Revitalization plan in works for milk production on Kauai

It’s a gross understatement to say that dairy farming in Hawaii is a difficult business.

The industry, once numbering close to 100 farms, has been in decline over four decades. Two costly endeavors to boost local milk production in recent years failed. And the last remaining commercial dairy in the state is being sued by a national environmental organization.

Yet, a plan is in the works to expand the industry, which has been near extinction after once supplying all the milk consumed in the state.

One of the biggest local growers of fruits and vegetables, Aloun Farms, is seeking legislative backing to establish a dairy farm on Kauai described as a project to “revitalize” Hawaii’s dairy industry.

The company hasn’t publicly disclosed specifics of its plan to the Legislature, and did not share details with the Honolulu Star-­Advertiser despite multiple requests.

State lawmakers are being asked to authorize tax-free financing for Aloun’s project via an unspecified amount of special-purpose revenue bonds issued through the state Department of Budget and Finance.

Such bonds are permissible for private projects that have a public benefit within a few industries, including agriculture, health care and nonprofit schools. The obligation to repay investors who buy the bonds rests solely with the private entity and not the state.

The Senate unanimously approved the bond financing measure, Senate Bill 1547, in February after two public hearings. On Wednesday the House Committee on Agriculture and Food Systems further advanced the bill, which has received a mix of support from farm industry backers and opposition from environmental and animal welfare advocates.

Divisive business

The Hawaii Farm Bureau said in written testimony that helping Aloun establish a dairy will provide fresher milk for Hawaii consumers and schools, improve food security in the state and support local agriculture.

“Hawaii’s dairy industry has faced significant challenges over the years, leading to the closure of nearly all local dairies,” the organization said.

Ulupono Initiative, a local socially minded investment firm that previously tried to start a dairy on Kauai but is not involved with Aloun’s project, also supports SB 1547.

Mariah Yoshizu, government affairs associate at Ulupono, said in written testimony that Hawaii’s reliance on imports for more than 90% of its milk represents extreme dependence that threatens local food security and exposes residents to volatile mainland price fluctuations.

“We’ve seen how local egg production has helped shield Hawaii consumers from the dramatic price increases that affected mainland markets; a revitalized dairy industry could provide similar protection against milk price inflation that disproportionately impacts our most vulnerable populations,” Yoshizu wrote.

Alec Sou, president and general manager of Aloun, said in brief written testimony that the requested financing will enable the company to establish a dairy operation that integrates feed production and milk processing in compliance with regulatory requirements.

Opponents of SB 1547 largely expressed environmental concerns and encouraged plant-based food production.

“Cows need vast amounts of water, land, and feed to produce milk, yet much of the energy from these inputs is lost through the animals’ metabolism,” John Kawamoto said in written testimony. “The space required to raise dairy cows and grow their feed should instead be used to produce plant-based foods that provide more direct nutrition to humans.”

Cathy Goeggel of Animal Rights Hawai‘i urged lawmakers not to help fund what she called a “very iffy project” that could have a devastating negative impact on Kauai.

Gordon LaBedz, representing the Kauai chapter of the Surfrider Foundation, noted in written testimony that the foundation helped stop a prior Kauai dairy farm plan over concerns that cow effluent would pollute the environment.

“These are dirty operations that are going out of business all over the U.S.,” LaBedz said. “We don’t want them on West Kauai.”

Industry challenges

The near-total evaporation of local milk production in Hawaii has been influenced by urbanization forcing dairies onto marginal land, a tainted-feed incident, rising costs of imported feed, drought and other factors.

Hawaii dairies produced all the milk consumed locally until 1985, when Safeway began importing milk in the aftermath of tests in 1982 that found much of Hawaii’s local milk supply was contaminated by heptachlor passed through cows eating tops of pineapple treated with the pesticide.

Since then, competition with imported milk helped put more local dairies out of business.

After Oahu’s last dairy closed in 2008, a year after two other Hawaii dairy closures, only two dairies remained in the state.

Three years later Ulupono announced a plan to reverse the trend by establishing multiple dairy farms with cows primarily fed on pasture grasses.

