Hawaii-2024-SB2799-Introduced

SECTION 1. The legislature finds that while Hawaii has soils and climates that are ideal for many crops, Hawaii's agricultural economic productivity has lagged behind other states and countries. In a 2021 report analyzing Hawaii's agricultural economic landscape, the university of Hawaii's economic research organization explains some of the large economic constraints for local farmers: "Because of high input costs to production and smaller-scale farms, it is difficult for Hawaiʻi to compete with production in other regions. Input costs of agricultural production are 40 percent higher, farms generate half the sales, and farms are two-to-three times smaller in acreage compared to the U.S mainland". In regard to input costs, the most viable constraint to address, shipping and transportation costs are a significant expense to Hawaii's agricultural farming industry and its food producers.

Local food producers are faced with the economic challenges brought by high transportation costs due to variable and volatile factors such as market fluctuations, flexible commodity prices, adverse weather events, availability of shipping containers, limited options for trucking companies, and increases in domestic fuel prices. To offset some of these expenses, farmers have cut out transportation costs by selling directly to their consumers or incorporating transportation options directly into their business operations rather than contracting with an outside company. However, for agricultural farmers who transport products interisland, these high shipping costs are unavoidable.

The legislature further finds that the impacts of the coronavirus 2019 disease have exposed Hawaii's need to strengthen local food systems and reduce dependance on imported foods to ensure that a reliable stream of affordable and nutritious foods are readily available for the State's residents. Maintaining the current agricultural output for the State, in the hopes of scaling up production and increasing future agricultural output, requires that incremental increases in subsidies for agricultural producers are realized and established through successful legislation. This promotes profitability, increases competitiveness of local agriculture, and strengthens the domestic and local supply chains within the islands.

Therefore, the purpose of this Act is to establish and appropriate funds for a local agriculture transportation cost reimbursement incentive program to be administered by the department of agriculture to reimburse eligible agricultural producers for a portion of the producer's cost to transport agricultural commodities.

SECTION 2. Chapter 141, Hawaii Revised Statutes, is amended by adding a new section to part I to be appropriately designated and to read as follows:

"§141- Local agriculture transportation cost reimbursement incentive program. (a) There is established a local agriculture transportation cost reimbursement incentive program to be administered by the department of agriculture to reimburse eligible agricultural producers for a portion of the producer's costs to transport agricultural commodities; provided that the department of agriculture shall only reimburse transportation costs associated with air cargo, parcel, or water cargo carrier services.

(b) To be eligible to receive reimbursement payments pursuant to this section, an agricultural producer shall be a farmer or rancher in the State and produce agricultural commodities for consumption within the State. Payments shall be disbursed to reimburse up to:

(1) One hundred per cent of total transportation costs for farms with gross income of less than $200,000 per year;

(2) Twenty five per cent of total transportation costs for farms with gross income of $200,000 to $1,000,000 per year; and

(3) Ten per cent of total transportation costs for farms with gross income of more than $1,000,000 per year.

Reimbursement payments disbursed pursuant to this section shall be in an amount not to exceed $5,000 per year.

SECTION 3. In accordance with section 9 of article VII of the Hawaii State Constitution and sections 37-91 and 37-93, Hawaii Revised Statutes, the legislature has determined that the appropriations contained in Act 164, Regular Session of 2023, and this Act will cause the state general fund expenditure ceiling for fiscal year 2024-2025 to be exceeded by $ or per cent. This current declaration takes into account general fund appropriations authorized for fiscal year 2024-2025 in Act 164, Regular Session of 2023, and this Act only. The reasons for exceeding the general fund expenditure ceiling are that:

(1) The appropriation made in this Act is necessary to serve the public interest; and

(2) The appropriation made in this Act meets the needs addressed by this Act.

SECTION 4. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2024-2025 for the department of agriculture to fund and administer the local agriculture transportation cost reimbursement incentive program established pursuant to this Act.

The sum appropriated shall be expended by the department of agriculture for the purposes of this Act.

SECTION 5. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2024.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2799
THIRTY-SECOND LEGISLATURE, 2024
STATE OF HAWAII