Between 15 and 25 employees of Gay & Robinson, Inc. sugar company will be laid off as a result of management’s decision to suspend planting operations on land leased from the state in Kekaha. A combination of a drop in
Between 15 and 25 employees of Gay & Robinson, Inc. sugar company will be laid off as a result of management’s decision to suspend planting operations on land leased from the state in Kekaha.
A combination of a drop in sugar prices and decline in U.S. consumption prompted the decision, said Alan Kennett, G&R president.
“It’s not that we want to suspend planting in Kekaha, it’s that I have to,” Kennett said.
Harvesting of the Kekaha acreage will continue for the next two years, but by not re-planting the fields G&R leaders will save substantial money associated with the re-planting process, he said.
The plantation leases the Kekaha acreage through a revocable permit with the state, and Kennett is negotiating with state officials on lease payments now. The company may re-plant the Kekaha acreage if situations change, he said.
The company will continue to grow sugar cane on land it owns in and around Kaumakani.
Sugar prices have dropped by $30 a ton, and with G&R scheduled to harvest 65,000 tons that price drop equates to around $2 million in revenue Kennett hoped to see but now will not.
Combine that with the first-time-ever drop in U.S. sugar consumption brought about mainly by low-carbohydrate diets, and continued political pressure to allow cheaper, foreign-produced sugar into U.S. markets, and the domestic sugar industry once again is operating in crisis mode, Kennett explained.
“Right now we are in a serious cash-flow situation.”
Getting only $1.8 million in state loans after applying for $4 million for the Kekaha expansion, and having to purchase the Nawiliwili sugar terminal when Amfac got out of sugar, placed additional financial pressure on the island’s last sugar-grower, he continued.
The drop in U.S. sugar consumption was minimal in 2001, larger in 2002, but was 310,000 tons last year.
“That’s as bad as a trade agreement” that allows more foreign sugar into the country, he said. “There’s way too much sugar” on the market, he bemoaned.
The trend toward lower-sugar diets is distressing news for Kennett and others in the sweetener business, he continued.
“It’s like a train that’s gathering speed. That impacts our business,” he said.
Diversification may be the only thing that will keep sugar alive on Kaua‘i, he stressed.
If there is a light at tunnel’s end, it is at the state Legislature, where a bill that would require ethanol be mixed with gasoline for cars, and another to provide tax credits for those building ethanol-production plants, are moving toward passage.
Ethanol is a liquid that can be used for fuel.
A large ethanol plant will be built on G&R land if the tax-credit bill passes, Kennett said. One bill moving toward passage would provide fully refundable tax credits for construction of ethanol plants.
House Bill 2961, introduced by state Rep. Mina Morita, D-North Kaua‘i, passed yesterday out of the state Senate Ways and Means Committee with recommendation for full Senate approval. That is one of the ethanol tax-credit bills.
Another tax-credit bill for ethanol production, Senate Bill 3207, House Draft 2, was approved by the House Finance Committee and recommended for passage by the full House.
Senate Bill 3170, Senate Draft 2, House Draft 1, calls for ethanol to be mixed with regular gasoline to power island automobiles. It was approved by the House Finance Committee, also recommended to be approved by the full House.
Gay & Robinson officials are working on a bagasse-to-ethanol plant at Kaumakani, too, he said. Bagasse is a biofuel produced during the processing of cane into sugar.
G&R officials are also still interested in building an incinerator that would burn garbage and produce ethanol.
Gay & Robinson, with 310 employees, is one of the largest employers on the Westside.
Associate Editor Paul C. Curtis may be reached at 245-3681 (ext. 224) or mailto:pcurtis@pulitzer.net.
