The most technically challenging facet of this venture is the organic production. Farming commenced in early 2002, and we have now completed three full years of soil building, crop testing and experimentation with different organic methods. This has provided invaluable information on organic fertilization; timing of crop planting cycles, and organic seed varieties. The result is a system that has produced high yields with excellent product quality (taste, shelf-life, appearance, weight), and minimal insect damage. We augmented on-farm experimentation by visiting many other farms to research new and best practices. Similarly local farmers and university extension agents have visited MA`O and provided more technical information. There are numerous variables that must converge to produce a healthy crop. Over the past three years we have kept daily input and yield records so that we can better plan for future seasons. We have a strong working relationship with Jonathan Deenik, a PhD soil scientist at the University of Hawai`i, who has assisted with our organic production plan since the inception of farm activities.
3.Crop Growth
Given Wai`anae’s climate and optimal growing conditions, mixed salad greens (lettuces, arugula, chard, beet tops, tat soi, mizuna, mustard cabbage, kale) take 25-28 days from seed to first cutting. This is our biggest seller and we are able to harvest it 2-3 times per planting, with re-growth occurring every 8-10 days. We also plant a longer rotation every two weeks of fennel, green onion, beets, and carrots, which last approximately 100-days. In our perennial rotation, which lasts 4-6 months, we plant basil, eggplant, parsley, kale, chard, and collards. We plant this rotation every four months.
Market demand requires fresh, clean and attractively presented fruits and vegetables. For organically grown fruits and vegetables consumers have even higher expectations for appearance and cleanliness. Our crops are harvested three times each week. Youth managers and workers are trained to cultivate, harvest and handle (wash, package, chill) in keeping with these quality standards.
Washing vegetables tends to be the most labor-intensive facet of the operation, especially as salad greens are delicate and are double washed. While our current packing facility is basic, we have customized faucets so that each sink cleaning area has overhead washing faucets with shower-flow heads. This frees hands to concentrate on cleaning the product. After each product has been washed, it is placed in small quantities (about five pounds) on drying trays and a youth manager or coordinator inspects the product. The inspector has the option to return the tray to the cleaner for additional washing. If the tray is excellent quality then a packaging crew handles the boxing or bagging of the product. This provides three points of inspection. Before a product leaves the farm a final check is done by choosing a random item from each product. One item from each harvested crop is also kept to monitor shelf life.
5.Inventory Management
Every Monday, we estimate yield quantities for the week. Staff log anticipated yield numbers in a spreadsheet to manage distribution. This system helps us accommodate fluctuations in weekly yield to ensure customer satisfaction. To maximize freshness, we harvest three times per week and maintain little inventory. For all points of sale, except KCC farmer’s market, we harvest and distribute the same day. For KCC we harvest, chill over night, and sell in the morning. Our present cold storage is limited to a 108 cubic foot chiller, but in June 2005 we will install a 760 cubic foot reefer, which will have an alarm system to monitor possible power outages.
6.Organic Certification
In September 2004, MA`O Youth Organic Farm received organic certification from the Hawai`i Organic Farmer’s Association (HOFA), under the auspices of the USDA. HOFA is the only certifying body in the State of Hawai`i and the application process involved a 6-month review and final inspection. MA`O will be inspected each year and is required to show proof of organic methods. We are obliged to keep accurate records for soil inputs, seed sources, and crop yields. We track the following data on a customized excel spreadsheet: (1) type of product sold; (2) amount of product sold: (3) customer that received product; (4) location on farm where product was grown; and (4) history of inputs and events for the area where product was grown.
7.Farmer’s Markets
As aforementioned MA`O will sell primarily at markets already tested including:
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Wai`anae Comprehensive Health Center
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Wednesdays 11:45am to 1:00 pm
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Kaiser Permanente, Nanakuli
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Wednesdays 11:45am to 1:00 pm
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Leeward Community College, Pearl City
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Wednesdays 11:45am to 1:00 pm
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Aloha `Aina Café, Wai`anae
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Saturdays 9:00 am to 11:00 am
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KCC Farmer’s Market, Honolulu
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Two Saturdays per month,
7:30 am to 11:00
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MA`O uses the markets as training grounds for youth in our leadership development programs. Our full-time staff provide supervision for each market while the part-time youth ensure adequate staffing to cover multiple markets simultaneously.
8.Land, Equipment, Office Space, Tools, Resources
W CRC leases 5-acres of land located at 86-210 Puhawai Road in Lualualei Valley, which will be used for the MA`O venture. The landowner is the Community of Christ Church and the 25-year term began in 2001. The land has excellent potential for expansion with three of the neighboring properties vacant (see map at right).
MA`O will benefit from equipment acquired with WCRC grant funds. This includes a 2001 model 55-hp John Deer tractor and a cargo van. ANA funds will be used to purchase and additional delivery van and a one-ton dump truck. As mentioned cold storage is limited at present but through the aforementioned HUD grant MA`O will be constructing a new Organic Agriculture Center to include a 40’ x 40’ concrete floor processing facility, additional cold storage, and offices.
