HB1221 HD1

SECTION 1. The cost of feed for livestock production in Hawaii can comprise up to seventy per cent of total production costs versus close to fifty per cent for mainland producers. There are currently five dairies and eight poultry farms of significant size, with combined gross annual revenues of over $26.4 million. Within the past year, two poultry farms and one dairy farm have gone out of business due to production cost increases largely attributed to the rising cost of feed for livestock animals. Currently, another dairy farm and another poultry farm are threatened by closure. Such closures increase dependence on imported foods and threaten the State's food security and ability to achieve levels of agricultural self sufficiency. Self sufficiency is critical to the State's ability to respond effectively in the event of natural disasters or disruptions in transportation.

Closure of local dairies and poultry farms also means that children and adults in Hawaii will no longer have the option of selecting fresher, locally produced milk, eggs, or chicken. The public has often expressed interest in obtaining locally produced milk but unfortunately, the dairies do not produce enough to meet the public demand. The public has expressed similar interest for island fresh chickens and eggs.

The purpose of this Act is to create a dairy and poultry farm revitalization and food security program to administer and disburse funds to qualified dairy and poultry farms that apply for and receive, if properly documented, a reimbursement for up to sixty per cent of each farm's feed expenses. Feed expenses shall not include the cost of transportation to Hawaii. The maximum amount of feed expenses for each farm shall not exceed sixty per cent of poultry feed expenditures for poultry feed and forty per cent of dairy feed expenditures incurred. With financial support, the dairy and poultry industries will be able to make investments in modern equipment, expand and improve their herds and flocks, and develop new markets and products. This financial support will serve a public purpose by enabling the dairy and poultry industries to stabilize their operations, thus contributing to food security, and make them more competitive with mainland suppliers in the future.

Milk and eggs provide essential nutritional needs to consumers. The perishability of these food products make these products susceptible to spoilage, which can cause food-borne illnesses to the consuming public. Without these local industries, all milk and eggs would need to be imported into the state, incurring up to ten days of shipping before being offered to the consumers. Increased shipping time decreases the expected shelf life of fresh milk and eggs.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

DAIRY AND POULTRY REVITALIZATION PROGRAM

§ -1 Definitions. As used in this chapter unless the context otherwise requires:

"Administrative costs" means costs associated with reviewing, approving, and recording expenditures and completing any reporting requirements associated with the grant program. "Administrative costs" shall not exceed .3 per cent of the total amount disbursed in any year within the two-year period.

"Department" means the department of agriculture.

"Qualified producer" means any person that, at the time of application for and disbursement of funds under this chapter, is in the business of producing milk from a herd located in Hawaii of not fewer than three hundred fifty cows; or producing eggs, or chickens for egg production or consumption, from a flock located in Hawaii of not fewer than three-thousand birds.

"Eggs" means chicken eggs, uncooked in shell.

"Milk" means the lacteal secretion, practically free from colostrums, obtained by the milking of healthy cows normally produced or marketed through the channels of the fluid milk trade.

§ -2 Grants; conditions and qualifications. (a) Applications for grants by qualified producers shall be submitted on a form furnished by the department and shall be filed with accompanying documentation of animal feed costs; provided that:

(1) The applicant shall comply with applicable federal and state laws prohibiting discrimination against any person on the basis of race, color, national origin, religion, creed, sex, age, sexual orientation, or disability;

(2) The applicant shall have applied for or received all applicable licenses or permits;

(3) The applicant shall indemnify and save harmless the State and its officers, agents, and employees from and against any and all claims arising out of or resulting from the feed purchased;

(4) The subsidy shall not be allowed for a year in which, in any three months of the year, the flock or herd size falls below five per cent or more of the required minimum three thousand birds or minimum three hundred fifty cows; and

(5) The department may, as deemed necessary, request an applicant to provide necessary information for the purposes of verifying flock or herd size and feed purchases.

(b) The applicant shall submit an annual financial statement of farm income and expenses incurred and other supporting documents as deemed necessary by the department which shall be filed with the department within ninety days following the close of the business’s fiscal year after the effective date of this Act.

(c) Funds shall be disbursed, upon approval by the department, to a qualified producer for up to sixty per cent of the feed costs incurred for poultry and egg production, and up to forty per cent of the feed costs incurred for milk production; provided that feed costs shall be limited to only the feed fed to the qualifying flock or herd and shall not include feed purchases for resale or gift. In no case shall funds be disbursed to a qualified producer when, after evaluation and verification by the department, the annual financial statement indicates a net profit of more than twelve per cent.

§ -3 Exemption from chapter 42F. The provisions of chapter 42F shall not apply to grants made pursuant to this chapter. All reimbursements shall be made only in accordance with the standards and conditions specified in section -2."

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $3,300,000 or so much thereof as may be necessary for fiscal year 2007-2008 and the sum of $3,300,000 or so much thereof as may be necessary for fiscal year 2008-2009 to be disbursed to qualified producers of milk, eggs, or chickens for the cost of feed for dairy cows and chickens and administrative costs under the dairy and poultry revitalization program. Funds shall not lapse until December 31, 2009.

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

SECTION 4. This Act shall take effect on July 1, 2007.

HOUSE OF REPRESENTATIVES	H.B. NO.	1221
TWENTY-FOURTH LEGISLATURE, 2007		H.D. 1
STATE OF HAWAII