Cover Story

Food or fuel

Should we have to choose between biofuels and locally grown food?

Cover

Cover image for Feb 28, 2007

Imagine: All ports closed. Airplanes grounded.

And yet, the lights are on. Flex-fuel cars line the highway. The A/C blasts. The fridge hums. Renewable energy saves the day!

Or does it? Without incoming shipments, Hawai’i would have to rely solely on food produced in the state, a meager 15 percent of what the public consumes; the other 85 percent of the food supply is imported–and retailers have only five days’ worth of goods on the shelves.

In other words, the fridge is on, but it’s empty.

Renewable energy has received much political play lately around the world and in Hawai’i, the most oil-dependent state in the nation with more than 90-percent dependency on imported oil. Even noted skeptic President George W. Bush has begun stumping for biofuel.

In last month’s State of the Union address, Bush called for more investment in technologies to produce renewable energy and fuel, and emphasized the need for energy security by ending dependence on Middle East oil. He did not, however, talk about the effect growing biofuel crops would have on food prices or how ethanol-related crops would impact smaller, local farms. He did not talk about food security, the very real need to rely on food we produce here in the United States.

The reality is that food and energy security cannot be separated. The food and biofuel industries require many of the same resources–to grow plants (and raise livestock), to harvest and process those plants (and slaughter animals), to store and transport food and fuel. Hawai’i already has limited resources for agriculture–will biofuel trump food in the islands?

Energy trumps food

Biofuels are being championed as a cure-all for our fossil fuel woes. But without careful consideration, these energy crops may have some unsavory side effects. Already, global food markets are seeing an increase in food prices because corn crops are going to make ethanol instead of food.

With the rising global demand for ethanol, U.S. corn prices have shot up to almost $4 per bushel from a low of $1.50 one year ago. As it stands, investor frenzy and investment fund speculation in ethanol has only increased the volatility of corn prices, much like, say, oil prices.

And the price fluctuation won’t stop with corn. It will also likely affect a key player in Hawai’i’s ethanol production: sugar. Brazil, the world’s largest sugar producer and exporter, has become a major ethanol producer. The country is hoping to become energy independent, but rising food costs are a growing concern.

In some parts of the world, protests against price increases in food have already begun. Earlier this month, there was a riot in Mexico over the high price of tortillas and other food staples, mainly caused by the ethanol-related rise in corn prices. And in response to a populace worried about rising corn and grain prices, officials in China assured citizens that only excess grain would be used to produce biofuels.

Why isn’t there a loud, national debate about food and energy crops? And what does it all mean for Hawai’i?

David Cole

David Cole, CEO of Maui, Land & Pineapple, says locally, ethanol crops might trump food crops judging by actions at the state level. ‘Looking at the sheer weight of legislative proposals and following the money, energy from a realpolitikstandpoint will surface as a higher priority,’ he says.

This focus on biofuel production is even more striking locally than globally because Hawai’i’s dependence on food and fuel imports are almost equivalent. The state imports over $3 billion in both oil and food and beverages, including processed food items, such as potato chips, that are not considered agriculture.

Given the economic parity of food and energy imports, the political focus on renewable energy may be myopic. Shouldn’t food be just as important?

Subsidized

Sen. Russell Kokubun

Big Island Sen. Russell Kokubun, chairman of the Water, Land, Agriculture and Hawaiian Affairs Committee and head of the Hawai’i 2050 Sustainability Task Force, has proposed establishing a Department of Energy to make Hawai’i more energy self-sufficient. ‘Energy has elevated itself as such a critical issue in the state, we really need to focus our vision on energyÖprimarily on alternative fuel development, transportation energy issues as well as the electrical generation issues,’ he says.

One current legislative proposal sets a minimum floor price for ethanol to provide certainty for investors; in other words, the bill establishes subsidiaries for the ag-energy business. ‘We have not done that for food,’ he admits. ‘At least for ethanol, we can do a comparative analysis across the board. I’m not sure we could get into every [agricultural] commodity with a minimum floor price.’

However, just because subsidizing ethanol is easier, that doesn’t mean it should be done. Those subsidies may create an unfair market place, one where biofuel farmers get breaks and food farmers don’t.

Renewable energy incentives have already affected markets in corn-producing states, such as Iowa and Indiana, where farmland prices have been pushed up by the growing demand for ethanol.

Larry Jefts, owner of Sugarland Farms in central O’ahu, says fuel farms have an unfair advantage over food farms. ‘They’re going to be devastating,’ he says. ‘They’re going to destroy the rest of us.

Jefts is concerned that subsidies for biofuel farms will further raise Hawai’i’s already high agricultural land prices. The sudden boom in the ag-energy business has increased the value of farmland.

Iowa, a major corn state, has seen what economists call an ethanol ‘halo’ on farmland demand. This means the boom in ethanol production has created a boom in farmland real estate prices as large, subsidized farm operators buy land to expand into the new ethanol marketplace. The unfortunate effect is that farmers who don’t grow corn and don’t receive government subsidies may be priced out of the market.