In early 2004, WCRC started educational programs at two local schools, using edible organic school gardens as an alternative teaching tool. Teachers have been trained to use organic farming techniques as a vehicle to teach social studies and science classes. Fruits and vegetables are harvested on a weekly basis, and sold by youth on campus. Youth participants are prime candidates for future employment at MA`O, critical to our growth plans.
G.FINANCIAL PLAN FOR MA`O VENTURE 1.Start-up
A grant of $456,000 has been secured from the DHHS-Administration for Native Americans with $317,837 dedicated to this venture to be used in 2005 and 2006, to complete development of MA`O. This money is listed as restricted grants on the balance sheet and as ANA grant on the cash flow and income statements.
2.Accounting System & Business Controls.
We use Quickbooks as our primary accounting system. We track sales weekly through spreadsheets and review them monthly so that we understand trends related to product and point of sale. This will allow us to analyze the profitability of sales by specific crop. WCRC’s Board of Directors will regularly monitor all these statements for accountability. We have scheduled our first external audit (based on increased budget size) for 2005.
3.Long-term Sustainability
WCRC has maintained financial stability while growing rapidly in the past four years. Significant steps have been taken to lay a foundation for long-term sustainability, including:
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Securing a total of $1,354,000 of federal funds the past 4-years to support MA`O, for our new café, and a variety of educational and community projects;
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Arranging for the purchase of 2.5 acres of land that we currently lease for farming, providing leverage to acquire more land in the future;
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Forging partnerships with industry and business (Maui Land and Pine, Hawai`i Organic Farmer’s Association, Kokua Natural Foods Cooperative), education (Leeward Community College, University of Hawai`i College of Tropical Agriculture & Human Resources, Kamehameha Schools), to ensure access to markets and technical assistance;
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Initiating contractual relationships with Kamehameha Schools/Bishop Estate and Alu Like, a $16 million Hawaiian job training program, to improve job training programs for youth.
4.Proforma Statements
We have included the following financial statements:
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Projection of weekly customer product orders. These estimates rely on data from the last three years of operations and are the basis for our sales figures for the next three years. Note that year 3 is a critical point for expansion as productive land and sales double.
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Annual income statements for years 1, 2, and 3.
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Monthly cash flow statements for years 1, 2 and 3.
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Annual balance sheets for years 1,2, and 3.
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Social Return on Investment (SROI).
Analysis of Social Return on Investment
SROI Narrative and Assumptions
Community Wealth:
Benefits
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Amount income returned to the community in taxes based on Hawaiian state income tax rate of 6.4% for 16,000-24,000 income bracket. Assumed youth salary: $18,000/year.
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Public assistance not collected based on 20% welfare assistance dependence in the target community multiplied by average annual payments of $6,168 (Honolulu Star Bulletin 1999).
Costs
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Additional staff time for farmer training programs based on the estimate that the youth dedicate about 20% of their time to leading educational programs.
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Discounted sales figures were calculated based on establishing an average discount taken off the price of produce sold at markets that cater specifically to the low-income, local community. The average discount calculated was 33%, and with this discount taken off, weekly revenue averaged $854.
Environment:
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A conventional farm receives subsidies at a rate of $72.93 per acre. (www.betterfarming.com)
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The cost of farming inputs in conventional agriculture is $340/acre (University of Florida, IFAS Extension). By farming organically, MA`O is using 50% less energy and resources to farm their land (Lori Drinkwater, Nature Magazine, Nov. ’98).
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The value of training organic farmers is based on average per person, per hour educational rates of HOFA (Hawaiian Organic Farmers Association.) We assumed that for each youth education hour, two individuals receive training, and that this hour is valued at $10 per trainee.
RISK ASSESSMENT & CONTINGENCY PLAN
While farming has many inherent risks, in just three years of operations MA`O, has created an innovative and successful model that others in Hawai`i wish to replicate. Moreover, the model and systems have been developed with the co-management of youth. Risk assessments have been mentioned throughout this business plan and the following table summarizes the important challenges and our mitigation approaches.
RISK
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MITIGATING FACTORS
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Organic production fails through pests, natural causes, and or other unforeseen circumstances.
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Thoroughly tested organic methods and systems
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Expert technical assistance available
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To anticipate losses, yield assumptions are conservative
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Ongoing research experiments to ensure new learning
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Problems with youth, such as lack of motivation.
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Consensus-building, open communication approach
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Accountability built within profit-sharing model
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Expert technical assistance available for youth, and diverse opportunities for improving skills.
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Low Sales
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Regular customer feedback
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Diversified product mix
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Proven demand for products
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Diversity of markets
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Options to reduce expenses, if necessary
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High operating costs, low margins
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Diversity of markets increase direct sales and improve margins
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Source lower cost local supplies, e.g., animal manure
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Difficulty in attracting suitable staff
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Grow youth from within the MA`O system and expose early to other benefits – trips to conferences, site visits
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Seen at the moment as doing cutting edge work so we are in high demand
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Educational programs with local schools provide pipeline for new staff
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Operational problems, poor food quality, delivery time
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Thoroughly tested system
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Access to high-end chef who will help to assess product quality
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Technical assistance available to investigate unforeseen crop failures
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MA`O system reinforces importance of product quality, assessment and feedback given to youth three days per week.
