Why Local Produce Costs More Than Imported Produce

Richard Ha writes:

In response to a recent Ha Ha Ha! post, Kini asked the question:

Why does the price of produce grown here in Hawai'i continue to be more expensive than produce shipped in from the mainland?

It’s an excellent question, and there are several parts to the answer.

1) One reason, not easily seen, is the over-enthusiastic State policy of facilitating commerce. The Department of Agriculture is required to help mainland and foreign retailers keep their imported produce moving.

Our Department of Agriculture inspectors are instructed to help "clean up" imported produce so it can be moved quickly to retail and thereby facilitate commerce.

If our products do not pass inspection in California, on the other hand, we Hawai‘i farmers pay to have them hauled away for incineration.  We do not dare to ask the California Department of Ag to help "clean up" our products. We worry that they might just ban all products from Hawai‘i. 

Some retailers sending produce from outside Hawai‘i expect Department of Agriculture inspectors to routinely drive to individual supermarkets in order to inspect newly arrived air and sea containers of
produce. This almost requires Department of Agriculture inspectors to be on call, and there is a cost associated with that process. Why should we taxpayers pay? The effect of this "hat in hat" approach to facilitating imported commerce is that the cost of imported produce appears to be lower than local produce. It sends the wrong message to our local farmers.

Maybe the mainland retailers could pay, into a special fund, the amount necessary to ensure the inspections get done. If that cost was picked up by the importing retailer, then they would mark up the price of their imported produce. The true price of importing produce would be apparent, and local farmers would become more competitive.

I have said it before: “If the farmer makes money, the farmer will farm." The over-enthusiastic interpretation of the idea of "facilitation of commerce" serves to discourage farmers here from farming.

Several years ago we supplied the company Harry and David, in Oregon, with apple bananas. This required Federal inspectors on site, and we were charged for the inspectors' time and travel. We built that cost into the cost of our product.

It seems like that “pay as you go” system works fine for the Federal government. Maybe it can also work for the inspection of incoming products?

2) Another problem is that most of our Hawai‘i farms are small – less than 25 acres. Smaller farms cannot make ends meet without charging higher prices. Also, they do not have the production capability to help their customers stay efficient and competitive. Higher land prices play into the above.

3) Hawai‘i depends on fossil fuel for 78 percent of the generation of its electricity, whereas the U.S. mainland uses oil for only three percent of its electricity generation. This is significant because produce is commonly refrigerated in order to maintain freshness and quality. Oil prices have been rising lately and so Hawai‘i farmers are spending more for refrigeration; or else they are gambling that the decline in quality that results from not cooling will be okay.

This is why we put forth so much effort in passing legislation that will give farmers preference when renewable energy incentives are initiated. It's about food security. And it's about sending the right signals to farmers.

In our "families of farms" model, we try to address these issues in a way that acknowledges and builds on the strength of each participant. I’m going to write about our “families of farms” soon.

Comments

[Dave Smith]

Thank you for your knowledgeable perspective on a process with which few are familiar.

[Lorie Farrell]

Great post, shows the situation in clear terms...To bad everyone does not understand the "true & actual" costs of imported goods!

[Sonia]

Very well explained, Richard. It is hard for most people to understand why milk from the mainland is cheaper than milk from a dairy a few miles down the road....same with all produce!