Building on what it means to bloom where you are planted, we have seen the impact when local companies cultivate Hawaiʻi’s agriculture and local economy by creating value-added products.
Many companies in the Mana Up ʻohana have foundations rooted in high-quality Hawaiʻi-grown ingredients and their founders have a strong commitment to the island soil that fosters their success.
Encouraged by our partner Ulupono Initiative, we recently embarked on a study to see how Mana Up companies source locally, connect to the community through agriculture and manufacturing, and what their potential purchasing would look like if they were able to find more of what they wanted to source for their value-added products.
Out of 51 portfolio companies including food, fashion, beauty, and more, 57 percent of them source locally for ingredients and 75 percent of them manufacture locally. With $38 million in estimated annual revenue from these 51 companies, the multiplier effect of locally sourcing and manufacturing is in the multi-millions. Despite the desire among the founders to source more in Hawaiʻi, there are more than 25 ingredients that are either cost-prohibitive, scarcely found here, or low in supply.
At the same time, the agriculture industry is challenged on how to transition from the plantation era to diversified agriculture in a way that is economically viable, as this transition takes many years, investment, and resources. Local value-added producers may be a piece to this puzzle if we are going to pursue diversified agriculture as means for economic development and food security.
Create revenue streams for farmers in addition to fresh product, contributing to viability of diversified agriculture
The promise of connecting value-added companies with farmers is that their products can compete on quality, sourcing and the brand of Hawaiʻi rather than the lowest price. The model that several value-added companies have deployed on a small scale is committing to price and volume with farmers before they grow their crops, giving the farmer a reliable market for their effort. Another benefit is that these crops do not have to meet the “perfect look” standard grocery stores demand, avoiding up to 30 percent of loss from discarding damaged produce.
Our costs for labor, inputs and land are too high to compete on commodity items on a global stage, so competing on these other value propositions has great potential.
Bring Visibility To Hawaiʻi’s Specialty Crops
Local companies are winning national and international awards by collaborating with local farmers to grow the highest quality ingredients and becoming expert craftsmen in their industries. They are elevating entire industries and Hawaiʻi at the same time.
Create Innovative Community Solutions
We also have incredibly innovative business owners in our community who are creating first-of-their-kind products or processes. For example, Big Island Coffee Roasters created an Espresso Bites bar which leverages the caché of Hawaiian coffee, but in an entirely new product that is more similar to a chocolate bar. It is also easily carried on the go and giftable. Maui Nui Venison is turning a community problem into a high quality, delicious snack. The venison meats company utilizes partnerships to reduce axis deer on Maui where they have caused millions of dollars of damage to farmers and ranches. They work with the USDA to process the meat through a mobile slaughterhouse, and selling fresh and preserved axis deer snacks to consumers nationwide.
Another example is Voyaging Foods. This Mana Up company has a patent-pending mobile solar dehydrator to allow farmers to be able to turn ʻulu, taro and other canoe plants from fresh crop into into shelf-stable form.
Limits Pace of Company Growth
Kō Hana Rum has experienced these challenges as the founders have committed to source 100 percent of its ingredients locally, including Native Hawaiian sugarcane from its farm on Oahu. “This has made it much more difficult for us to scale quickly, but we believe there is a value in doing things in a way that builds capacity here,” says Robert Dawson, Co-Founder of Manulele Distillers, a farm and distillery that makes Kō Hana Hawaiian Agricole Rum.
Information Gaps in Connecting Farmers & Producers
One of the challenges we heard while conducting this study is that it is often difficult to connect with farmers who grow the preferred ingredient at the grade the value-added producer needs. For example, some of the health and beauty brands need cosmetic grade ingredients to put in their product mix or others are simply looking for farmers growing the specific ingredient they need, like arrowroot (pia).
Mana Up companies are a test-bed for what could be implemented on a broader scale. While their market size is still a small part of our economy comparatively ($38 million annually), it has potential for growth and increased impact in our community.
Changing consumer habits also show promise for our local companies to grow into a bigger global market share. Data shows that 39 percent of consumers would switch from their current preferred brand to one that offers more product transparency, according to a recent study. Another study found 71 percent of consumers consider whether they have access to the full list of ingredient information for a product when making food purchase decisions and nearly all respondents (94%) say it is important to them that the brands and manufacturers they buy from are transparent about what is in their food and how it is made.
Recent months have shown how deeply our economy depends on importing food and the business of tourism. We have a path for diversification in a way that is community driven, taking into account the benefits and costs on our islands as we grow the industry.
Mana Up companies (and companies like them) are part of that solution. Together, we are all integral keys to unlocking Hawaiʻi’s enormous agricultural potential and creating a more diverse, secure economy for the future.