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Export Commodities

Hawai'i Island

Value Chain Analysis and Stakeholder Analysis

Understanding the value chains of the island's agricultural products from production to consumption helps to identify the factors that determine the prices producers get for their products and where different market opportunities might exist, particularly for more value-add to products that can increase farm profitability. Analyzing vertical linkages amongst value chain functions and horizontal linkages amongst producers can yield potential new opportunities. The following diagram displays each of the value chain functions and market segments determined by farm size and income.

Export Commodities Value Chain Diagram.png

The export commodities value chain on Hawai’i Island includes key sectors such as coffee, macadamia nuts, floriculture and nursery, aquaculture, and papayas. Each of these sectors has unique production systems and market channels but also shares several commonalities. These commodities rely on Hawai’i’s unique climate, soils, and reputation for high-quality products. Most producers are small to medium-sized farms, but there is a trend of increasing vertical integration, particularly among larger operations that handle processing, distribution, and marketing in-house. Value chain functions such as aggregation, cold chain management, and distribution are critical in reaching local, domestic, and international markets, with transport costs being a significant challenge due to the island’s geographical isolation.

Common constraints across all five industries include high transportation costs, labor shortages, and regulatory challenges. These sectors face high production costs because of Hawaii's reliance on importing inputs such as feed, energy, and fertilizers. Labor, particularly skilled and seasonal workers, is scarce and costly, which impacts production and harvest schedules. Pests and diseases are another shared challenge, with industries like coffee grappling with the Coffee Berry Borer and Coffee Leaf Rust, while macadamia nuts contend with pests like the macadamia felted coccid. However, despite these constraints, sectors like coffee and macadamia nuts have been able to leverage Hawaii's strong branding and international demand to maintain competitive positions in global markets.

While the industries share these broad challenges, they also have distinct differences in value chain dynamics. The coffee and macadamia nut sectors have long-established infrastructures for processing and distribution, which help with scalability and market access. Floriculture and aquaculture, on the other hand, rely heavily on air freight for fresh exports and have higher input costs for packaging and preservation. Papayas, being highly perishable, face greater challenges in maintaining freshness and quality during distribution. The diversification in products also means that industries like aquaculture and floriculture have specialized value chains, where small producers often handle their own aggregation and distribution to meet niche market demands.

Key Takeaways

  • Transportation Costs: All export industries face significant challenges with high transportation costs, particularly for perishable products.

  • Labor Shortages: Skilled and seasonal labor shortages are a shared constraint, driving up production costs and limiting scalability.

  • Pests and Diseases: Coffee, macadamia nuts, and other crops continue to struggle with pests, impacting yields and quality.

  • Infrastructure Needs: Improvements in processing facilities, cold chain logistics, and distribution infrastructure are essential to reduce costs and improve product quality.

  • Market Intelligence: There is an opportunity to enhance market forecasting and demand analysis to better align production with market needs.

  • Branding and Marketing: Strong branding for Hawaii-grown products remains a valuable asset, but further development of sustainable and niche marketing strategies could expand market reach.

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