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The Maui News: “A&B moving forward with repurposing of sugar cane land”

A&B moving forward with repurposing of sugar cane land

Hawaiian Commercial & Sugar Co. equipment is lined up in front of shuttered Puunene Mill on Thursday afternoon. Alexander & Baldwin shut down sugar operations in December. A&B President and Chief Executive Officer Chris Benjamin told investors Thursday that agricultural diversification on former sugar land is “coming along well” but that there is no expectation of profits from those operations in the near term. -- The Maui News / MATTHEW THAYER photo

Hawaiian Commercial & Sugar Co. equipment is lined up in front of shuttered Puunene Mill on Thursday afternoon. Alexander & Baldwin shut down sugar operations in December. A&B President and Chief Executive Officer Chris Benjamin told investors Thursday that agricultural diversification on former sugar land is “coming along well” but that there is no expectation of profits from those operations in the near term. — The Maui News / MATTHEW THAYER photo

The Maui News

While agricultural diversification of Alexander & Baldwin’s 36,000 acres of former sugar lands on Maui is “coming along well,” there’s no expectation that the effort will be profitable in the near term, A&B President and Chief Executive Officer Chris Benjamin told investors Thursday.

“In fact, we may continue to have some modest net expenses as we work on repurposing the sugar lands,” he said in a conference call. “But we’re making good progress in discussions with several interested tenants who will help keep these lands in active agriculture.”

He referred to a recent announcement that A&B had entered into a partnership with Oakland, Calif.-based TerViva, a seed oil-producing company to produce biofuel from pongamia trees on 250 acres on Maui.

“If successful, the partnership could expand up to 2,000 acres,” he said.

Benjamin said the company also is working on trials with cattle grazing and other energy crops on Maui.

“Our objective is to deploy as much of our former sugar plantation lands as possible in viable agricultural uses as quickly as possible,” he said.

The company reported $2.4 million of after-tax income from discontinued Hawaiian Commercial & Sugar Co. operations, while the results of the first quarter of 2016 included a $10.8 million after-tax loss related to the sugar plantation’s shutdown, which was completed in December.

A&B announced income of $4.4 million, or 9 cents per diluted share, for the first quarter of 2017. That’s compared with $3.7 million, or 8 cents per diluted share, in the first quarter of 2016.

Results for this year’s first quarter included $3.7 million of after-tax costs ($4.8 million, pretax), which was related to the evaluation of real estate investment trust conversion.

Revenue for the company’s first quarter was $93.2 million, compared with $91.4 million for the same period last year.

“The increase in revenue is attributable to increased development and parcel sales, partially offset by lower materials and construction sales revenue and lower commercial real estate revenue,” A&B said.

A&B’s development of the Ho’okele Shopping Center, a 94,000-square-foot, 8.9-acre Safeway-anchored retail center in Kahului, was mentioned along with the La Hala Shops and Pearl Highlands Center on Oahu as part of “our strategic objective of increasing recurring earnings from our commercial portfolio,” Benjamin said.

In its commercial real estate segment, the company reported selling the 16,600-square-foot Maui Clinic Building for $3.4 million in January. The company also closed a sale of a Maui Business Park property for $2.4 million, and it sold an urban-zoned vacant property of 0.8 acre for $1.6 million.

A&B reported there were two Maui industrial tenants (both in the P&L Building on Papa Place) who chose not to renew their leases.

The company’s commercial properties increased operating profit 9.2 percent to $14.3 million in the year’s first quarter, compared with $13.1 million in last year’s first quarter. Occupancy of A&B’s commercial properties was “stable” at 94 percent, the company said.

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The Maui News: “The Last Harvest-The Final Chapter in the Story of Sugar on Maui”

The Last Harvest: The Final Chapter in the Story of Sugar on Maui

Alexander & Baldwin Inc. sounded the death knell of sugar on Maui and in Hawaii on Jan. 6, 2016, when it announced the end of operations at Hawaiian Commercial & Sugar Co. after the 2016 harvest.

The announcement was abrupt and caught many off guard, but was not totally unexpected. A&B said that its agribusiness sector, which was mostly HC&S, faced $30 million in losses in 2015 and “significant losses” going forward, which corporate officials called unsustainable.

The losses stemmed from lower yields due to wet weather and a significant increase in the world sugar supply, which depressed prices. HC&S also faced headwinds from those opposing cane burning and the drawing of water from streams in East Maui and the West Maui Mountains.

It was difficult news to hear for the 675 workers, all but 15 of whom would lose their jobs at the end of the harvest in December. Workers were laid off as the company completed its series of “lasts” — from harvesting to the shipping of the sugar out of Kahului Harbor. Workers and retirees marked the arrival of the last Tournahauler filled with cane at Puunene Mill on Dec. 12.

The fire went out at the mill four days later and the last workers were laid off about a week after that.

