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HB280 - Certification of Kona Coffee
11 July 2012

Many Kona coffee farms are part-time hobby farms.  Anything with a couple thousand trees or less will, at best, generate just enough money to pay for the farm.  Small farms rarely generate enough money for a family to live on.  Despite their lack of size, some small farms are still operated very professionally and produce fantastic coffee while others more closely resemble abandoned gardens and produce almost no coffee at all.

On the other extreme are the large commercial farms.  They have a hierarchy of employees including both office staff and full-time farm workers.  Own such a business though and you will likely spend your days on the phone, sitting in meetings and discussing politics rather than outside working on the farm.

Coffee Kona Earth is somewhere between these two.  Farming pays all of our bills so we are definite not a hobby farm yet we don't have any employees so we are definitely not a corporate farm.  I can get so consumed with farm work that I go several days without leaving the farm.  Other times I find myself spending the day on the phone, sitting in meetings and discussing politics.  I recently had just such a day.

The day started at 4am because I had to catch an early flight to Oahu, I had a meeting with the Governor.  I don't have the time or money to fly to other islands very often but I felt that this was important.  Luckily I have a great farm wife and while I was off playing politics, Valerie spent the day fertilizing the coffee trees.  We don't have a fancy fertilizer spreader so it has to be done by hand.  With several thousand trees, it is not an easy job.  Valerie did the whole farm by herself.  I was quite impressed.

Since I was on a different island at the time, I don't have any pictures of Valerie hard at work.  Instead, I'm going to bore you with the political issues I was dealing with.  It all revolves around something called HB280.  Basically, it is a bill that involves certification of coffee.  Certification is a big deal for large farms while small farms are often exempt because they don't sell significant quantities of unroasted green coffee beans.  Even though they are exempt, a group of small farm owners was determined to exert their opinions on everyone else.

The reason I got involved is because Kona Earth is not exempt from the issue, we ship unroasted green directly to wholesalers and we certify our coffee.  This isn't the first time we have been frustrated with coffee certification.  Most of our customers have specifically chosen Kona Earth because they know us, they know our farm and they like our coffee.  Our customers don't care about Hawaii state certification but it is the law so we certify our coffee anyways.

What really bothers me with HB280 is that the opposition is not offering any facts.  They are even saying things that are outright wrong.  I was asked to sign a petition without being given any information first.  When asked for information, all I received was speculation about how this bill would ruin the good name of Kona coffee and "take us back to the days of the Kona Kai Coffee Counterfeiting Scandal..."  Nobody can predict the future and anybody that makes such statements is doing nothing but speculating.

Coffee counterfeiting is happening now, I've seen it first hand and even been asked to participate.  I refuse and I want to see counterfeiting stopped.  The current laws are not working which means we need a change.  I think HB280 is exactly that.

From what I can tell, HB280 changes two things.  First, it stops punishing me, a Kona coffee farmer trying to be honest, by allowing me to skip grade certification when my customers don't want it.  Certification increases my cost and I have lost business by refusing to ship cheaper uncertified coffee.  If the opposition certified their coffee, I think they would understand this issue better.

Second, HB280 adds the line "False labeling of Hawaii-grown coffee is a class C felony."  I think this is a vastly important change.  Without it, counterfeiting was only a misdemeanor and was almost never enforced.  With this change, the laws will be given some teeth so they might actually get enforced.  I'm tired of time and again seeing some well known local "Kona" coffee producers blatantly break the law and get away with it.  I don't understand how opposing HB280 and keeping everything the same would help.

This isn't the first time the opposition has made illogical arguments concerning coffee legislation.  The same group opposed HB1552 which was a bill to help stop deceptive marketing.  For a group that is always making noise about protecting consumers, that one made no sense to me at all.  Luckily it went into law anyways and despite their warnings that the sky was falling, no Kona farmers have been adversely affected because of it.

