A conversation with Keoni Lee, CEO of Hawaii Investment Ready, about having to import massive amounts of food, inputs, fuel, etc., being at huge risk from climate disruptions and climate change and much more.
LISTEN TO THE CONVERSATION ON:
Why do we need to take systems change lens into investing? You can’t focus on single solutions and hope that the massive global food and agriculture system will change. Nowhere that is more current than on islands: they are usually far from mainlands, have to import massive amounts of food, inputs, fuel, etc. and are at huge risk from climate disruptions and climate change.
Look for instance at the Archipelago of Hawaii, which used, before western contact, to produce enough food for 1 million people and, now with 1,4 million people and 10 million tourists visiting, has to import over 90% of its food. Learn more on how investing with a systems change lens in food and agriculture looks like in Hawaii.
HAWAII USED TO BE SUPERABUNDANT IN FOOD PRODUCTION
The regenerative systems of abundance that were created by my ancestors, says Keoni, were able to feed a population that’s very similar in size to today’s population.
”We had agroforestry systems that produced tremendous amounts of food from the shoreline and our aquaculture with traditional fish ponds and fishing practices, through our riparian zones, where we had taro terraces, wetland and dryland taro terraces and all the way to the upland where we had agroforestry systems for breadfruit, sweet potato.” – Keoni Lee
”When Captain Cook first got here, one of the things they noted when they arrived was how fit and strong the people were here. And again, it makes a lot of sense how we were able to build these systems of abundance… If you think about how Polynesia was settled by my ancestors, it was done by canoe, right? They sailed purposely across the Pacific and inhabited every single inhabitable island in the Pacific. And you do not create an industry of sorts of open ocean, celestial navigation, if you are not a society that has abundance.” – Keoni Lee
”There’s a sacredness, and there’s a specialness to how we interact with our natural resources that cause you to make decisions that are going to ensure that there is abundance.” – Keoni Lee
ISLANDS FEEL CLIMATE AND OTHER DISRUPTIONS FIRST
The things that Hawaii have been able to depend on for millennia are now shifting. They are facing sea level rise, and changing weather patterns.
”Going back to the fact that we are on islands, those of us that live on islands, we feel the pressure of an extractive capitalist economy, we feel the pressures of climate disruption and climate change, I think about 10 to 15 years earlier than on continents.” – Keoni Lee
”There’s less trade when these in Hawaii, over the last 25 years, we’ve lost about 50 days a year of our normal trade winds. And when you understand our water cycle here in Hawaii, where the trade winds bring moisture from the ocean that hit our mountains, which capture freshwater, which percolate down to our aquifer, that water cycle is being disrupted, because we’ve lost so many days of trade wind weather. So, we see the disruption, we see the pressures a lot sooner. And particularly with our food, Hawaii is a bio machine, we have 300 plus days of beautiful sunny weather, we have a lot of rain, we have three growing seasons a year…” – Keoni Lee
A LOCAL FOOD MOVEMENT HAS SLOWLY EMERGED OVER THE RECENT DECADES PARTLY DRIVEN BY THE TOURISM INDUSTRY, WHICH ALSO BRINGS TENSIONS
According to Keoni, they’re talking about increasing local food production for local consumption, but that’s driven by the tourist market, because tourists who visit Hawaii want to eat local food, and are willing to pay a premium for it.
”Tourism was selected as a diversification strategy. And we’ve seen what that has done in the last seven years, they went from a small diversification strategy to now being the primary economic driver. But that’s kind of how things work in this economy. Specialization, is the strategy, right? How do you get monocultures, economies of scale. That’s how the market works. And, so we started to specialize into tourism.” – Keoni Lee
”So, the producers and the distributors target that market because of that margin. It can help to grow the industry and grow the market for local food production because of that premium that they can charge to tourists. So, it’s kind of a dilemma, right? It’s a dilemma for the producers, because they actually want to see their food locally consumed. But a big part of that local consumption right now is feeding people who are not from here.” – Keoni Lee
”We’ve seen tourism grow, grow, grow, grow, grow over the last 50+ years, to where now we have 10 million visitors a year coming to Hawaii. And, at any given time, we have somewhere around 200 to 250,000 tourists here. So, 15 to 20% of the people that are in Hawaii at any given time are tourists. So, it adds pressure to our carrying capacities and our needs. And like I mentioned, the importing of our food, 90% of our food is imported, because it’s cheaper to import.” – Keoni Lee
HOW KEONI WOULD INVEST 1B INTO LOCAL PROCESSING
Keoni would build infrastructure. According to him, once it’s built, it allows others to create value where they couldn’t have created value before.
”I use the food hubs as an example, they are a value chain infrastructure that allows access between supply and demand. It flows the product through market. And so, by having that infrastructure there with these food hubs in place, it allows producers to be more confident in their ability to scale their operations, because they have this consistent, reliable demand for their product to get to market. Rather than them doing it themselves, producers don’t necessarily want to distribute their food, they want to focus on what they do well, which is grow food and produce food.” – Keoni Lee
”If we have more of this infrastructure, it allows the production side to increase. And it also allows the demand side to increase and have more access to local food. Because there is a demand for local food, it’s just how do you satisfy that demand? At a price point that is viable in the market? I think it’s important to talk about the economics that we have here in Hawaii, because we are so geographically remote. And because our local food production industry is relatively small, we don’t have the economies of scale.” – Keoni Lee
LAND AND INPUTS ARE SUPER EXPENSIVE, AND FARMING MARGINS ARE VERY SMALL AND THUS THE NEED FOR SUBSIDIES
Inputs for agriculture in Hawaii are 40% more expensive, and they’re bringing in a lot of things.
”The cost of land here is really high, because it’s finite, and it’s an island, and, it’s for sale, and we have all of this foreign outside of Hawaii investment into our real estate that drives up the cost of real estate. They want to develop their land, rather than keeping in ag. So, the margins on food, anywhere are often really low and small. It’s even more so here in Hawaii, to the point where we really have to look at subsidies and tax credits and philanthropy as interventions necessary for us to scale this system. So, if you ask me, if you give me a billion dollars today, I would go and invest in infrastructure. It would be meat processing infrastructure.” – Keoni Lee
OTHER POINTS DISCUSSED
Koen and Keoni also talked about:
- Sugar plantations and annexation
- How did we build systems of abundance
- Scaling and scalability of the business.
LINKS:
LINKED INTERVIEWS:
- Soil Builders, regenerative agroforestry on Hawaii and soil carbon credits in Australia
- Christian Jochnick – Why Ibiza is the best place to start the regenerative renaissance
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The above references an opinion and is for information and educational purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
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