Ag initiatives, potential ADC audit intertwine and head to conference committee

KAILUA-KONA — What does the extension of an agricultural theft pilot program on the Big Island have in common with moves to facilitate an expanded market for Hawaii-grown papaya in China?

The answer is almost nothing, except that a late-stage amendment from the Senate Ways and Means Committee to a piece of House legislation has made House Bill 1883 a vehicle for both initiatives. The measure passed its final reading in the Senate Tuesday and will head next to conference committee where its fate will be decided.

Rep. Richard Creagan (D-Hawaii Island), primary introducer of HB 1883, said the mashing of papayas into his legislation is an example of the “gut and replace” tactics happening with greater frequency this year in the Senate.

“They just take one bill and turn it into another,” Creagan said. “When you have a title like this one, ‘Relating to Agriculture,’ you can put anything in there. It had nothing to do with ag theft.”

The ag theft program is a joint venture between the state Department of Agriculture (DOA) and the Hawaii County Prosecutor’s Office that created a position to police secondary and tertiary markets for stolen agricultural goods.

County Prosecutor Mitch Roth said the program has proven effective in its first year. Creagan’s legislation extends the program two years and adds a second position on Hawaii Island. Depending on success, the program may expand statewide down the line.

The papaya initiative appropriates funds to study why and where in the growing and transport process the fruit breaks down so as to make it more viable for export, thereby strengthening Hawaii’s agricultural economy, particularly on the Big Island where the vast majority of the state’s papaya is grown.

Hawaii exported nearly $8.1 million in papaya globally in 2016, including more than $2.2 million to Hong Kong, according to export totals provided by the DOA. In 2017, export value dropped to $7 million.

China recently announced its intention to place a 15 percent tariff on U.S.-shipped papaya amid escalating trade tensions between that country’s leadership and President Donald Trump’s administration.

However, Eric Weinert, general manager of Calavo Growers Inc., Hawaii Operations, said the timing of the state initiative coinciding with the new tariff isn’t a significant concern.

“Papaya is generally a luxury fruit regardless,” he said. “So I think the impact will be minimal in terms of sales. As far as potential market, it’s huge for us.”

Audit reason for bill mashing

Plans for papaya were paired with ag theft because of differing viewpoints over a potential audit of the Agribusiness Development Corporation (ADC).

The Legislature established the ADC in 1994 to help Hawaii transition from the plantation economy to a more diverse agricultural profile.

A mission statement from its strategic plan published in 2008 and listed on the ADC’s website notes the organization’s purpose as the acquisition and management of “high-value lands, water systems, and infrastructure for commercial agricultural use” through partnerships with farmers, ranchers and aquaculture groups. It also mentions research to develop new crops and markets for them.

The ADC is attached to the state Department of Agriculture, Creagan explained, but has never functioned as a normal state entity.

“They didn’t have to file procurement. They weren’t civil service. They really had no rules and were very unstructured,” he said. “All these rules that the (DOA) has and DLNR have — the ADC doesn’t have those rules, so they’re very flexible.”

Rep. Cynthia Thielen (R-Oahu) said since its inception, the ADC has been required to submit a detailed report of plans and activities before every regular session, something that hasn’t been done since 1997.

Exacerbating accountability concerns, Creagan said the ADC “is expanding all over the place” in recent years.

The state has appropriated more than $260 million to the ADC over the previous five legislative sessions, mostly for land purchases, and Thielen has been adamant in her demand for an accounting of those finances — to no avail.

“Isn’t this our job at the Legislature, to oversee these entities that we create?” she said.

Playing politics

The initial papaya legislation, Senate Bill 3087, was drafted by Senate Ways and Means chairperson Donovan Dela Cruz (D-Oahu), described by Thielen as perhaps the ADC’s most fervent legislative supporter.

ADC Executive Director James Nakatani initially voiced support for Dela Cruz’s bill. In its original form, SB 3087 would have sent money to the ADC to kick start a science and marketing campaign for papaya, and nothing more.

After the measure crossed over, however, the House Committee on Agriculture amended the bill, and apparently lost Nakatani’s support. The ADC director submitted subsequent testimony opposing the measure, contending “An audit would be too onerous at this time for an agency the size of ADC due to the amount of time and attention it will require.”

Several legislators, however, disagree.

“Rep. Thielen and I are jointly concerned about the rapid expansion of the ADC, both in terms of the scope of their mission and the amount of money involved,” said Creagan, who chairs the House Committee on Agriculture. “We, and many of our colleagues, feel that it’s time for an audit so that there will be transparency and any concerns people have will be addressed.”

Thielen, also a member of the House Committee on Agriculture, added Nakatani earns more than $145,000 annually and wants to know for what.

“This is nuts,” Thielen said. “We don’t really know what they’re doing. There’s no open report showing this is the money appropriated and this is what (has been) done with it.”

Dela Cruz took umbrage to the notion that there is no oversight. He stressed that ADC board meetings are open to the public and that a board of nine individuals oversees the ADC, which employs only four people including Nakatani.

“I’m not afraid of transparency,” Dela Cruz said. “That’s why we have a board that provides sunshine.”

Creagan conceded a nine-member board presiding over such a small entity is an unusual disparity in manpower but added he was unsure of how much policy direction or correction the board offers, as Creagan himself has not attended its board meetings.

Dela Cruz stopped short of expressly addressing whether or not he opposed an audit, instead saying SB 3087, the measure he originally drafted and to which the audit is tied, remains alive and will be hashed out in conference committee.

However, the papaya amendment the Senate Ways and Means Committee — which Dela Cruz chairs — tacked onto Creagan’s HB 1883 about ag theft, combined with Nakatani’s position reversal on SB 3097 — the papaya marketing proposal — would indicate both the ADC and Dela Cruz are averse to an audit of the organization.

“I’m really very skeptical that we’re going to be able to get the audit out of the Senate,” Thielen said.

Creagan said, however, the prospects for the continuation of Hawaii Island’s ag theft program and a program to develop papaya as a more viable export remain promising as HB 1883 heads to conference committee.