According to the U.S. Dept. of Agriculture, corn subsidies totaled $41.9 billion from 1995-2004. Agriculture in Hawai’i received only $12.9 million over this same timeframe.

Water is also a major issue, especially here in Hawai’i where sugar cane is poised to be the main biofuel crop. The reason: Sugar production is highly water intensive.

Sen. Kokubun is sponsoring a bill to designate a special fund for agricultural irrigation system repair and maintenance. He saysthat food and energy interests do not have to compete. ‘It’s going to take the most opportune combination of water, land and agriculture,’ he says. ‘But in my opinion there is enough land now.’

The agriculture portfolio

But is there enough land? With an already strained and antiquated water and infrastructure system, can Hawai’i support both food and biofuel in agriculture?

The Rocky Mountain Institute, a Colorado-based non-profit, estimates that even if all of Hawai’i’s existing sugarcane production is converted to ethanol, an additional 83,000 acres of prime farmland would be needed to meet the state’s ethanol needs by 2020. According to a 2003 study, 85,500 acres of available land are suitable for sugar production.

‘Ideally, energy crop production will proceed not in conflict with or to the detriment of food,’ says Maurice Kaya, chief technology office of the Department of Business, Economic Development and Tourism’s Strategic Industries Division, which is working on the Hawai’i Energy Strategy. ‘Our hope is that lands identified for [energy] crop production would not otherwise be used for food.’

DBEDT is waiting for further results from study by the Hawai’i Natural Energy Institute to determine the amount of farmland available for energy crop production. The department is also researching subsidies and other policy ideas to encourage renewable energy and biofuel production in the state. Federal ethanol incentives already include tax credits for processing facilities.

According to Mae Nakahata, vice president of Hawai’i Farm Bureau Federation and director of crop control for Hawai’i Commercial & Sugar (HC&S), the ‘biggest dream’ from the farm bureau’s standpoint is to have commercial agriculture form collaborative relationships with small farmers to help package and market products, both locally and for export. HC&S is a subsidiary of Alexander & Baldwin.

In a battle for land and water, though, will the big guys really want to share?

Systems approach

Over the past 50 years, Hawai’i’s agricultural landscape shifted from large commercial-scale sugar and pineapple farms to smaller farms with a diverse range of crops. Over 70 percent of the state’s farms with harvested cropland are fewer than 10 acres.

Dean Okimoto

Dean Okimoto, owner of Nalo Farms and president of the Hawai’i Farm Bureau Federation, helped design the recently proposed Important Agricultural Lands incentives. He says his two top priorities are tax credits on infrastructure and water rights, both of which are problems for current agricultural production and both of which stand to help farmers increase production and grow their businesses.

Okimoto says the 100 percent tax credit on infrastructure–roads, utilities, water systems and processing facilities–is designed to help small farms expand.

Processing facilities, similar to ethanol production facilities, take raw crops and refine them to create a new product with additional value. For example, a raw tomato can be processed into pasta sauce.

‘In order for farms to get bigger, they have to be able to process more [value-added products]‘, says Okimoto. ‘Processing helps with scaleÖand more facilities means more farmers will be viable.’

Maui, Land & Pine’s Cole says processing is one part of taking a ’systems approach’ to reviving agriculture. Long a local food advocate, Cole has implemented several sustainable practices into business. In the late 1990s, he acquired organic Sunnyside Farms and relaunched the company as a network of farmers supplying organic produce and products. On Maui, he has helped implement policies to grow crops for the company’s Kapalua Resort.

But in business, economics play a role, and Maui, Land & Pine recently had to defer investing in a multi-commodity/multi-client processing facility designed to help diversified agriculture because construction costs had gone too high.

Meanwhile, the bottom line continues to be a struggle for Hawai’i’s farmers. As an economic industry, agriculture accounts for only 4 percent of the state’s $54 billion gross state product (GSP), and it’s still struggling to distinguish local produce from mainland crops. ‘There are no incentives to adopt local produce,’ Cole notes

Unfortunately, many mainstream consumers are unaware of the value of buying local. Economically, substituting $1 of food imports translates into about $2 in economic value–that means, if Hawai’i replaced $1 billion of its $3 billion in food and beverage imports with local production, the economy would grow by $2 billion because of the additional jobs and services created. Environmentally, local food requires less transportation and, therefore, less oil.

Beef is an example of a heavily transported food that should be localized. Cole says that a focus on locally raised and processed meat is critical to the success of a Hawai’i-first food supply. ‘To crossover from the well-educated, nutrition-motivated, sophisticated consumer to the mainstream, you need to focus on the center of the plate. And the center of the plate is protein,’ he says.

That’s a problem. Hawai’i has lost most of its livestock production and almost all of its commercial slaughterhouses and processing facilities. Local cattle are shipped to the mainland just to be shipped back as frozen steak. The state’s ‘local food’ is traveling more than 5,000 miles from farm to plate–and all that transportation uses oil.

