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October 1997

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Kona Coffee Booms
but... Can there be peace, stability,
and prosperity in our industry.
by Les Drent     

Coffee Pickers on the Big Island of Hawaii.

A bountiful 1997 Kona coffee harvest is upon us and strong growth in our industry seems to be upon us as well. The high demand for Kona coffee around the world and increasing cherry prices have resulted in widespread planting of coffee by small to large size farms all around Kona. Kona coffee has not seen a growth spurt in its planted acreage since its downturn in 1958 when there was an estimated 6,800 acres of planted coffee in Kona. These new plantings are apparent from Holualoa to Honaunau and for the first time in the last two years it is a pleasure to see bulldozers tearing through the landscape and making way for coffee trees as opposed to another chain store being erected in Kailua. Coffee acreage in Kona which was estimated at around 1,700 acres three years ago is now believed to be cresting the 2,000 acre mark.

The Ups & Downs
of Kona Coffee

ACREAGE

1898 .......... 6,400
1900 .......... 4,000
1930 .......... 6,000
1947 .......... 3,400
1958 .......... 6,800
1962 .......... 5,100
1991 .......... 1,600
1997 .......... 2,000

CHERRY PRICES
(per pound)

1910 ........ 1.6 ¢
1919 ........ 4.1 ¢
1921 ........ 1.9 ¢
1925 ........ 4.5 ¢
1938 ........ 1 ¢
1956 ........ 12 ¢
1969 ........ 5 ¢
1977 ........ 31 ¢
1989 ........ $1.00
1993 ........ 65 ¢
1997 ........ $1.15

The coffee cherry that is already making its way to the various mills around Kona this fall is reported to be of excellent quality. Unlike the beginning of last year's harvest, which was reportedly one of the worst in nearly a half century, this year's picking could produce a bumper crop. Some early estimates by local farmers place production up nearly 40%. Mother nature has been kind indeed.

Outside of the healthy harvest and nearly a year after Kona coffee made national headlines in the major bust of Kona Kai farms and their fraudulent Kona coffee scheme, the fallout from this incident still swirls through the coffee lands of Kona. A host of questions regarding the future of Kona coffee, protection of the name "Kona" and the future stability of this product still remain to be answered. Among these matters of name protection are new concerns regarding the profitability of coffee farming in Kona. These matters include the renegotiations of Bishop Estate farm leases, redefining the existing blended Kona coffee market, coffee certification, and the potential for one democratic governing Kona coffee organization. Out of all this one must ask if there can there be peace, stability and prosperity in the Kona coffee industry?


From left to right: Walter Diaz, Benji Pali, and Tory Aquino of Captain Cook Coffee Company prepare for a busy season of coffee processing as this year's crop begins to show up at mills all around Kona.

Name protection seems to be at the forefront of concern for many coffee farmers in Kona. The history surrounding the protection of the name Kona is a relatively recent issue. During the late 1800's and continuing into the 1900's the Kona coffee crop and its distribution on the mainland was always controlled by a few large mainland based American companies, such as American Factors, Ltd., which used Kona coffee as a master blend. The exploitation of Japanese laborers to plant, grow, and harvest the coffee in Kona is what allowed the industry to flourish in those early years. At the turn of the century the world coffee market collapsed and along with it went the value of Kona coffee. The land owned by the large commercial coffee companies was then leased to Japanese farmers in exchange for half of their yearly crop.

Over the years leading up to the 1950's these Japanese farmers slowly gained control of their lands and began purchasing their land from the mills. For many years leading up to modern times the coffee industry in Kona was restricted to farming only and farmers had very little to do with the sale of their coffee. Thus the prices of Kona were subject to busts and booms according to the status of the world coffee market. Farmers had very little if any feeling of stability in their yearly coffee crop and it was widely believed that only a fool would rely on the price of coffee maintaining its value. The unreliability of coffee prices resulted in a steady decline of coffee acreage for nearly forty years.


Man rakes parchment at Greenwell Farm, which is open to the public for tours daily.

