Alexander & Baldwin has established Kulolio Ranch in Hamakuapoko, a grass-fed cattle pasture operation. The formation of the ranch on 4,000 acres comes after trials that began in late 2015 on old Hawaiian Commercial & Sugar Co. lands. Alexander & Baldwin photo

Alexander & Baldwin has entered the ranching business on Maui, forming Kulolio Ranch in Hamakuapoko in a diversified agriculture venture on 4,000 acres of old Hawaiian Commercial & Sugar lands.

The ranch, a wholly owned subsidiary of A&B, will be collaborating with Maui Cattle Co., a partnership of six ranches, five on Maui, A&B said in a news release Tuesday. Under a grazing agreement, the ranchers will provide calves, while retaining ownership, to Kulolio Ranch, which will raise them to maturity and market weight, said Alex Franco, president of Maui Cattle Co., on Tuesday. Kulolio Ranch will be paid based on the weight gain.

“Having Kulolio has been a game-changer for us,” said Franco. “Our goal is to keep all our cattle here on Maui for the local market.”

Chris Benjamin, A&B president and CEO, said that “by raising grass-fed cattle on Maui, we believe we can increase and stabilize the supply of local beef and help increase consumer demand for local, fresh food products.”

“The goals of our partnership with Maui Cattle Co. are to increase local food production, support our local ranching community and deliver high-quality, healthy animals to the local market,” he said.

The ranch’s name comes from the wind that blows in the area, A&B said in a news release. Cattle trials, which included irrigated pastures in Hamakuapoko, have been ongoing since late 2015.

“We are really pleased with the results,” said Franco. “We like the quality of the beef that’s been coming from Kulolio.”

The ranch recently doubled the size of its grazing herd from 150 to 300 animals and is in the process of installing more than 18 miles of perimeter fencing and irrigation systems for the pastures, A&B said.

The ranch hopes to have 900 animals grazing in the fields by the end of the year and 3,500 animals by 2021.

Maui Cattle ranches will focus on producing calves rather than growing the cattle to maturity, said Franco. The 3,500 animals at Kulolio Ranch represent how many calves the local ranchers expect to be able to produce comfortably. With the focus on calf-raising, local ranches could produce more animals, he said.

The calves sent to Kulolio Ranch are 8 to 10 months old, and the ranch raises them for 12 to 15 months to maturity, he said. Franco did not disclose the rates to be paid, noting that they are based on a complicated formula, but did say they are compatible with market rates for the cattle industry.

Kulolio Ranch with its irrigated fields solves a problem ranchers have been dealing with for many years — drought, Franco said. Without green pastures to graze during drought, ranchers have been forced to reduce their stocks and to send their calves to the Mainland.

“When you are trying to supply the local market, whether it is drought or not, people are seeking the product,” Franco said. “When they are not able to get the product, it becomes problematic.”

The irrigated fields provide “a consistent means of getting our product into the marketplace” and “mitigate drought due to irrigation,” he said. While most of the trials were held during rainy times, the irrigation worked in getting grass established.

This arrangement allows Maui Cattle ranches and Kulolio Ranch to do what they do best, Franco said. He added that older mother cows are more able to handle drought conditions than cattle being grazed to market weight.

The addition of Kulolio Ranch offers a chance at a stable marketplace for the longtime ranches in Maui Cattle, which average 70 years in operation, Franco said. They include Ulupalakua, Kaupo, Hana, Haleakala and Nobriga ranches on Maui and Olumau Angus Plus on Kauai.

“You are looking at established companies that have been a big part of Maui for many, many years,” he said. “We are close to the market.”

They will provide jobs, buy materials from local vendors and “bring a lot into the economy,” Franco said.

Currently, 92 percent of beef on Maui is imported from the Mainland, New Zealand and Australia, he said. “We enjoy just a small portion of the marketplace,” he said.

Franco hedged when asked about the impact of Kulolio Ranch on imported beef but said “it is going to be real minimal,” maybe a 3 or 4 percent increase in locally produced meat.

There also will not be a major sway on meat prices. Franco said that the cost of doing business is higher in Hawaii and the scale of operations is smaller than the Mainland. He noted that some packers on the Mainland process 3,500 head of cattle in a couple of days.

“As far as price, our costs are still higher than our Mainland counterparts,”Franco said. “Our price still needs to be a little higher, so we can remain sustainable.”

Having grass-fed animals might be an advantage in the more health-conscious society. They are leaner with less intermuscular fat and higher in omega-3. Franco added, though, that the selection of grass- or grain-fed meat “depends on the palate of the consumer.”

The plan is to have all of the cattle slaughtered and processed on Maui, Franco said. Darren Pai, A&B spokesman, said Tuesday that the company has had “preliminary discussions” with groups interested in leasing land for expanded slaughterhouse facilities.

“Those discussions are still preliminary and have not been finalized,” he said.

Kulolio Ranch currently has two full-time hands in the field every day, Pai said. The ranch is expected to increase the number of workers as the operation progresses.

The ranch will be employing sustainable ranching practices with animals moved daily within paddocks. This will allow the cattle to graze freely while allowing grass and other forage to accumulate and grow during rest periods, A&B said.

“The cattle naturally fertilize the soil, eliminating the need for chemical fertilizers,” A&B said. “This holistic management process improves soil quality, sequesters soil carbon, reduces runoff and provides a healthy environment for the cattle.”

Franco said that the establishment of Kulolio Ranch will allow for management of previously unmanaged, fallow sugar cane land. This will reduce the fire danger and provide a habitat for birds.

“This is another sign of progress as we transition from sugar to diversified agriculture,” said Benjamin.

The establishment of Kulolio Ranch is technically not A&B’s first venture into diversified agriculture for its former 36,000 acres of sugar fields, Pai pointed out. The company recently formalized an agreement with Oakland, Calif., based TerViva to grow pongamia for biofuel on a 250-acre demonstration project in the north Kihei/Maalaea area.

A&B said it aims to transition 8,000 to 10,000 acres into diversified agriculture this year and “to aggressively convert more acreage over the next few years.”

Benjamin told investors in May that he did not expect diversified agriculture operations on the old sugar lands to show a profit in the near term. A&B shut down HC&S in December.

“We expect this project (the Kulolio Ranch) and our other diversified agriculture programs will become profitable over time,” Pai said when asked about profitability of the ranch.

“This is a strong start, yet there’s much more progress on the horizon,”Benjamin said. “Establishing viable agriculture on these Central Maui lands will not be easy, but we are committed to being good stewards of these lands and working with the county, state and other partners in the community to improve food security in Hawaii and make diversified agriculture on Maui a success.”

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