Consumers don’t know whether many macadamia nut snacks identified with Hawaii contain any Hawaii-grown macadamia nuts, and an effort to change that through state law may be doomed this year.
For a second year in a row, Hawaii lawmakers might sideline an effort to establish a truth-in-labeling law applying to locally produced processed mac nuts in packaged food products like roasted or chocolate-covered macadamias.
A bill to establish such a law, House Bill 2278, passed the state House of Representatives in a 48-1 vote March 5 and was up for a vote Tuesday in the Senate.
But one senator offered an amendment on the Senate chamber floor to change the legislation’s effective date from July 1 to July 1, 2040. The full Senate adopted the amendment, then passed the bill’s new version Thursday in a 24-0 vote.
The floor amendment initiated by Sen. Jarrett Keohokalole, chair of the Senate Committee on Commerce and Consumer Protection, effectively prevented the House from endorsing the immediate prior version of the bill and sending it to Gov. Josh Green for possible enactment.
Now, deciding whether to approve an effective new draft of HB 2278 will be up to a select group of Senate and House members in a conference committee that can make decisions out of public view.
Keohokalole (D, Kaneohe-Kailua) told colleagues Tuesday that there should be continued discussion on the bill and hopefully a compromise draft produced in conference committee. On Friday he said he wants to ensure that a state labeling law for mac nuts is fair to all segments of the industry, including processing and distribution.
Industry split
A fracture in the industry in recent years led farmers and smaller processors of what has been Hawaii’s second most valuable farm crop to seek a state truth-in-labeling law in 2023 backed by the state Department of Agriculture and the Hawaii Farm Bureau.
On the other side of the fracture is Honolulu-based Hawaiian Host Group — whose founders on Maui in 1950 are recognized as the first maker of chocolate-covered macadamia nuts that established what the company calls “Hawaii’s gift to the world.”
Hawaiian Host, which makes its macadamia nut products in Hilo and Honolulu under the Hawaiian Host, Mauna Loa and KOHO brand names, buys Hawaii mac nuts from farmers and processes them locally but also uses cheaper foreign nuts in products with no disclosure to consumers.
The company, including many employees, appears to be the only one or near-only one testifying against HB 2278 and a similar bill in 2023 that was derailed after Keohokalole canceled a committee hearing on the 2023 measure, HB 1348.
Farmers and small processors claim that large-scale importing of mac nuts by Hawaiian Host has depressed prices for Hawaii’s crop and forced some farmers to get out of the business or leave nuts unharvested.
“A lot of growers are at the brink of not being able to make it anymore,” Andrew Trump, a second-generation Hawaii mac nut farmer with Island Harvest Inc. on Hawaii island, told the House Committee on Consumer Protection and Commerce during a Feb. 14 hearing. “And one of the greatest threats to this is misleading labeling. … This bill, at the crux of it, is so that consumers, growers and the public can go and see macadamias on the shelf and be able to say this is 100% Hawaiian mac nuts, this is potentially 50% and where the country of origin is of what is being grown.”
Jeffrey Clark, an executive with a firm that owns Hamakua Macadamia Nut Co. and Ka‘u Farms Management growing and processing Hawaii macadamias, told the committee that nothing in the bill precludes anyone from importing nuts like Hawaiian Host does. “It just requires that they label them properly, and that allows customers and consumers to understand where products come from,” Clark said.
State support
Sharon Hurd, director of the state Department of Agriculture, said in written testimony, “Truth in labeling should prevent companies from misusing the origin of the actual macadamia product used and consumers being confused that they are getting a Hawaiian origin product when it may have been outsourced from another country.”
Brian Miyamoto, executive director of the Hawai‘i Farm Bureau, also endorsed HB 2278 as a positive protection for local farmers and the premium crop they grow.
”Currently, there is little to no regulation to prevent the use of Hawaiian names to market macadamia nuts grown outside of Hawaii,” Miyamoto said in written testimony.
Hawaiian Host contends that a lack of processing capacity limits the volume of mac nuts it can buy in Hawaii and that the company already is the largest buyer of local mac nuts.
The company also claims that Hawaii’s largest mac nut grower sends its nuts for processing in China.
Ed Schultz, the company’s president and CEO, said at the Feb. 14 hearing that the company proposes developing a cooperative processing facility that will enable the company to buy more Hawaii mac nuts.
“We want to grow the industry for all — growers, processors, branded food companies,” he said. “However, we must focus on investment and not on bills that pit one side of the industry against the other.”
Dire warning
Schultz said that if HB 2278 is enacted, then Hawaiian Host will consider investing in a production facility outside Hawaii to produce products that wouldn’t be subject to the proposed truth-in-labeling law covering only products made in the state.
A federal food labeling law requires that the origin of macadamia nuts is disclosed only for packages of unprocessed raw nuts.
Schultz also said moving operations outside the state could lead to local job losses.
“We have seen this movie before, when companies and jobs are forced to leave Hawaii to remain competitive,” he said.
At a March 20 hearing held by the Senate Committee on Commerce and Consumer Protection chaired by Keohokalole, Hawaiian Host Chief Administrative Officer Michelle Leon-Guerrero told the committee that in her view Hawaii’s macadamia industry stands to lose a lot more than it has to gain if HB 2278 is enacted.
“We’ve been the primary purchaser and processor for all the small growers, and this bill makes that so much harder to continue to sustain,” she told committee members.
Sen. Tim Richards (D, North Hilo-Waimea-North Kona) said Hawaii branding needs to be protected, and asked Leon-Guerrero whether Hawaiian Host believes in and supports truth in labeling.
“Senator,” Leon-Guerrero responded, “I believe that we are producing in Hawaii and doing our best to ensure that we are purchasing as much local macadamias as we can.”
Sen. Angus McKelvey (D, West Maui-Maalaea-South Maui) asked what percentage of mac nuts in Hawaiian Host products are foreign on average.
Leon-Guerrero did not give a figure, but said it varies year to year. “We try to purchase as much local macadamias as the growers will sell to us,” she said.
According to the Hawai‘i Farm Bureau, Hawaii is the fifth-largest producer of macadamias in the world after Australia, South Africa, China and Kenya.
The most recent U.S. Department of Agriculture report, from 2021, said 620 Hawaii macadamia farms covering 17,000 acres produced 51 million pounds of product valued at $62.7 million.
