When the workers showed up that Monday morning, they huddled with Pa for several hours. Together they penciled out a plan that would eliminate the 100 acres of apple bananas, which yield less per acre than regular bananas and are more difficult to pick. A second step would be to move the remaining banana plantings much closer to the packinghouse and chiller room to reduce the workload and speed up turnaround. The workers argued that they could run the operation with a much smaller work force and get nearly 10 percent more output per acre. The higher productivity would be sufficient to return the banana operation to healthy profitability.
When presented with the plan, Ha listened closely. Under normal circumstances, he wouldn't think such a plan would cut it. But he had been watching the huge run-up in oil prices, and he realized it was starting to work to his farm's advantage. When he first began thinking about closing down the banana operations, oil was just above $100 per barrel. Now, it had soared to around $110. Ha knew he would soon be getting some energy savings from a hydroelectric generator he planned to install along a stream on his property. At the same time, the surge in oil prices was hurting importers far more than it was hurting him. Importers were paying shipping companies a 30 percent or higher fuel surcharge on containers coming to the islands. The weakness in the dollar had further pushed up prices for Central American bananas.
Taking in these factors, Ha and his son-in-law saw a sustained period of higher prices for imported bananas. That would give them the cushion they needed, and it made the workers' proposal seem tenable. "For the first time in recent memory, banana prices did not fall steeply during the summer," says Pa. "That made us think something had changed."
The Decision A day later, Ha reversed his decision and announced that Hamakua Springs would continue shipping its bananas to supermarket shelves on the Big Island, Maui, and Oahu. Ha knew if his banana gamble didn't work, he might tip his farm into the red and put a strain on other parts of his business and his family. In the end, though, he decided to follow his heart -- sticking with the banana crop and keeping his staff intact. "Nobody told us it would be the end of cheap bananas," says Ha. "We had to decide that for ourselves. Had the world really changed that much? I knew it would be a big risk." Still, if it hadn't been for the workers' insistence, he doubts he would still be growing bananas today. "They really wanted to make it happen," Ha says. "They said they would work hard. I felt I had to meet their commitment."
The team members immediately put their shoulders into transforming the operations, pulling out apple banana trees and preparing the 100 acres to be leased to other farmers. Since the decision, oil prices have climbed to nearly $140 per barrel -- and plenty of experts think they are headed much higher, which would be good news for Hawaii's homegrown bananas. Ha is now pricing his crop slightly below the imports and still expects to hit his profit targets. "As long as we do a good job, we'll hold our own," he says. "We would really like to supply our island, and everything seems to be pointing toward this being a good strategy."
The Experts Weigh In
Go for the local edge
We are seeing record jumps in the cost of fertilizer, tractor fuel, electricity, and even farm tractor tires, all associated with oil prices. Ha's decision to shift crops and alter banana production was a difficult one that is uniquely based on the loyalty of his employees and the geographic isolation of Hawaii. It will definitely build worker morale. And there is some inherent competitive edge in being a local producer. But because of high production costs, there is still very little room for mistakes.
Try for green marketing
Ha has made a very brave decision that, I think, will prove to be right. He should also invest in developing Fairtrade accreditation. This would give an additional point of difference when competing with Central American imports. It would also leave the door open to forging new business with ethically and environmentally conscious retail buyers in places such as California and Washington. Fairtrade bananas brought in by boat from Hawaii might have a greener sound to them than conventionally grown fruit trucked through Mexico.
Keep Workers Looped In
The initiative and creativity demonstrated by Ha's workers bodes well for the operation. The decision to keep the banana operation also satisfied his desire to keep workers employed and provide food for Hawaii. But he might want to figure out financial benchmarks for his banana operations and share them with the workers. That would encourage them to continue thinking like owners. Finally, Ha should have a contingency plan in place so that a decision to exit bananas can be made swiftly and minimize any negative impact.