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Marketing problems, regulatory barriers and costs
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Diversity of end markets
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Certified organic status already achieved
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Classes to teach safe food handling strategies
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Café is a certified kitchen and their staff provide guidance
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Departure of key project employees
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Inherent to WCRC is the training, empowerment and employment of youth, new leaders constantly being developed
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WCRC Board will create a succession plan
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H.ENDNOTES
i Dimitri, Carolyn and Green, Catherine. “Recent Growth Patterns in the U.S. Organic Food Markets.” ERS Agriculture Information Bulletin No. AIB777. 42 pp, September 2002
ii Information supplied by Kokua Natural Foods Cooperative.
iii See www.ota.com/organic/mt/business.html. “Industry Statistics and Projected Growth.”
iv See support letter from Mr. David Cole, CEO, Maui Land and Pine.
v Population statistics derived from www.census.gov
vi Demographic information obtained from the US Census 2000 web site www.census2000.gov
vii Information obtained via telephone interview with the State of Hawai`i Department of Labor
viii Food Security Task Force, A Report to the State Legislature. Office of Planning, State of Hawai’i, January 2003. See www.hawaii.gov/dbedt/op/html, pg. 5.
ix From “Nanakuli Area Community Profile.” “Wai`anae Area Community Profile.” Publications produced by the Center on the Family, College of Tropical Agriculture and Human Resources. 2003.
x Wai`anae Sustainable Communities Plan. City and County of Honolulu Community Planning Document. 1998.
xi Carson, Rachel. Silent Spring. 1962. Houghton Press, Boston. From www.rachelcarson.org it states that: “Disturbed by the profligate use of synthetic chemical pesticides after World War II, Carson reluctantly changed her focus in order to warn the public about the long term effects of misusing pesticides...she challenged the practices of agricultural scientists and the government, and called for a change in the way humankind viewed the natural world.”
xii Dimitri, Carolyn and Green, Catherine. “Recent Growth Patterns in the U.S. Organic Food Markets,” ERS Agriculture Information Bulletin No. AIB777. 42 pp, September 2002
xiii Information supplied by Kokua Natural Foods Cooperative.
xiv See www.usda.gov.
xv See www.ota.com
xvi Horovitz, Bruce. “Get 'em while they're hot: Ballpark franks go organic; 2 stadiums respond to consumers' pleas.” USA TODAY. Dec 2, 2004. pg. A.1
xvii See www.ota.com.
xviii See www.ota.com/organic/mt/business.html. “Industry Statistics and Projected Growth.”
xix See www.state.hi.us/doh/about/press/99-35hept.html.
xx Statistics reported in Honolulu Weekly. December 8, 2004. pp 4.
xxi The authors surveyed produce sections of 9 regular grocery outlets, across a 36-mile corridor of O`ahu from Wai`anae to Honolulu, on December 5, 2004. Three stores, Tamura’s Wai`anae, Time Waipahu and Sam’s Club Pearl City did not stock organic produce. Seven stores did stock organic produce, they were: Safeway Kapolei, Sack and Save Nanakuli, Foodland Waipio, Daiei Waipahu, Star Market Moiliiili, and Costco, Honolulu.
xxii See support letter from Mr. David Cole, CEO, Maui Land and Pine.
xxiii Earthbound Farms 1# package of mixed salad greens sells for $3.80 at Costco, while 0.5# of a similar product retails for approximately $5.50 at local natural foods stores.
xxiv Namkoong, Joan. Honolulu Advertiser. Food section, August 22, 2001
xxv Verbal communication with Bari Green from HOFA on December 14, 2004.
xxvi Population statistics derived from www.census.gov
xxvii Hawai`i Business Magazine. March 2004.
xxviii A list of venders at the KCC market can be found at www.hfbf.org/farmersmarket.html).
xxix Information derived from WCRC. WCRC is purchasing 2.5 acres from the current landlord at the cost of $195,000.
xxx See www.hicentral.com
xxxi Information derived from public hearings held in 2001 regarding the use of diverted Waiahole Stream water for Leeward agriculture purposes conducted by the State’s Water Commission.
xxxii See www.hanahou.com/westsidestories.htm
xxxiii Ferrar, Derek. “Ka Wai Ola o OHA”, 2005 v.22 n.2 – February. Page 10.
xxxiv Nichols, Katherine. Honolulu Magazine. August 2004. Page 183.
xxxv Kiyabu, Sue. Honolulu Weekly. October 13-19, 2004. Volume 14, Number 41. Page 39.
xxxvi Griffth, Lesa. Article entitled “Town and Country.” Honolulu Weekly. October 13-19, 2004. Volume 14, Number 41. Page 49.
xxxvii Kam, Nadine. “Food Lovers Find a Home in Town. Honolulu Star Bulletin. Sunday April 10th, 2005.
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