COOPERATIVE UPDATE
Facing Forward
Hawaiian cattle co-op finds new life by responding to marketing crisis
Editor's note: This article updates one that first appeared in the March 1995 issue of Farmer Cooperatives.
Against a backdrop of fields of cattle, lush
grass and black lava fields, Lani Cran Petrie daily carries out two challenging roles in
her beautiful but restless homeland.
Sloshing through puddles on a rainy day, co-op manager Lani Cran Petri checks on a load of cattle soon to be shipped to the U.S. mainland. (USDA Photos by Dan Campbell)
Petrie helps run her family's 24,000 acre
cattle ranch on the Hilo, or "new," side of the big island of Hawaii.
She is also general manager of Hawaii Cattle
Producers Cooperative Association (HCPCA), an organization that has seen its sales volume
skyrocket since a crisis in the early 1990s catapulted it from zero to hero in the eyes of
many of the state's cattle producers.
Together, the two roles have melded to give
Petrie opportunities she might not otherwise have had. "I've gone from being a
cowgirl working on my family's ranch to a cooperative manager who gets to meet and do
business with some of the big guns of the industry," she says.
Petrie's indoctrination to broader vistas stems
from a crisis that rocked Hawaii's cattle producing industry in 1991.
That year, Hawaii's medium- and small-scale
cattle ranchers were nearly jolted out of their boots when they heard that Parker Ranch -
the state's cattle-producing giant - would no longer be feeding and slaughtering its
livestock in Hawaii. Instead, Parker would export live calves to the mainland for
fattening and slaughter.
Parker Ranch so dominated the cattle market in
Hawaii that even the state's smaller cattle producers depended on its infrastructure,
which included a 15,000-head feedlot and associated packing plant. With 20,000 brood cows,
Parker is the third largest producer in the United States.
So when Parker suddenly shifted gears,
small-scale producers either had to follow the leader or find a new way to achieve an
economy of scale. Fortunately, producers already had a cooperative in place to develop
alternatives for them.
HCPCA had been formed in 1984 to market cattle
for nine producers. Florence and Dick Schultz and Gordon Cran, also ranchers on the Big
Island, were the cooperative's primary organizers.
In 1991, however, the co-op still had only 10
producer/members and was "just barely limping along," HCPCA President George
"Keiki" Wood said in 1995. But as so often happens in a crisis, producers
rallied around their cooperative when Parker Ranch shifted to exporting live calves.
With a new sense of mission and urgency, the
board, led by Wood and Petrie, soon developed a plan to help members export calves to the
mainland. As word spread that the cooperative was moving forcefully to address the
situation, HCPCA membership tripled to include producers on other Hawaii islands.
Kona-based HCPCA had to find a way to use
U.S.-owned container cargo ships to haul its calves to the West Coast. Under the Jones Act
of U.S. maritime law, Hawaii to-U.S. mainland commerce had to be carried on U.S.
flagships. In 1991, the only ships specifically designed to haul livestock were owned by
Danish or Belgian shipping lines.
The cooperative responded by purchasing eight,
40-foot-long steel shipping containers which it had retrofitted into
"cowtainers" capable of being loaded onto container ships. Each was customized
for housing livestock, and included ventilated windows and self-filling feed and water
troughs. Total holding capacity of the coop's eight cow-tainers was 550 head. Cattle had
enough room to turn around and walk about inside. The goal was to keep them as comfortable
as possible on the eight-day Pacific crossing to avoid the weight losses that result from
stress.
Expectations Exceeded
The co-op's transportation system quickly
exceeded expectations. By 1995, HCPCA was exporting 7,500 head of cattle.
"This year, we'll move over 15,000
head," says Petrie.
Gross sales have jumped from $730,000 in 1995
to $1.12 million in 1997. Revenues for 1998 are expected to reach $1.8 million. Membership
has climbed to 40 producers. There are eight members on the board of directors, and a
livestock manager who oversees cattle shipments.
"Our co-op is growing extremely
fast," Petrie says. "After the last board meeting, I just shook my head and
thought, 'Should I go back to school and sharpen up a bit?...
In fact, HCPCA has branched out even further by
opening a meat company that offers value-added processing to its members. Called Kona
Specialty Meats, the wholly owned subsidiary of HCPCA was formed in 1995. It primarily
utilizes the culled animals that, for economic reasons, are not exported to market.
Business has been good. Kona Specialty Meats
did $445,000 worth of business in 1996, and should soar to $800,000 this year.
Kona Specialty Meats is especially proud of its
sausage, which is sold to a retail chain on the island. But the company also has big plans
for selling its specialty beef jerky in gift boxes.
This year, Kona Specialty Meats received a
grant of $75,000 through USDA's Rural Development to hire a marketing firm to create a
brand identification and label design for the jerky. The product will be called Paniolo
("Hawaiian Cowboy") Provisioners. The name, says Petrie, hearkens back to the
late 1700s, when cattle were introduced to Hawaii to provide meat and provisions for ships
stopping at the island.
"We are trying to sell a piece of Hawaiian
history," says Petrie. "We're also trying to get out of commodities and into
niche marketing."
The manager of the meat company is Petrie's
husband, Bill. "I guess that's why I married him - we needed a good meat man in the
family," she laughs.
Over the last three years, HCPCA has also
converted its meat plant to meet federal inspection regulations. And the co-op is
preparing for more change.
"Transportation is in transition and will
look very different three to four years from now," Petrie says. "We won't
continue to ship cattle in cow-tainers."
A possible variance to the Jones Act is being
discussed and there are expectations that a change soon will be made granting producers
the right to ship their cattle on regular livestock ships of foreign registry.
In addition, HCPCA has high hopes for Kona
Specialty Meats. "Our meat company is in the infantile stage of where I expect it to
be 20 years from now," Petrie says.
While women have played a key role in the
co-op, its real success stems from the quality and commitment of its members.
"Certain people were determined to get
this industry back on its feet," Petrie says. "It just happened that some of
them were women."
Florence Schultz, whom Petrie says was a
"cornerstone of the co-op," died in April 1998. "It's taken two of us to
replace her," she says.
But the new full-time secretary, Betty Spence,
has brought HCPCA into the age of the computer. "Betty's very computer literate and
has taken Florence's hand files and converted them into fabulous data bases so we can
extract information very quickly," Petrie says.
And, of course, there's Petrie herself, who
paved the way for the co-op's success.
With help from Schultz, she put together many
of its operations. They also worked hard to overhaul the co-op's bylaws to reflect the
changing role the cooperative was playing for its members.
Petrie also has worked closely with members to
arrange shipments in large enough lots to take advantage of the best freight rates. As
more volume has been needed to reduce transportation costs, Petrie has actively solicited
non-member business.
 |
 |
| One of Petrie's jobs as manager is to arrange for members to ship their cattle together in large enough lots to qualify for the best transportation rates to the mainland. | |
Despite the long hours working on both her
family's ranch and as co-op manager, Petrie doesn't regret her involvement or commitment.
"It's been a pleasure to work with our members because I have learned so much from
them," she says.
And Petrie, like the other members of HCPCA,
still marvels at what the co-op did for the island's cattle producers.
"It's almost mind boggling how far I've
come personally, and how far we've come as producers and cooperative members since we
faced the crises in 1991," she says. "In 1993, our marketing choices basically
were which of three buyers to sell to. Now we have nearly limitless marketing choices,
thanks to our cooperative." 
    |