Hawaii coffee labeling bill gets relabeled

Hawaii coffee farmers may have to wait until 2024 to know whether it makes good economic sense for the state to require more locally grown beans in coffee blends branded with Hawaii geographic names.

Two state Senate committees on March 21 removed language in House Bill 1517 that would have increased the current statutory 10% minimum in three steps to 51% by July 1, 2024.

The measure, which the House of Representatives passed in a 45-3 vote on March 3, was overhauled by the Committee on Agriculture and Environment and the Committee on Energy, Economic Development and Tourism so that the bill instead would have the state Department of Budget and Finance produce, with the help of the state Department of Agriculture and coffee industry stakeholders, an economic impact study on the contemplated change to Hawaii’s coffee labeling law.

Then on Friday, two other Senate committees reassigned the study to the Department of Agriculture and reinserted language to require 51% of locally grown coffee in coffee blends that use Hawaii geographic names.

Results from such a study would need to be conveyed to the Legislature no later than 20 days before the start of the 2024 legislative session, if the new objective in the current draft of HB 1517 is enacted.

The version of the bill passed by the House drew a heavy mix of competing views, including 192 pages of written testimony submitted at the March 21 hearing, after which the bill was amended to produce a study.

Generally, many coffee growers backed the proposed increase in the minimum requirement to 20% on July 1, then to 30% on July 1, 2023, and finally 51% on July 1, 2024.

Among those testifying in support of the increase were the state Department of Agriculture, the Hawaii Coffee Growers Association, Kauai Coffee Co., the Kona Coffee Farmers Association, the Ka‘u Coffee Growers Cooperative and about 50 other organizations or individuals.

“We are being badly mauled by the blenders who want to keep making large profits by using foreign coffee and calling it Kona, or Kau, or Maui coffee,” Jim Monk, a small Kona coffee farmer, said in written testimony. “Please stop this travesty of the misuse of the Hawaiian name.”

Jacqueline Wikum, vice president of Honaunau-based Lions Gate Farms, railed against the push for a study from those opposed to raising the minimum blend requirement.

“The blenders will continue to argue that we should ‘study’ this issue,” Wikum said in written testimony. “They will testify that coffee prices will crash should they stop buying Kona for blends. But this is not economic reality.”

Opponents of increasing the minimum were generally coffee processors and retailers along with their representatives that included the Hawaii Food Industry Association, the Hawaii Restaurant Association and Retail Merchants of Hawaii.

In all, nine organizations or individuals testified against increasing the minimum at the most recent hearing on the bill, including some who argued that such a change would result in prices and sales dropping for Hawaii coffee farmers.

The Kona Coffee Council, whose members include coffee growers as well as processors and wholesalers, also opposed the minimum increase.

Rainoldo Cancino, whose Cancino Family Farm produces, purchases and resells a lot of Kona coffee, said in written testimony that it would be “financially irresponsible” to change the minimum requirement without doing an economic impact study.

“We believe (increasing the minimum) would jeopardize the current Kona market,” he said.

The rationale to have the bill call for an economic impact study was conveyed in a report by the Senate’s Committee on Agriculture and Environment and the Committee on Energy, Economic Development and Tourism.

The report said: “The low threshold for products to be labeled with Hawaii’s geographic names damages the reputation of Hawaii’s coffee industry and reduces the revenues of the state’s coffee producers. … However, your committees further find that the economic impacts of changes to the labeling requirements are unclear. Without more information on the economic impacts, there is a risk of unintended consequences for Hawaii’s coffee growers and the state’s economy.”

On Friday, a joint hearing before the Senate’s Committee on Commerce and Consumer Protection and the Ways and Means Committee restored the minimum blend language to the bill and also directed the Department of Agriculture to do the study since the Department of Budget and Finance does not do such studies.