Beginning in the 1970's the coffee industry in Kona would plant the seeds of change with the arrival of mainland Americans. Many of whom came to Kona to escape the turmoil of their modern era. As Vietnam splintered America and the suburban nine to five work routine proved to be all too restrictive for many looking for personal freedom and peace of mind in their lives Hawaii seemed like the perfect getaway point. Kona in particular was a popular choice for many who came and settled on 45 year agricultural leases developed by Kamehameha Schools Bishop Estate. While it didn't take much to get by in Kona in those days, what little it did take was hard to come by. Coffee prices were unstable and at 31¢ a pound (compared to $1.15 today) being offered for coffee cherry in 1977 the best a single farmer could do picking his own seasonal coffee (about 200 pounds) in a day was $62. Subsequently many farmers in Kona turned to growing pakalolo (marijuana) to subsidize their living. This part of coffee history in Kona has been widely omitted from the history books, but ask any honest farmer who has been farming coffee in Kona since those days and you are certain to hear the truth. They will also tell you that even the old folks were growing the "Kona Gold" in the back yard.

As independence among Kona coffee farmers grew during the 1980's, and the DEA was in full swing of its widespread Green Harvest marijuana eradication program farmers in Kona took notice of another industry starting to root itself in the American market place, specialty coffee. As farmers, millers, and roasters began to realize the potential of their product being self-marketed so also did they realize the extent of exploitation that now gripped their product name. Kona, in most cases, had become a meaningless name on the side of many coffee packages. With the American specialty coffee industry beginning to blossom, it was now obvious that if Kona was to compete in this marketplace, it would have to do so against its greatest competitor, the counterfeiter. While this competitor lurked in the midst of name brand America it was difficult to place a finger on who exactly was promoting and selling this illegitimate Kona coffee. In the Fall of 1996, you may remember, national headlines read aloud that a culprit had been caught. After Coffee Times first reported to you in 1994 our suspicions about Kona Kai Farms, the truth surfaced last year as indictments were handed down after a six month sting operation by US Customs agents revealed illegal rebagging practices in Oakland California. The 20 million dollar fraudulent coffee scheme was evidenced by video tapes of Kona Kai employees rebagging Costa Rican and Panamanian coffee in Kona coffee bags. The two to three dollar coffee was then resold for nearly seven dollars a pound as Kona coffee. While the news left a black eye on the industry, it was also an enormous victory for local coffee farmers, and it marked the first time that government intervened to protect the name Kona from counterfeiters. The case continues to unfold today as new indictments are being handed down.


Luis Cisneros of Bay View Farm.

Currently, a class-action lawsuit filed by an Oahu law firm, Davis Levin Livingston Grande, on behalf of a few Kona farmers has stirred more controversy in the Kona coffee industry. The law suit aimed at several buyers of Kona coffee who purchased bogus Kona coffee from Kona Kai Farms alleges that they knowingly did so and at the expense of the Kona name. It would be apparent to most Kona coffee drinkers that a coffee that wasn't Kona would be easily recognizable and the question remains as to how these companies did not know that what they were purchasing was not Kona coffee, especially when these roasters employ professional cuppers and were spending millions of dollars on thousands of pounds of Kona coffee annually. The other side of this issue contends that this law suit may prove, in the long run, to be detrimental to the coffee industry if potential future customers of 100% Kona coffee are targeted by the suit. Not ignoring the fact that if wrong was done, that those who aided and abetted the fraud should make amends, it is hoped by many that the industry does not target the wrong companies or unsuspecting victims and especially those who would, in turn, support the local industry by purchasing and selling legitimate Kona coffee.

The division over the law suit and whether or not it should be pursued is but only one issue that now divides the Kona coffee industry. Currently there are five organizations who would like to lay claim to the governing body for Kona Coffee. The coffee segment of the Kona County Farm Bureau; The Hawaii Coffee Association, a group of state-wide coffee companies, The Kona Coffee Council, a group of local Kona coffee farmers, millers and roasters who meet once a month to discuss coffee matters, and who also regulate their own seal program; The Kona Coffee Cultural Festival, who now not only handle the Kona Coffee Festival but also administer a County-initiated roasted certification seal and program begun by Mayor Stephen Yamashiro, and the newly formed Kona Farmers Alliance whose mission statement reads "A nonprofit Kona community farming alliance whose purpose is to protect the existence of agricultural land, farmers and their products."

Kona coffee Kona coffee
A perfect example of the division between coffee organizations are the two seals of Kona coffee authenticity that exist.

In addition to these several organizations, and the two coffee authenticity certification seal programs, the Department of Agriculture green coffee certification program also exists. The issue of a mandatory certification program being administered by one group will seemingly allow for all the coffee in Kona to be tracked and guaranteed to be authentic. For mainland roasters this would be the ideal situation as they would have the ability to check the authenticity of their product. Like the other issues though, this measure is favored by some and opposed by others who feel that the mandatory certification is an infringement on their private businesses.