With HB1552 all but forgotten about, HB280 became the center of attention.  It passed through the state House and Senate.  The Hawaii Department of Agriculture and even the local coffee inspector support HB280.  The issue looked solved until the Governor declared his intention to veto the bill.  That is when I was granted the rare privilege to voice my side of the story.

I will admit that my very first impression of the Governor wasn't entirely positive.  It seemed obvious that he had already decided to veto the bill and wasn't so interested in hearing more discussion.  That changed though once we had an opportunity to speak.  Not only did the Governor listen, he also asked some very valid questions and was genuinely concerned with getting all the facts he could.  I came away impressed.  It can't be easy to spend all day every day hearing people passionately argue for this or that, never knowing who is being honest or deceptive.

In all fairness, the day wasn't exactly easy for me either.  After flying back from the meeting with the Governor I had two more meetings to attend.  First was a meeting about a very important coffee cupping competition.  Following that was the monthly board meeting for the Kona Coffee Council where we discussed several other important issues such as funding for CBB abatement and employee labor laws.  When I finally got home just in time for dinner, I watched an old Andy Griffith movie on TV then went to bed.  It was a long but very interesting day.

In the end, the Governor did not veto HB280, he allowed the bill to pass into law without his signature.  I would like to think that it was my testimony that made the difference but that would be pure ego.  There were many, many letters written and I personally saw the Governor reading several of them.  He listened to many viewpoints on both sides of the topic.  If I were Governor, I'd like to think that I would be equally willing to listen and consider everybody's concerns.

What does HB280 mean for us?  After all that, not much really.  It means that we now have the option to ship wholesale green without grade certification although we do still need to meet all the standards for quality and origin documentation that have always been required.

The opposition says (grammar and font color retained) "The integrity of Kona Coffee is allowed to be compromised by BIG $$$$ interests."  I don't see how this can be true since all of the quality standards are still in place.  If you disagree, I encourage you to read HB280 for yourself rather than relying on the rhetoric of others.  Here is an excerpt:
§147-23  Prohibited acts.  (a)  No commercial exporter shall ship any fresh or processed agricultural commodities to points outside the State unless such products meet the quality, condition, and labeling requirements of the rules adopted under this part.  (b)  No Hawaii-grown coffee beans shall be shipped outside the area of their geographic origin to any point within the State or outside the State unless the coffee bean package containing the beans has been marked with or contains documentation of geographic origin approved by the department.

I am hopeful that some of the known counterfeiters will be put out of business or at least think twice before breaking the law again.  I'm not going to hold my breath though.  In the mean time, Valerie finished this round of fertilizer but there is still a huge stack of calcium carbonate that needs to be spread on the fields.  It is difficult, tedious work but maybe I'll take a picture anyways.  Even difficult farm work is more fun than politics.

HB280 FAQ
Q: What is HB280?
A:
HB280 is a bill that makes two primary changes to current Hawaii coffee certification laws:
    The first change makes counterfeiting Hawaiian coffee a class C felony instead of a misdemeanor.  This will move enforcement from the HDOA to county prosecutor's office or state law enforcement agencies as well as give it some teeth.  The hope is that this change will provide better enforcement of existing laws which are currently being ignored.
    The second change will make certification for grade voluntary instead of mandatory.  This only changes the certification for grade while certification for origin will actually be more rigorous.  All unroasted green coffee leaving its place of geographic origin must still meet minimum standards of quality and must be marked with or contain documentation of origin approved by HDOA.  In other words, it will still be illegal to counterfeit coffee.

Q: Why oppose HB280?
A:
Repeal of the current system would take us back to the days of the Kona Kai Coffee Counterfeiting Scandal of the mid-1990s when the reputation of Hawaii-grown coffee was severely damaged because of a “voluntary” certification system.
    - "Independent Voice" newsletter, Kona Coffee Farmers Association, July 2012

The KCFA created an online petition opposing HB280.  The petition received more than 700 signatures of Kona coffee farmers, friends and mainland customers.