Hawaiian Commercial & Sugar Co. workers gather for a group photo at Puunene Mill on March 1, the day the final harvest of sugar cane began. The Maui News / MATTHEW THAYER photo

A&B worked with federal, state, county and nonprofit officials to help the workers find new jobs, new lives. As of late December, A&B reported 200 of the workers had found new jobs, 99 had retired and 13 had relocated off-island.

An auction was held last week to sell off the equipment of HC&S.

As the sugar plantation fades into history, A&B looks for uses of the 36,000 acres of former sugar cane fields. Diversified agriculture, biocrops and irrigated pastures for cattle are among the options being mulled by company officials. Members of the public have been vocal in offering their thoughts on uses for the fallow fields.

Old-timers will say that there was a time when “sugar was king.” There were plantations all over the island from Hana to Lahaina, and ruins of those old mills still can be found in Kipahulu, Ulupalakua and Haiku. In the 1960s, three sugar plantations dominated the Maui landscape — Wailuku Sugar, Pioneer Mill in Lahaina and HC&S. Wailuku Sugar was the first to shut down in the late 1980s; all that’s left of that business is Wailuku Water Co. Pioneer Mill closed in 1999; the smokestack near the intersection of Lahainaluna Road and Honoapiilani Highway is a reminder of the company’s 139 years of sugar operations.

The plantations diverted water from wet areas through tunnels, siphons and ditches to feed the thirsty sugar crops. Those diversions currently are being disputed by taro farmers, Native Hawaiian practitioners and others who say that the plantations and their predecessors have unfairly removed water from the streams for commercial purposes outside of their regions.

The plantations literally changed the face of the islands, bringing in workers from China, Japan, Portugal and the Philippines. Those cultures blended for generations to create the multicultural mix of Hawaii’s population today.

Old-timers remember their days in the dusty, rustic plantation camps with fond nostalgia, but it was a difficult and harsh life. Workers toiled in the fields for long hours and minimal pay. The years have washed away the rough edges, the conflict over union organizing, better working conditions and higher wages and the social and economic hierarchy.

HC&S was born in 1870 when Samuel Thomas Alexander and Henry Perrine Baldwin planted their crop on the newly established Alexander and Baldwin Plantation in Makawao.

Before sugar on Maui disappeared into history, The Maui News embarked on a project to document “The Last Harvest” for future generations. The reports in words and photos throughout 2016 were intended to detail the process of growing and producing sugar at HC&S, whose large-scale and efficient operations were key attributes to its longevity and being the last sugar plantation in Hawaii.

This publication is a compilation of all of those stories and a few others that document “The Last Harvest.”

The Maui News thanks A&B and Tran Chinery for setting up the visits and HC&S and its workers for opening the doors to the mill and letting a reporter drive a Tournahauler in the fields.

It was a last harvest to remember.

* Lee Imada can be reached at leeimada@mauinews.com.

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The Maui News: “Wildland ‘live-fire’ drills to start Tuesday”

Wildland ‘live-fire’ drills to start Tuesday

The Maui Fire Department will conduct a series of wildland “live-fire” training exercises in north Kihei from Tuesday through Thursday and again April 24 and 25, the department announced Sunday.

Live-fire training will take place on 48 acres of former sugar cane fields on Alexander & Baldwin property, about a quarter-mile to 1 mile northeast of Hale Piilani Park and homes on the east end of Kaiolohia Street in Kihei, said Fire Services Chief Edward Taomoto.

In addition to providing firefighters with valuable training, the fallow sugar cane slated for burning will serve as a safety buffer from any future wildfires that might erupt upwind from the north Kihei neighborhood.

With the shutdown of Hawaiian Commercial & Sugar Co. in December, the heavy equipment and personnel that previously assisted the Fire Department with cane field fires no longer exist. The once-lush cane fields have grown fallow and, in some cases, have become vastly overgrown after the recent winter rains. By selectively burning out specific areas, the department is effectively assisting A&B with creating a safety buffer next to homes and mitigating some of the dangers to residents, Taomoto said.

During the training sessions, Kihei residents can expect to see and smell smoke, and possibly see flames. Burning hours will be from about 8:30 a.m. to 4:30 p.m. Individuals with respiratory issues should keep their windows closed, use air conditioning and stay indoors during these hours.

The Fire Department and the Maui Incident Management Team have carefully planned out these burn exercises to minimize the risk of fire spreading beyond the intended burn area, Taomoto said. Fire crews and additional equipment will be standing by to help control any fires that threaten to jump containment lines.

For any questions about the exercises, contact the department’s Fire Services Office at 270-5542 during normal business hours.

