Models of Land-holder Participation and Operation

HOSPRO is a Hawaiian owned and Hawaii based company. It’s sole purpose is to serve and promote farmers who wish to grow oil nut trees, with an initial strong focus on Elaeis guineensis palm, to recover vegetable oil for biofuel and edible oil for cooking, with waste products (palm fronds or nutrient rich leaves, nut shells, pressed nut meat, etc) going to make compost or feed for animals. It’s long term intent is to also promote spin off businesses using oil products such as pharmaceuticals, soaps, edible products, and more. The goal is to improve Hawaii’s independence and sustainability while creating jobs and opportunities.

Hawaii imports about 5.1 billion gallons of petroleum/year to satisfy citizen, DoD and visitor needs and this does not address the amount of edible oils we consume! There is a high cost in terms of fuel to operate the tourist mecca that is Hawaii, and every dollar we can keep at home helps our local economy. With over 300,000 acres of land available through various venues for oil palm development, the potential vegetable oil production alone is in the neighborhood of 2.18 billion gallons which would make a substantial dent in the amount of energy money that flows out of our island economy.

We recognize that every citizen and landholder in our state, regardless of size of their holding, may want to participate in increasing Hawaii’s self-reliance. And, there is no reason why any landholder cannot enjoy directly home grown vegetable oil. Today, palm oil is used by over half of the world as a cooking oil, with soy oil running second. We can’t grow soy beans the way they can be grown in the Midwest of the U.S. or on the southern plains of Brazil, but we can grow oil palm, and we can grow it on lands that do not stress endangered species. We can even grow our own endangered plant species between the trees, perhaps increasing the ability to take some of the hundreds of endangered species we have off the DOI list. Unlike Indonesia and Malaysia where pristine jungle habitats are destroyed along with sensitive species that live there to create palm plantations, Hawaii can make oil palm work to provide conservation value for its own species.

So how do the landholders become a part of this bold vision for the state, and what might be the individual benefits? Regardless of the size of the landholding, there are moral and ethical considerations that help drive the desire to help in some way achieve a more sustainable future for Hawaii. Thus no matter the size of the landholding, landowners likely gain satisfaction from helping achieve the vision put forth by the Hawaii State Legislature in 2015 through Act HB623 that mandates 100% renewable energy in Hawaii by 2045, about three decades from now. We shall address the opening question above by considering tiny landholders (5 acres or less), homesteader (medium sized) landholders (6-25 acres), large landholders (25-3,000 acres) and legacy landholders (ranches and the largest land-holding families that have contributed to the growth of the Kingdom and State of the islands and whose names are associated with the successful agricultural and business developments of Hawaii). We use oil palm as our example below because it is the nut tree with which we have the most and growing experience, with 90 acres in production right now.

a. Small Farm Holder (SFH) model (<6 acres) for production and harvest with planting on small fields or lanes or backyards, or perhaps in a victory garden approach. Return to landholder might vary from none expected to a jug of cooking oil or a few gallons of biofuel for SFH participation, but the main return is an ethical one where the landholder feels he/she is contributing to Hawaii sustainability. In this model, we assume the landholder will want from 1-10 trees, perhaps as ornamentals, perhaps expecting some return for the oil they may produce, but willing to let HOSPRO teams harvest and help maintain the nut-producing trees in exchange for their contribution. With ~77,000 housing units in Hawaii County (Hawaii of which probably a third are condos or apartments, this leaves us with somewhere around 53,900 house lots. If we assume 10% will be interested in having at least 3 palms (as example), this gives us over 16,000 extra oil palms from which to harvest the fruit for making biofuel. Since we know the trees average at least 30 pounds of fruit/tree by six years of age and the conversion factor to oil is 27%, this number of trees should yield minimally 130,977 gallons of vegetable oil to refine into biofuel. This would double if each household planted 6 trees and would double again if 20% of homeowners participated. This is why we have created a category for SFHs. In this category, SFHs purchase and plant their own trees and notify HOSPRO of any problems that might occur between routine monitoring visits. HOSPRO would send a team to harvest the fruit and leaf wastage.

b. Homestead Landholders with 6-100 acres are what we would call medium sized land holdings (HLHs). There are many land holders in this category as a result of the breakup of the sugar cane plantations. Six acres of well managed and cared for trees will yield approximately 4,200 gallons of vegetable oil, or about $12,000 worth if bio-refined, or $105,000 worth of edible oil so it becomes a tidy income for someone who is, for example, retired. As above, HOSPRO landholder care teams would help care for the trees, harvest them and take care of all the refining, and under contractual agreement return either a portion of the oil or a portion of the income derived from it to the landholder. HLHs would purchase the trees from HOSPRO and might be expected to help plant the trees and to notify HOSPRO of any orchard problems beyond routine monitoring visits.

c. HOSPRO considers any planting over 100 acres as satisfying the Big Landholder model (BLH). In this type of model, the landholder has enough palm trees to decide how he/she wants to do planting, maintenance and harvesting of the trees. HOSPRO will offer an advantage in terms of contracting the above management. We can provide manpower needs, equipment needs, sorting and extraction of oil, and marketing with a return on oil accruing to the landholder including tax write-off’s taken on tree depreciation. One way to handle this dual management style is to partner with HOSPRO with accruals of income, tax benefits and costs shared at some fixed rate between HOSPRO and the BLH. Contracting models can be developed jointly with tradeoffs and credits in mind.

d. Legacy landholder (LLH) models might include DHHL, State, KS leaseholds, large ranches and other large legacy landholders. Here, HOSPRO might either lease the land on a long term leasehold, or join a contractual agreement similar to that for BLH land owners. These agreements will necessarily take into account the development of the land into a condition ready to receive oil palm trees. Rental costs of such land would be anticipated to include HOSPRO’s assumption of up front development costs and the three-year period in which no production is forthcoming while the orchards mature.

To meet the land holder obligations, HOSPRO will mount work crews as we develop to take the burden off of small to tiny landholders and the work required on larger farms. We envisioned 4 types of crews which can consist of multiples of a salaried leader and 2 salaried workers plus volunteers and part-timers (e.g. students on STEM grants). The four crews when fully operational include: nursery and seedling crews, land development and planting crews, care and maintenance crews, and harvesting and mill ops crew. Personnel might move between crews depending on the season, the amount of fruit coming into the extraction mill, and contractual developments. In the sugar cane industry days one estimate was that there was need for one man/ten acres. Oil palm as a perennial will use fewer workers including fewer in the harvesting and extraction phases; we anticipate our needs will be a base of 6-8 women and men with an additional person/100 acres of oil palms added to production.