Q: What was the Kona Kai scandal?
A:
From 1993-1996, Michael Norton sold 3.6 million pounds of non-Kona that was relabeled as Kona coffee.  He was never convicted of this crime.  In 2000, Norton was convicted for wire fraud, money laundering and tax evasion.

Q: Where did Kona Kai happen?
A:
Kona Kai Farms owned a coffee mill in Kona, Hawaii but headquarters were in Berkeley, California.  All of the blending and counterfeiting occurred in California, outside the jurisdictions of Hawaii state law.

Q: Could the Kona Kai scandal happen again today?
A:
Yes.  All of Kona Kai's coffee shipped out of Kona was HDOA (Hawaii Department of Agriculture) certified.  There are no federal statutes governing Hawaiian coffee so the Kona Kai scandal was and still is perfectly legal.  Even in Hawaii, prior to HB280, counterfeiting coffee was considered only a misdemeanor.

Q: Is counterfeiting happening today?
A:
With any premium product, counterfeiting will always be a concern.  Origin counterfeiting is occurring today with Ka'u coffee being sold as Kona coffee.  Prior to HB280, with lack of enforcement and lack of sufficient penalties, there was little chance of stopping counterfeiting.

Q: What are the current Hawaii state certification laws?
A:
All unroasted green coffee leaving its place of geographic origin (i.e. Kona, Ka'u, Kauai, Maui, etc.) must be properly labeled and documented.  Coffee can be certified by grade or as "Origin Only" which is Prime or better.  Grade certification is a statement of quality while origin certification is a statement of where the product came from.

Q: How does coffee get certified?
A:
Certification is performed by a state inspector, usually at a large coffee mill on a preset schedule.  Certification costs a couple hundred dollars per batch for grade certification and slightly less for origin certification.  Each grade must be certified separately so the cost can quickly become significant.  In 2010, due to state budget cuts, the number of inspectors was reduced and the time required for inspection went from a few days to several weeks or months.

Q: Does all coffee require certification?
A:
There are no certification requirements for roasted coffee nor for coffee sold inside its place of origin.  Since most small farms sell either roasted coffee or unprocessed coffee cherry, they do not need certification.  Usually only large batches of wholesale green beans are certified.  Poor quality coffee that fails certification can legally be sold as roasted coffee.  Of course there is no protection at all outside the state of Hawaii.

Q: Why make grade certification voluntary?
A:
Voluntary grade certification moves the final decision of quality away from a government official and into the hands of the buyer and seller.  If desired, state certification is still an option.  However many buyers prefer to make their own decision and don't want to pay for state certification.  Since quality is a matter of personal taste, most consumers don't want the government telling them what they can or can't buy.  No other product in Hawaii must be certified for quality.

Q: How will HB280 affect coffee sales?
A:
Nobody can predict the future so there are a variety of answers to this question.  It is fairly certain that voluntary certification will lighten the load on state inspectors, reducing the number of inspectors required.  HB280 may help prevent fraud by changing the focus from certifying honest sellers to catching dishonest counterfeiters.  Or HB280 may increase fraud by allowing dishonest sellers to more easily avoid certification.

Q: Who opposed HB280?
A:
Kona Coffee Farmers Association
The KCFA has approximately 300 members.  Only Kona coffee farmers may be members of the KCFA.  Most are smaller, part-time farmers that sell either unprocessed coffee cherry directly to a local mill or roasted coffee directly to consumers.  Since most small farms do not sell large quantities of wholesale green beans, many do not get their coffee certified.  Overall, KCFA members represent approximately 5% of the Hawaii coffee industry.

Q: Who supports HB280?
A:
Over 90% of Hawaii coffee, by volume and value, is represented by the following organizations which all support HB280:
Hawaii Coffee Growers Association
Maui Coffee Association
Kona Coffee Council
Hawaii Coffee Association
Ka'u Farm Bureau
Hawaii Farm Bureau

HB280 was approved by both the Hawaii state House and Senate in May, 2012.
It was not vetoed by the Governor and passed into law in July, 2012.




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