HONOLULU — Sugar was once king in Hawaii, steering the economy and politics while shaping the multicultural identity and colorful pidgin English language of these islands. But the once sweet and thriving industry has moved closer to extinction here with Gay & Robinson Inc.'s announcement it is leaving the sugar business after 119 years because of skyrocketing costs and mounting multimillion-dollar losses. Sugarcane will still be raised in G&R's red volcanic soil on the lush island of Kauai. Rather than catering to America's sweet tooth, the crop will be converted into ethanol to feed vehicles and the nation's growing appetite for renewable energy.
Not first plantation to foldThe family-owned business will lease its 7,500 acres and facilities to other companies that plan to produce ethanol and electricity, but not sugar. "Our losses were simply too great. We just had to stop the bleed,” said E. Alan Kennett, G&R's president and general manager. G&R, with its Sept. 10 announcement, is the latest Hawaiian sugar grower to abandon the business or close in the past two decades, leaving deteriorating smokestacks as aging monuments to the industry's heyday. After the company harvests its final crop in mid-2010, it will end the storied sugar-producing history on Kauai, where the first successful sugarcane plantation in the islands was started in 1835. It will also leave Hawaiian Commercial & Sugar Co. (HC&S), which has a 35,000-acre operation on Maui, as the lone sugar producer in the state. "We've seen the closure of all the other plantations over the course of the last 20 years, so it's not a wake-up call,” said Frank Kiger, general manager of HC&S. "It's an acknowledgment that it's a really tough business to be in,” Kiger said. Some fear HC&S, a division of Honolulu-based Alexander & Baldwin Inc., could be the next casualty of soaring costs and low margins. Its closure would be the end of sugar in Hawaii.
Inflation eats at profits"HC&S does not have any plans to go out of business, period,” Kiger said. "But I continue to say, we're under a lot of stress from a number of factors.” Many of the challenges facing the dying island sugar industry today are the same as those a century ago — thin margins, competition, pests, disease, labor shortages, rising costs, trade barriers and drought. This year, the industry has been hit hard by record fuel prices. The sugar industry is heavily dependent on fuel for its heavy equipment, ranging from cranes to tractors. G&R was paying $2.85 a gallon for diesel fuel 18 months ago. Recently, it hit $5.05 a gallon. In addition, G&R's fertilizer and herbicide costs have doubled in the past year, and the cost of providing medical benefits for workers has soared 41 percent since 2006. While costs have soared, the price of sugar has remained virtually flat since the early 1980s. G&R currently earns about 18 cents a pound. "It's inflation that ate up all the other sugar companies, and it was doing the same to us. You can't make it if you can't pass on the costs,” Kennett said. G&R is a relatively small operation, producing about 42,000 tons of sugar a year.
A truckload of harvested sugar cane arrives at the Gay and Robinson mill. Associated Press