Hawaii coffee wins greater protection from Legislature after epic struggle

May 19—1/1

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State lawmakers passed a bill that says roasted, instant and ready-to-drink coffee sold with packaging using Hawaii place names must contain at least 51% of coffee grown in a region of Hawaii. Hualalai 100% Kona coffee, left, sells for $17.99 for 4 ounces. Aloha Aina's Signature Blend, a 10% Kona coffee blend, sells for $9.49 for 7 ounces.

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Many Hawaii coffee farmers got most, but not all, of what they wanted at the state Legislature this year to protect valuable crop origin names.

House Bill 2298, if enacted, will require that by July 1, 2027, roasted, instant and ready-to-drink coffee contains at least 51% of coffee grown in a region of Hawaii if the product package uses the name of the region — such as Kona, Kau, Waialua, Molokai, Maui and Kauai — in a blend with foreign coffee.

The bill's passage was lauded by some legislators as historic, given that the local coffee-growing industry has been trying for decades to expand and strengthen a 32-year-old state law that requires only 10% Hawaii coffee in packages of blended coffee using Hawaii geographic origin names.

The final version of HB 2298 also represents a big compromise from the bill's original aim, which was to prevent any blended packages of roasted, instant or ready-to-drink coffee from using Hawaii geographic names of origin after July 1, 2027.

Mark Petersen, president of the Kona Coffee Farmers Association, said a new push for higher protection could come a few years from now depending on how the market changes after 2027 if HB 2298 is enacted. But he also said he's happy with what was achieved this year.

"We are really thankful that this finally got passed, and that the lower limit is no longer 10%," he said. "Hawaii coffee farmers are incredibly patient, because it's been 30 years to get to this point."

Slow drip

Hawaii coffee farmers, mostly growers of highly regarded and expensive coffee in Kona, have been frustrated for decades that attributes and prices of what they grow have been devalued by blending.

"Since 1992, the 10 percent blend law has damaged the reputation of Kona coffee and threatened the economic well-being of Kona coffee farmers," the association said in a petition to Hawaii lawmakers in 2007, a year after two bills proposing a 75% minimum for Kona coffee blends failed to receive a hearing.

This year, a long-running clash was rehashed at the state Capitol mainly between farmers who want the use of Hawaii place names for blended coffee eliminated, and processors that sell blends of Hawaii and foreign coffees.

"We're one of the only geographies in the world that allows its geographic name to be used on products that are not 100% from that region — and it needs to change," Kona coffee farmer Joshua Montgomery of Guard Well Farm told the Senate Committee on Commerce and Consumer Protection during a March 20 public hearing. "It's like somebody putting a Mercedes-­Benz seat in a Ford Fiesta and then selling it as a Mercedes. It's dishonest, and it damages the brand."

Other supporters of the original version of HB 2298 included the state Department of Agriculture, Hawaii Farm Bureau, Hawaii Coffee Association and Ka'u Coffee Growers Cooperative.

Opponents of the bill included Retail Merchants of Hawaii, Hawaii Coffee Co., Dealer Store Hawaii and Mulvadi Corp.

Gerard Bastiaanse, Hawaii Coffee Co. president, expressed concern in written testimony that implementing the original or subsequent version of HB 2298 would hurt Kona coffee sales by taking more affordable blends off the market, which in turn he said would result in the company cutting jobs.

Hawaii Coffee Co., which has brand names that include Royal Kona, Lion and Hawaiian Isles Coffee Roasters, sells 7-ounce packages of 100% Kona coffee for $30 and 10% blends for $12.

"We believe it is important to offer consumers a range of coffee products so they have options to choose based on taste preferences and affordability," Bastiaanse testified.

Some Kona coffee farmers did oppose HB 2298 over concerns that they won't be able to sustain high enough sales if blends are banned.

Naneki Astronomo of Menehune Coffee Co., which sells both 100% Kona coffee and a 30% blend, testified at the March 20 hearing that the existing law is fine because it requires the amount of Hawaii-grown coffee in a package to be disclosed to consumers.

"The consumers are not deceived," she said, adding that her 200-acre farm in Captain Cook would be hurt by prohibiting Kona blends.

Economic study

In the past, there was more uncertainty from Hawaii coffee growers over whether such a ban would hurt or help their business. This year, however, the industry had an economic-­impact study that said a net economic benefit would result for farmers.

The 110-page report, a result of a 2022 bill passed by the Legislature, concluded that transitioning from a minimum 10% to 51% blend for coffee using the Kona name, or preventing Kona blends altogether, would redistribute an economic benefit from "downstream intermediaries" such as blenders and roasters to growers and consumers.

According to the U.S. Department of Agriculture, there are around 1,100 coffee farms in Hawaii covering about 7,400 acres and a harvested crop valued in recent years between $48 million and $64 million.

Carolyn Witcover, a small Kona coffee farmer, told lawmakers in written testimony that the study gives rise to passing HB 2298.

"It is time for the Legislature to get behind Hawaii farmers," she said.

There was some criticism from bill opponents that the study was flawed, given that its authors said limited available data from a constrained project timeline significantly impacted the precision of their conclusions.

Lawmakers wielding power over the bill appeared deeply divided.

Blended result

The original draft of HB 2298 introduced in January proposed raising the minimum amount of Hawaii coffee in blends using local place names in four steps, starting with 25% on July 1, then 50% a year later followed by 75% after another year and then finally banning such blends as of July 1, 2027.

On Feb. 27, the House Committee on Consumer Protection and Commerce led by Rep. Mark Nakashima (D, Hamakua-Hilo) amended the bill to have only three steps ending with a 50% minimum in 2033.

The Senate Committee on Commerce and Consumer Protection led by Sen. Jarrett Keohokalole (D, Kaneohe-Kailua) put the original steps phasing out blends back in the bill after a March 20 public hearing.

Ultimately, a conference committee led by Nakashima and Keohokalole agreed on the final draft with a 51% minimum taking effect July 1, 2027.

The bill passed May 1 with a 49-2 vote in the House and a 24-1 vote in the Senate.

Lead introducer of the measure, Rep. Nicole Lowen (D, Kailua-Kona-Honokohau-­Puuanahulu), told her colleagues before the final House vote that establishing a 51% minimum represents "huge progress" but also only a "half step toward doing the right thing" for farmers who have sought legislative help for over three decades.

Lowen noted that you can't buy a package of Georgia peaches that are only 51% from Georgia, Idaho potatoes that aren't all from Idaho, Champagne that isn't from Champagne, or Bordeaux wine that isn't from Bordeaux.

"For more than 30 years, Hawaii has been the only region in the world to allow the use of regional names on packages of specialty ag crops with only 10% genuine content," she said. "The farmers will be back undoubtedly to fight for 100%, and hopefully it won't take 30 more years to get there."

Sen. Dru Kanuha (D, Kona-­Kau-Volcano) led the introduction of a companion to HB 2298 in the Senate, and urged his colleagues to pass what he called "historic" legislation.

HB 2298 also elicited praise from Sen. Tim Richards (D, North Hilo-Waimea-North Kona) moments before the final vote in the Senate.

"This elevates Kona coffee, actually regional coffee, ... and will raise the quality of our coffee that we are selling throughout the state," Richards said. "This has been a long time coming."