Coffee labeling in Hawai‘i – the 10% blend

In Hawai‘i, there is a law that regulates the blending and labeling of coffees.  If a company wants to blend a local coffee and name the origin on the package, then the package must contain at least 10% of that named origin and it must be labeled a certain way.  Many people dislike that the minimum content amount is 10% and, in many recent years, bills in the state legislature have appeared to increase this amount to at least 51%.  This year is no different.

Philosophically, it is an easy decision to make; the content minimum should increase.  However, it is a surprisingly tricky practical situation that is typically underexplored and underexplained.  In the recently released 2nd edition of The Hawai‘i Coffee Book, I included a section discussing this issue.  I won’t repeat it here. 

I have never taken an official position on this issue.  Rather, I’ve tried to keep my conversations balanced to the pros and cons of the issue.  Last night, however, I submitted public testimony in opposition to House Bill 1886 HD1.  In brief, I agree with the idea of increasing the minimum content, however, I fear we are not prepared for what could be disastrous, unintended consequences of this change.

I am posting my testimony below, though you can just as easily find it in the official record.  I am happy to discuss this topic with anyone; please, contact me directly.

Aloha Committee on Consumer Protection & Commerce,

            I write this testimony in opposition to this bill not because I don’t agree with the principle of it, rather, I fear for the consequences of what might happen should it become law.

            Ethically, it is easy to support an increase in the blend percentage minimum.  Certainly, if someone uses a name of something, most of the something should be in the item.  What’s not to like about such a philosophy? 

            Unfortunately, we can’t afford to be idealistic optimists, here, not after all these years living with the percentage minimum being at 10.  The increase in content could have a severe, negative impact on Kona coffee farmers (because, let’s be serious, this only really applies to Kona) and the price of green Kona coffee.  We simply don’t know what would happen.  We should ask ourselves, though, if the potential negative outcomes are quite severe because if they are, this well-intentioned, innocent bill, could be disastrous. 

            The thought experiment is as follows.  Let’s assume that the majority of Kona coffee is sold through 10% Kona blends, as we’re led to believe (although, I suspect even if a sizeable minority is sold through these channels that this scenario still holds).  Let’s also assume that most of the coffee produced for these blends comes from cherry farmers rather than estate farmers.  These 10% blends sell so well because the price is low and they contain some locally grown Kona coffee.  If the content is required to increase, the price will go up, too.  If the price increase is too great for most consumers, then the 51% blends won’t be purchased.  If they aren’t purchased, then the roasters won’t continue to buy coffee cherries and green Kona coffee.  If this happens, most of the farmers won’t have a market for their coffee and they’ll suffer for it.  In addition, the glut of coffee on the market will push prices down for everyone. 

            The truth is, we don’t know if this scenario will play out if we change the minimum percentage.  An alternative scenario is that the world is very thirsty for Kona coffee at its current price and there’s a large scarcity of it; increasing the blend percentage will have no real effect.  Or, maybe, another scenario will play out.  The question to ask must be “is the risk worth the reward?”

            I don’t know the answer to this question.  None of us do because we don’t know the risk.  An economic study- the excuse that has long held up passage of a bill supporting a blend percentage increase – would probably lend valuable insight.  Is the risk great enough to warrant some research, first?

            My belief is, yes, because I think the doomsday scenario that hurts our farmers is the likely outcome.  I could lay out the argument as to why I think so (and am happy to do so in a different forum as it is a complicated issue) but, in the end, it is just an educated guess. 

            I suggest not passing this bill.  Rather, help find a way to fund a study to explore the issue.  Let’s make this decision based on facts rather that dreams and supposition.

Respectfully Submitted,

Shawn Steiman, PhD
Coffee consultant and author of The Hawai‘i Coffee Book

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