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The Maui News: “A&B planning pongamia project on former HC&S land”

A&B planning pongamia project on former HC&S land

Tree’s seed oil can be used for biofuel

A demonstration project to grow pongamia on old Hawaiian Commercial & Sugar Co. land in the Maalaea/north Kihei area could get underway in mid-May, an Alexander & Baldwin official said. The tree from India and Australia could produce 400 gallons of biofuel per acre from its seeds. — TerViva photo

Alexander & Baldwin is close to formalizing a partnership with a seed oil producing company on a 250-acre demonstration project to produce biofuels from the pongamia tree on old sugar fields with planting possibly to begin in mid-May.

Darren Pai, A&B spokesman, said Friday that pongamia, a long-living tree from India and Australia, also offers the possibility of producing food and fuel — with cattle grazing or other crops grown between the tree rows.

“We believe pongamia can help diversify agriculture production on Maui while also potentially addressing our community’s need for renewable fuels and bioenergy,” Pai said. “Transitioning the former plantation lands into diversified agriculture provides an opportunity to look at growing more energy crops locally.”

A&B has been in discussions for a few years with Oakland, Calif., based TerViva, which has been working on smaller pongamia projects in Hawaii, he said. “The transition of the former sugar plantation resulted in an opportunity to work together on a larger project,” Pai said.

Since Hawaiian Commercial & Sugar Co. harvested its last sugar cane in December, parent company A&B has been looking for uses for the 36,000 acres of fields in Central and Upcountry Maui. The company has ongoing livestock partnerships and is looking at working with MauiGrown Coffee on expanding its coffee fields to old sugar land, possibly near the intersection of Omaopio and Pulehu roads or below Haliimaile.

TerViva is a 6-year-old company with offices in Hawaii, California and Florida that grows the orchard crop pongamia, a nongenetically modified organism tree that can be grown with little or no irrigation, according to the company’s website.

The seed oil from the tree may be used to produce biofuels. The residual pongamia seed cake, which is high in nitrogen and protein, can be used in fertilizer, animal feed supplements or as a feedstock for other bioenergy, including biogas production, Pai said.

A&B will be “partnering with TerViva on an initial 250-acre demonstration project with the possibility of expanding up to 2,000 acres or more if all goes well,” said Pai.

The two companies “are close to finalizing our partnership,” Pai said, adding that planting could begin in mid-May. When asked if A&B would lease the land to TerViva or grow the plant itself with TerViva, Pai said: “TerViva will grow the pongamia and manage the project with support from A&B.”

The Maalaea/north Kihei site was selected because of good sun exposure, productive soil, access to irrigation and other conditions like grade and accessibility, he said. Farming the tree will require some drip irrigation, but the water needs will be less than equivalent acres of sugar cane.

“Pongamia has grown well in smaller projects on Oahu and Hawaii Island without any environmental concerns,” Pai said.

Pongamia produces an annual harvest of seeds similar to soybeans, he said. TerViva estimates that 400 gallons of oil can be produced per acre.

“The purpose of our project is to confirm pongamia’s agronomic suitability in Central Maui and to determine production costs and yields at commercial scale,” Pai said.

It was not clear if A&B would process the plant on Maui. Pai said that A&B and TerViva “will evaluate together the best uses and optimal logistics for the crop, which could involve processing the crop on Maui.”

Pai said the processing of pongamia is similar to that of soybeans “and at scale could create additional jobs beyond field-related activities.”

Joanne Ivancic, executive director of the nonprofit Advanced Biofuels USA, had good things to say about TerViva.

“I have been impressed with the young people at TerViva who work with pongamia,” said Ivancic in response to an earlier story about A&B’s diversified agriculture plans that mentioned pongamia. Advanced Biofuels promotes biofuels for energy security, economic development and pollution control.

She said pongamia, a legume that fixes nitrogen to the soil, may be better for the land than hemp or sunflowers, which can be quite demanding of the soil. Pacific Biodiesel is working on a 115-acre sunflower demonstration plot on old Wailuku Sugar land near the Kuihelani and Honoapiilani highway intersection and hemp has been promoted as a farm crop for old HC&S lands, including by Rep. Kaniela Ing. The South Maui representative teamed with Oahu Rep. Cynthia Thielen during the last legislative session on possible measures to help HC&S transition to industrial hemp.

“At a conference in Washington, D.C., in early March, I was impressed with TerViva’s vision of an eventual multiuse way to grow these legume trees, incorporating pastureland forage so that the manure from the cattle will help to fertilize the trees and the grasses will serve to hold the soil,” Ivancic said.

* Lee Imada can be reached at leeimada@mauinews.com.

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The Maui News: “Mahalo and aloha to plantation life”

Mahalo and aloha to plantation life 

Former Puunene resident Stan Mukai (front) poses Friday next to a banner he had made as a “final farewell” to Hawaiian Commercial & Sugar Co., which ended its sugar operations last month. Standing behind him at the Alexander & Baldwin Sugar Museum in Puunene are former Puunene plantation camp residents, including some from Mukai’s camp, Spanish B. Mukai, 78, now an Oahu resident, said that the banner will be given to the museum to archive with other items from the mill’s closure.

