The Office of Hawaiian Affairs is getting out of the poi business four years after a plan to increase profits at a Kauai company turned sour.

The state agency announced last week that it will let a new owner take over its money-losing Makaweli Poi Mill in Waimea after rejecting an acquisition bid by a community group backed by taro farmers supplying the mill.

OHA’s deal will keep the only commercial poi mill on the western side of Kauai in business, but the Makaweli Poi brand and its unique style of poi will be discontinued at the Waimea factory.

Upon completion of the transfer, the mill will be operated as Lehua Poi Co., established by a nonprofit focused on Hawaiian language immersion programs and run by Kauai businessman and former lifeguard Nakulu Arquette.

Lehua Poi won’t continue producing the distinct style of poi from Makaweli Valley — a small offshoot of Waimea Valley — that is known for being thicker, souring quicker and having a more earthy flavor than other poi.

Makaweli Poi’s dozen or so employees will have a chance to apply for jobs with Lehua Poi, which plans to meet with mill operators today to discuss its plans.

Other slated changes by Lehua Poi include selling poi in smaller bags — 1 or 2 pounds as opposed to 5 pounds — and selling taro in other forms such as flower, chunks mixed with honey and a paste similar to hummus, according to Arquette.

Arquette, who produces food products including boiled peanuts and crack seed under the Nuts-o-What? brand, partnered to run the mill with Supporting the Language of Kaua‘i Inc., a nonprofit that promotes Hawaiian immersion programs and helped establish Kawaikini New Century Public Charter School.

As part of the arrangement, the nonprofit will receive a percentage of poi company profits and intends to work on having poi and taro products included in school lunches.

OHA also is providing $25,000 in seed money to help Lehua Poi get started.

The agency said that Supporting the Language of Kaua‘i had an “ambitious but realistic” business plan for the mill that was selected over competing plans by other nonprofits.

“We are confident they will be a success and will give back to both the keiki and kupuna on Kauai,” Kamana‘opono Crabbe, OHA’s chief executive officer, said in a statement.

OHA’s move to solicit nonprofits followed a decision not to transfer Makaweli Poi to local community group Ka Piko o Waimea.

The group formed after OHA announced in May that it would shut down the mill, and now feels spurned by the agency.

“We are very disappointed and hurt,” said Ka Piko board member Ronson Sahut. “We were very confident that we would not only help the mill survive but we would help the mill thrive.”

Sahut said members of the community supported by area taro farmers formed the nonprofit and crafted a business plan submitted to OHA. But he said Ka Piko’s bid got hung up over a confidentiality agreement OHA sought to protect certain financial information, and then the agency said Ka Piko’s plan was insufficient.

“We didn’t get a fair chance,” Sahut said.

OHA would not comment about its negotiations with Ka Piko. But Crabbe in his statement thanked the group for its effort to preserve poi production. “The dedication showed by Ka Piko was commendable and we urge them to continue to use their collective mana to support other worthy community causes,” Crabbe said.

Arquette said his partners applied to acquire the mill only after OHA rejected Ka Piko, and that he wished the Makaweli Poi farmers and mill operators had succeeded. “My heart breaks for them,” he said. “They are good people — all of them.”

Lucia Bartels was part of the community group that tried to save Makaweli Poi, and began working at the mill after OHA announced the shutdown. “We worked so hard,” she said, adding that she took pride in producing a unique poi from the valley.

Makaweli Poi was established in 1993 by Makaweli Valley taro farmer John A‘ana and his cousin Rawlins Char a year after Hurricane Iniki destroyed Waimea Poi Mill.

The cousins started the company with the help of a $50,000 loan from OHA, but A‘ana later sought to get out of the milling business because it was too much to do along with growing taro and being a Kauai Fire Department captain, according to OHA.

A‘ana had talked with various prospective buyers, but made a deal to sell the mill to OHA in 2008. The agency paid $185,000 for the business, and envisioned establishing academic programs for students in the taro fields. OHA also envisioned establishing a farmer cooperative to increase poi production and profit.

Then-OHA Trustee Donald Cataluna contemplated doubling the mill’s 12.5 percent profit to 25 percent — unheard of for an agricultural enterprise, according to a 2008 OHA bulletin about the purchase.

However, the mill lost about $100,000 in each of the four years it was owned by OHA through nonprofit subsidiary Hi‘ipoi LLC.

A‘ana said in a June Star-Advertiser story that bad floods in 2008 destroyed many huli, or baby taro plants, which prompted some farmers not to replant. The June story also quoted former OHA Trustee Clarence Ku Ching as saying micromanagement from OHA’s offices in Honolulu added expenses to mill operations.