After much research and planning, the firm, led by billionaire eBay founder Pierre Omidyar, in 2013 arranged to lease 582 acres of land on Kauai for its first dairy, bought an initial heard of 882 cows in Missouri and expected to begin milk production in 2015.

The $17.5 million venture called Hawai‘i Dairy Farms in Maha­ulepu Valley was envisioned to roughly double the local milk supply using about 1,800 cows.

Under the plan, liquefied cow waste would fertilize pasture grass, cutting out fertilizer and feed costs. Ulupono called the model more environmentally sustainable than common past Hawaii dairy operations that washed waste into evaporation ponds and disposed of leftover solids.

Using liquid effluent for field irrigation, or letting uncrowded fields absorb cow manure, are environmentally acceptable practices, according to the state Health Department. But holding liquid waste in uncovered ponds poses a spill risk that can threaten ground and surface water if rain floods the ponds.

This risk and other concerns with Ulupono’s project were raised by some Kauai residents, visitor industry stakeholders and environmental groups including Surf­rider, the Sierra Club and Malama Maha‘ulepu.

A lawsuit contended that cow manure from such a large operation about 2.5 miles from residential and resort areas would hurt tourism and pollute groundwater and ocean resources.

Meanwhile, an existing dairy on Hawaii island that adopted a similar model was spilling effluent that led to its shutdown.

This farm, Big Island Dairy, was established in 2012 after an Idaho dairy farm operator acquired the roughly 900-cow Island Dairy. The revamped farm expanded to about 3,000 cows on 2,500 acres, and a new $10 million milking facility opened in 2017.

Residents living below Big Island Dairy in Ookala complained that the farm was fouling streams and near-shore waters. The Department of Health confirmed one spill in 2017, after which a community group and the Washington, D.C.-based nonprofit Center for Food Safety alleged federal Clean Water Act violations in a lawsuit.

In 2019, Big Island Dairy shut down as part of settling the litigation. Around the same time, Ulupono announced that it was abandoning its dairy plan after failing to see a reasonable regulatory approval path after trying to address pollution concerns.

State Health and Agriculture department officials at the time said site topography for both Ulupono’s Kauai dairy project and Big Island Dairy was a key issue in the demise of both enterprises.

Officials from both agencies also said dairy farms can be viable in Hawaii.

Bahman Sadeghi, a veteran Hawaii dairy farm owner who in 2022 bought what is now the last remaining commercial dairy in the state, Cloverleaf Dairy, agrees.

Rebound efforts

Sadeghi, who in 2020 bought milk processor Meadow Gold, acquired Cloverleaf and then restructured the financially struggling farm on Hawaii island through bankruptcy.

Since then Cloverleaf milk production has risen to almost 1 million gallons annually from about 150,000 gallons three years ago, largely by growing about half the feed for almost 450 cows on 880 acres of land, according to Sadeghi.

Cloverleaf, however, also faces similar pressure to what brought down Big Island Dairy and Ulupono’s project.

In December the Center for Food Safety filed a federal lawsuit alleging that Cloverleaf’s liquid and solid waste handling presents a danger to public health or the environment. Sadeghi disputes the claims in the pending litigation.

Where Aloun intends to establish a dairy on Kauai remains to be seen. The company expanded to the Garden Isle a few years ago and has been growing crops that include watermelons, cabbage and pumpkins on the west side of the island. In 2024, Aloun acquired Kauai Shrimp, a company raising shrimp in ponds on 258 acres of land also on Kauai’s west side.

Aloun Farms stems from a 5-acre farm in Waianae established in 1977 by Aloun Sou, who immigrated to Hawaii from Laos as a refugee. Sou’s family, including sons Alec and Mike, expanded the business to 1,200 acres on Oahu’s Ewa plain in the 1990s after a sugar plantation there shut down. Today the company farms about 3,000 acres mainly in Ewa, Kunia, Waipio and Wahiawa.

In Sadeghi’s view, Aloun is well positioned for dairy farming given its experience growing produce, which Sadeghi said included corn for an Oahu dairy back in the 1990s.

With capital, the right site, local feed production and other good practices, Sadeghi believes dairy farming in Hawaii can rebound.

“It can be done,” he said. “I hope the industry grows.”