The obvious air of separatism that exists between all of these groups and the play for power as governing bodies, has left the Kona coffee industry divided, in that it really has no sole representative group or platform to discuss the issues. And although a consensus may be met in the individual organizations it is obvious that no consensus between the different groups has been found, or they would be unilaterally aligned as one organization working to promote and protect 100% Kona coffee. From a marketing standpoint, the situation is a nightmare for an industry that is trying to represent itself in the world marketplace. Some uniformity and code of ethics being fairly administered by one organization would go a long way in the promotion of Kona coffee.

While a popular coffee union may or may not unite Kona coffee farmers, an alternative argument can be made for the strength of the industry, in that no one organization, mill or company controls the Kona coffee industry. And, as we have stated in past issues of Coffee Times it is still this state of independence among the many different facets of the Kona coffee industry that contributes to its strength and growth today.

Another issue that seems to be of pressing concern, is the renegotiation of Bishop Estate leases which are now occurring between farmers and the land trust . A close and scrutinizing eye is being kept upon Bishop Estate as they are beginning to renegotiate the leases of their tenants, many of whom have invested years in developing their farms into sustainable businesses.


Captain Cook Coffee Company's first truck. circa 1910, courtesy of Mr. Oue.

Princess Bernice Pauahi Bishop bequeathed her entire estate to found and support a school for Hawaiian children. This school became known as Kamehameha Schools, also known as Bishop Estate. To fund and perpetuate this school system, Bishop Estate utilizes nearly 265,000 acres of land on the Big Island of Hawaii both commercially and non commercially. Out of this 265,000 acres 189,336 acres are used for agriculture. This land is or was leased to approximately 900 farmers who grow a wide range of products, including macadamia nuts, papaya, sweet potato, taro, prawns and coffee. Since a small percentage of this land is dedicated to coffee farm leases, it is essential that farmers in Kona have the opportunity to continue their farming practices at a reasonable lease rate. Much attention has been paid to this subject recently because initial renegotiations with Bishop Estate have resulted in as much as 6 times the original lease rates being handed down to farmers. It is everyone's hope, that the principals of generating sufficient income to provide operating funds to meet current educational needs, and protecting and increasing the trust corpus (asset base) for future educational needs by which this land trust were set up, do not harm the potential for keeping this land in agricultural use and coffee, an economically viable crop. While representing 51 percent of Bishop Estate's total land holdings, the agricultural lands generated only about 4.4 percent of Bishop's total lease revenues in 1993. This 4.4 percent may not have constituted much in the way of earnings but the land which is still maintained under this agricultural status supports more than Kamehameha Schools. It is the maintenance of an agrarian life-style that is at stake and the future of all of Hawaii's children, and the communities they will live in, that will benefit by this agricultural land maintenance.

If the Kona coffee community is to continue to grow and prosper into the next century, a serious effort will need to be applied to finding the answers to many, if not all, of the questions that now divide the Kona coffee community, which, in its division, is still gaining strength as a region of independent coffee producers. A little bit of cooperation amongst the different players in the Kona coffee industry and from Bishop Estate, a committed effort to protection of the name Kona, and a standard of ethics adhered to by all involved in this industry, Kona will do much more than just survive into the twentieth century. The result of a concerted effort by all will preserve the life-style that so many appreciate along this rural farm belt in Hawaii.

Cherry
Fruit of the coffee tree bearing the coffee bean. Approximately 78% of the gross weight of the product is lost in the wet milling process.
Oct '97 Price: $1.10 - $1.20/lb.

Kona coffee

Parchment
Dry Membrane that surrounds the green coffee bean after period of drying
Oct '97 Price: $6.00 - $7.00/lb.

Kona coffee

Green
The coffee bean before it is roasted and after it has been dry hulled of it's parchment. 5 major grades exist: Extra Fancy, Fancy, #1, Prime, and Peaberry.
Oct '97 Price: $9.00 - $11.00/lb.

Kona coffee

Roast
The coffee bean after it has been cooked at a temperature exceeding 400ºF. 20-25% of the weight of the bean is lost in this process.
Oct '97 Price: $20.00 - $30.00/lb.

Kona coffee

"Readers may submit editorial comments to any of our stories by sending an email to les@lbdcoffee.com. We would be happy to attach your comments and feedback to anything we publish online. Thank you for your interest.":

Story appeared originally in Coffee Times print magazine and appears online for archival purposes only. Any use or reprinting of these stories without the expressed written consent of the author is prohibited.

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