Molokai Ranch owners seek ruling on land use 

Molokai’s largest landowner is seeking to designate nearly 5,000 acres of property mostly used for cattle ranching as important agricultural land that would qualify the owner for state benefits.

Molokai Properties Ltd., better known as Molokai Ranch, has applied to the state Land Use Commission to preserve 4,919 acres for agricultural use under a 3-year-old state law that provides financial incentives for preserving ag land.

Cheryl Corbiell, a director for the nonprofit Molokai Land Trust, said that while details of the case have yet to be determined, in general the idea of preserving agriculture land from development is good. “I think any kind of conservation in the state is good news,” she said.

Molokai Properties’ application to preserve the land, filed Nov. 30, became the third case to use the new law, but it is the first attempting to protect land better suited for cattle than crops.

Alexander & Baldwin Inc. received commission approval in 2009 to protect 27,105 acres on Maui used by subsidiary Hawaiian Commercial & Sugar Co. and 3,773 acres on Kauai used mostly by subsidiary Kauai Coffee Co.

The law provides incentives for dedicating land for agriculture in perpetuity.

Incentives include $7.5 million in annual tax credits for investments in agriculture facilities, a $2.5 million loan guarantee program, expedited ag processing facility permits and allowance of employee housing on prime ag land.

There is also a controversial benefit that allows owners of prime agricultural land to urbanize land equivalent to 15 percent of the acreage protected for other uses, including housing.

But like A&B, Molokai Properties in its application waived any rights to claim the benefit for urbanizing land.

A Molokai Properties official could not be reached for comment yesterday.

Some longtime opponents of Molokai Properties question whether a company should derive benefits from preserving what they see as low-quality ag land. Others say helping sustain ranching will benefit Hawaii’s most economically depressed neighbor island, where unemployment is about double the state average.

In its application, Molokai Properties said the benefits of the law will help secure and expand ranch operations on an island where ranching has historically been important both culturally and economically.

“The protection and preservation of Molokai’s cattle ranching heritage and tradition is a vital goal of this petition,” the company said in the filing.

The company said ranching on Molokai dates back to 1833 when about 200 longhorn cattle were introduced by Kamehameha III. Molokai Ranch was formed in 1897 on about 100,000 acres. Disease threats devastated the industry in the 1980s.

Then three years ago, after much rebuilding effort, Molokai Properties quit ranching. The company shut down operations – including a luxury hotel – after failing to win enough community support for a plan to finance investments in its strained resort and ranch operations by developing 200 lots for luxury oceanfront homes at Laau Point.

The development plan included conveying 50,000 acres to a community land trust for perpetual protection, but opponents said the trade-off was not worth it.

The company laid off about 120 employees and shuttered most of its business. But cattle operations were turned over to longtime ranch manager Jimmy Duvauchelle.

Duvauchelle, a fourth-generation Molokai cowboy, established Pohakuloa Ranch and manages about 500 cows on about 3,000 acres leased from Molokai Properties.

The operation is the largest ranch on Molokai, but Duvauchelle said the last two years have been rough.

“I’m doing the best I can now, but I’m too small,” he said. “In the cattle business, volume helps. Without the volume, it’s not working as far as making money.”

Much of the difficulty for Pohakuloa Ranch, according to Duvauchelle, is that it ships most young cattle to the mainland to be fattened up and slaughtered. Rising shipping costs and falling cattle prices have hurt operations.

Duvauchelle said he wants to keep more cattle on Molokai for Hawaii consumption, but to do that he needs more land for grazing and has to invest in other improvements. His goal is to double the number of cows and export only half his animals for fattening and slaughter on the mainland.

Under the expansion plan, Pohakuloa Ranch would lease more Molokai Properties land and take over another ranch, Diamond B Ranch, which Duvauchelle manages for a Maui owner. Diamond B operates on about 1,000 acres leased from Molokai Properties.

Molokai Properties in its application said it will grant Duvauchelle a 20-year lease for roughly 5,000 acres and grant a 99-year easement to Molokai Land Trust to ensure the land is restricted for agricultural use.

Molokai Properties also said the land holds future potential for large-scale crop production, perhaps for biofuels or seed corn, if sufficient water could be provided.

Presently, the water supply to the land comes from mountain streams and can sustain cattle but not crops, though pineapple, a dry-land crop, was once grown on much of the land.

Molokai Properties said breakthroughs in technology such as desalination combined with wind power could create an economical water supply for the land to sustain crops.