The Maui News / MELISSA TANJI photo

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The Maui News: “With HC&S closing, MECO needs more on-demand power”

With HC&S closing, MECO needs more on-demand power

Maui Electric Co. is seeking approval to install three used diesel power generators temporarily for times of peak power use and to make up for reserve capacity that will be lost when Hawaiian Commercial & Sugar Co. closes its sugar plantation and unplugs its Puunene Mill as a source of backup electricity for Maui’s power grid.

According to a MECO application filed Tuesday with the state Public Utilities Commission, HC&S’ pending closure late this year and the ending of its purchase power agreement with the utility will reduce the island’s reserve power capacity. Now, the burning of bagasse, coal and oil at the Puunene Mill provides up to 4 megawatts of “firm” power and an additional 12 megawatts of emergency power, according to the utility.

“With this reduction to the system, the company is in need of additional firm generation sooner than anticipated to maintain reliability as customer demand increases,” MECO’s filing says.

(“Firm power” refers to electricity that a supplier guarantees will be available when needed. Wind and solar power are variable, or “as available,” sources of power. “Reserve capacity” is extra power-generating capacity available to meet unanticipated demands for electricity, if needed, such as if a generator were to break down.)

The utility says the temporary power generation project is “a key component of a larger portfolio of measures that are needed to help mitigate increasing reserve capacity shortfalls that are anticipated to arise on the company’s Maui island system as early as March 2017 . . . and continue until the installation of the next dispatchable firm capacity resource in 2022.”

The highest reserve capacity shortfall is expected in April and May of next year, when MECO’s largest power generators at Maalaea are taken offline for scheduled maintenance.

Earlier this year, the PUC approved MECO’s request to build a new, $13 million substation in a sugar cane field adjacent to the intersection of Kuihelani Highway and Maui Lani Parkway. Construction is targeted for completion as early as June. The diesel generators would be installed at the same time and location as the Kuihelani substation.

MECO already has identified a 4-megawatt shortfall of power generation capacity as of April, as well as additional, ongoing near-term reserve capacity shortfalls for 2018 to 2022.

The three temporary generators would burn “ultra-low sulfur diesel” – with each rated at being able to deliver 1.65 megawatts, for a total of 4.95 megawatts of firm power generation for the utility’s reserve-capacity use, according to the filing.

“The pending land acquisition of approximately 2.6 acres for the Kuihelani substation will provide sufficient space to allow for the placement of the temporary distributed generation units,” the utility says. “The temporary distributed generation units will provide customer benefits through increased service reliability, improved operational flexibility and support of the projected reserve capacity shortfall beginning in March 2017.”

The generators are expected to operate only during peak-load hours, typically between 5 and 9 p.m., according to the utility.

The power-generation units are expected to be removed and sold for nearly $1.7 million after about five years when the reserve capacity shortfall is anticipated to be eliminated by the installation of new firm power generation.

According to MECO, other reserve capacity shortfall mitigation measures include:

* Repurposing the company’s existing battery energy storage system.

* Relying on as-available wind resources.

* Pursuing company- or customer-owned, utility-dispatched distributed generation projects.

* Requesting voluntary customer power cutbacks.

* Accelerating the installation of the next firm generating unit or energy storage systems.

* Expanding the company’s fast-demand-response program from 0.2 megawatts to 5 megawatts.

(The fast-demand-response program allows eligible commercial customers to reduce power consumption proactively during times when electricity demand exceeds generation capacity. Customers enrolled in the program are rewarded with financial incentives.)

So far, MECO has four customers in the fast-demand-response program, which helps the utility maintain a stable power grid and prevent unplanned outages. MECO is seeking PUC approval to expand the program.

MECO noted that, of its options, the Kuihelani temporary distributed generation units, the expanded fast-demand-response program and improved battery energy storage system “are uniquely able to help reliably address the near-term reserve capacity shortfall beginning in 2017.”

When the PUC approved the Kuihelani substation project, state regulators conceded that the substation would be needed as early as June of next year, but they reminded MECO officials that they need to do a better job of planning for a transition to renewable energy.

The commission has established a blueprint for Hawaiian Electric companies to move out of the power-generation business and toward managing and dispatching electricity from dispersed independent operators and from consumers, including those with rooftop solar panels.

In early January, HC&S’ parent company Alexander & Baldwin announced the closure of Hawaii’s last sugar plantation at the end of this year. Layoffs have been coming in waves, but the closure will result in lost jobs for more than 600 workers.

The company has that said it plans to turn to diversified agriculture, including bioenergy crops and cattle grazing, for some of its 36,000 acres in Central Maui.

* Brian Perry can be reached at bperry@mauinews.com.