Nalo Farm’s Okimoto says the lack of local processing facilities has made farming less economically efficient and harder to scale. He cites the local poultry industry as an example: Only one farm in the state produces broilers or chickens to eat. The rest of the state’s chickens are used for egg production. Every three to four years, local egg producers have to purchase new hens. So what happens to the chickens whose services are no longer needed? Without commercial slaughterhouses and processing facilities, egg producers now have to kill and dump older chickens. What could have been food now goes to waste.

A local balance

One of the best ways to reduce energy and save agriculture is to eat local food. According to the World Watch Institute, food travels an average of 1,500 to 2,500 miles from farm to plate. A typical meal, therefore, uses 17 times more oil and produces 17 times more carbon emissions than a similar meal made up of locally purchased products.

Hawai’i’s food miles are even higher than average, so the benefits of local food are higher–though prices may be, too, because federal and state policies tend to favor industrial farming.

In a small state, large-scale thinking is not always helpful. Hawai’i could focus on building a local economy in renewable energy and food, and the environment and economic effects would be exponential. By substituting imports with local production, the state could add billions to the economy. Similar to substituting for agricultural imports, homegrown renewable energy could have a ‘multiplier effect’ on the economy. The multiplier effect is an economic term to describe the positive impact of replacing imports with local production. That means replacing $1 billion in oil imports would result in an additional $3 billion to Hawai’i’s gross state product along with reducing the import/export deficit.

This potential to couple economic gain and sustainability is certainly a compelling argument for developing local renewable energy and food, but focusing solely on one issue will only compound the problem. Real solutions will require the state to integrate the interests of food and energy producers.

Maui, Land & Pineapple may prove to be a testing lab. Last year, the firm joined with Kamehameha Schools and Grove Farm Company to form Hawai’i BioEnergy, a consortium with advisors including venture capitalist Vindo Khosla and Brasil Bioenergia, a leader in Brazil’s renewable energy sector. Cole says the consortium has conducted an investigation of biofuels and will unveil a business plan for bioenergy in Hawai’i this month.

Whether the consortium will look at the impact on locally produced food remains to be seen.’There’s no magic bullet. It’s a tapestry of solutions,’ Cole says. ‘The next step in public discussion is about the importance of [food and fuel] security. It’s not just the downside, but the huge upside in enriching purchasing power and building a robust economy.’

Maybe we can have our fridge, and food in it, too.


Farm Bill

Every five years, the federal government passes the Farm Bill, a bill that encompasses an incredibly wide range of issues, such as farm subsidies, conservation, school lunch programs, meat production, specialty crops and more.

The Farm Bill is up for renewal this year. At a 2006 hearing before the U.S. House of Representatives’ Subcommittee on Livestock and Horticulture, former U.S Rep. Ed Case commented on bioenergy and specialty crops in Hawai’i.

‘We are spending an increasing amount, and a lot of money at the federal level, to develop energy from agricultural products, whether it be direct subsidies or credits or tax credits or tax breaks of one kind or another, and I would expect that over the next couple of years, there will be increasing pressure to do even more of that. I also observe that I do not believe that money is getting proportionately to specialty cropsÖ’

Dean Okimoto, owner of Nalo Farms, also testified in support of specialty crops, which is another term for diversified agriculture. He noted that none of the crops grown in Hawai’i was included in the U.S. Department of Agriculture’s (USDA) programs that receive direct payments from the federal government. That means almost all of Hawai’i ’s food production is unsubsidized.

The USDA recently released its 2007 Farm Bill proposals. The proposal includes more than $1.6 billion in new renewable energy funding and nearly $5 billion to significantly increase support of fruit and vegetable produce. More than $3 billion would go to improve nutrition assistance programs by purchasing more fruits and vegetables for schools.

The benefit of these funds could be manifold, from children learning to make better, lifetime food choices to reducing the nation’s dependence on processed foods, which just happen to be built on corn.

Still, these numbers are paltry compared to the $16 billion that went to commodity programs in 2005, over $9 billion of which went to corn. More than 70 percent of the subsidies go to just four commodity crops: corn, rice, soybeans and wheat. However, it’s a start.

State Sen. Russell Kokubun of the Big Island is supporting legislation to establish an agricultural and culinary education pilot program to help put local food in school cafeterias and teach children healthy eating habits. The hope is that farmers will gain access to a large, consistent market for their products and children will learn about and eat fresh, local food.

Based on 2003 findings from the Center for Ecoliteracy, getting good local food into schools has measurable payoff. The center evaluated the results of The Edible Schoolyard, a one-acre organic garden and a kitchen classroom located on the campus of a Berkeley, Calif, school. The study found that after four years in the program, students had higher academic achievement in math and science and had improved their ‘ecological literacy.’ That literacy translated into making healthier food choices. And healthier food choices usually mean more fruits and vegetables.

To show your support of the Farm Bill, contact Hawai’i’s elected officials in Washington.