the same way. Two of the nine seats on the committee remain vacant. Of the seven serving members, five were in attendance Tuesday, meaning any decision would have required unanimous consensus.

The committee operates via parliamentary procedure and two motions were made. The first was to disapprove Kona Hills’ request. Four members voted to disapprove while one member abstained, and thus the motion failed, falling one vote shy of the necessary votes.

A second motion to defer was also defeated, as four members voted to defer and one did not.

Essentially, nothing was decided. Ho, who isn’t a member of the committee, explained that Kona Hills’ request has been tabled and will be heard at a time yet to be determined. The committee doesn’t schedule regular meetings, convening only on the basis of need.

Ho added the committee requested additional scientific documentation and design facility features from Kona Hills and won’t schedule a new hearing until the company provides that.

“(Kona Hills) is proposing to build a (quarantine) facility and there just wasn’t enough information for the committee to appropriately make a determination as to whether or not that facility would be able to contain a pest should one be imported,” Ho said.

If Kona Hills is able to provide the committee with documentation it finds acceptable and earns five approving votes, the proposal will then move on to the Hawaii Board of Agriculture, which will make the final decision on whether to grant the exemption.

Local farmers had some question about whether or not there were federal hurdles to clear, as the United States Department of Agriculture also enforces quarantine requirements. Janelle Saneishi, DOA spokesperson, wrote in an email Friday that coffee quarantine is a state quarantine and not a federal quarantine, so the Hawaii Board of Agriculture has the final say.

All those in favor

The DOA Advisory Committee on Plants and Animals received a deluge of testimony opposing the Kona Hills request, as the Kona Coffee Farmers Association sent out emails to its members urging them to voice their concern to the department.

More than 50 pages of testimony were submitted, a significant majority of which read like that from Bruce Corker, former president and current board member of the KCFA.

“The required one-year quarantine is in place to protect Hawaii coffee farmers against the introduction of new pests and diseases,” Corker wrote. “It should not be waived except in extraordinary circumstances.”

There was also some local support for the exemption, including from the Hawaii Coffee Growers Association, as well as support from within the Kona Coffee Belt itself. The primary reasons voiced by supporters echoed what McCormick said would be benefits to the Kona region by way of importing new varieties of coffee beans.

“The transient nature of people in today’s world means that the Hawaii coffee industry has lost the benefit of isolation from common coffee pathogens such as coffee leaf rust and coffee berry disease,” wrote Thomas Greenwell of Greenwell Farms, one of the most recognized names in Kona coffee.

“Currently, our industry is unprepared for an outbreak of these diseases, which many in the industry believe could propagate here any time,” Greenwell continued. “The process proposed is a safe methodology and is supported by the research community here in Hawaii as a practical means of establishing needed disease-resistant varieties here.”

What is Kona coffee?

Love countered Greenwell’s argument, saying coffee leaf rust and other such threats have been a concern for decades and that importing, growing and selling non-traditional beans under the Kona coffee brand could be potentially more devastating to local farmers and their collective product than any disease.

Guatemalan Typica has historically been the variety associated with the Kona coffee brand, Love said.

“Kona Typica is our heritage tree and people are used to that particular kind of taste connected with Kona,” added Joachim Oster, a coffee farmer in Captain Cook.

McCormick said Kona Hills supports the traditional typica and plans to plant upward of 700 acres of it, with roughly 1,000 trees per acre, representing more than one-third of the company’s product and making Kona Hills the largest producer of traditional Kona coffee in the state.

However, Kona Hills has assumed a different perspective on what constitutes “Kona coffee” and will also import varieties of Victoria, San Isidro, Geisha and San Roque from Costa Rica, all of which have distinct flavor profiles separate from Kona Typica.

“Our view is (Kona coffee) has to be grown within the Kona Coffee Belt,” McCormick said. “We don’t see any view that it has to be typica, and there’s many other varieties that already exist in the Kona Coffee Belt farmed by multiple growers.”

Love, who no longer farms Kona coffee but at one time dedicated 26 acres of his farm to it, took issue with McCormick’s view, saying most others familiar with coffee in the region would, as well.

“You’d have about 700 farmers disagreeing with that,” he said.

Concerns over competition

In its quarantine exemption request to the DOA, Kona Hills notes its intention to operate exclusively as a global wholesaler to companies like Starbucks and the like, which haven’t been able to procure enough Kona coffee to sell on a grand scale because of limited production.

Kona Hills further detailed that it does not intend to become a roaster or enter into the retail market, something McCormick confirmed.

That business plan, however, coupled with Kona Hills’ plan to grow coffee with a non-traditional flavor profile under the Kona coffee label, actually has local growers more concerned than if the large-scale, well-resourced Kona Hills operation were entering into direct retail competition with them.

“When (Kona Hills) is promoting a Kona coffee that doesn’t taste like Kona coffee, then our existing farm retail operations are being confronted with that on an unforeseen scale,” Oster said. “They would basically own and determine the very marketable name of Kona.”

McCormick said Kona Hills has already been a boon to the local economy, hiring 73 employees covering a wide range of age and experience levels. Furthermore, the company has bought most of its equipment and fertilizer locally. He said it is the intention of Kona Hills to enhance both the industry and the area through its presence here.

Love, however, said he can see all sorts of potential scenarios in which business concerns might end up at cross purposes with Kona Hills’ stated intentions for the community and the local industry.

“My problem is if they’re going to sell globally, like some of our other farmers, the first time Starbucks or some other market decides they couldn’t sell everything they bought last year and this outfit Kona Hills is sitting on 30,000 pounds of greens, what are they going to do?” Love posed.

“They’re going to flood the market and dump it at half the value, potentially putting 700 farmers out of business.”