LIHUE — The shipping company Young Brothers is trying to raise rates for the second time in two years, and some farmers fear the proposed 34% increase will devastate agriculture and livestock businesses.
John Gordines, president of the Kauai Farm Bureau, testified against the rate hike at a public hearing at the state building in Lihue Thursday evening, along with others whose businesses and livelihoods depend on imported supplies and intrastate commerce.
As a flower farmer, Gordines relies on regular shipments to supply his business with materials not produced on the island. He said rate a increase as large as the one Young Brothers is proposing would force him to pass the expense on to his customers.
“I can’t eat 34 percent. I cannot,” he said. “We’re trying, you know? Everybody’s trying.”
Sandra Larsen, a vice president with Young Brothers, explained the company’s position in a written statement Friday, saying the proposed increase “will place Young Brothers on a more sustainable path for the future.”
“We know that any rate increase has a real impact on the communities and customers we serve, and we welcome the opportunity to listen and learn,” Larsen said. “Steadily increasing operational costs and nearly eight years with no significant boost in revenue makes it necessary for us to reset our rates.”
Young Brothers vessels sail between Oahu, Hawaii island, Kauai, Maui, Molokai, with 12 regularly scheduled port calls a week and employs around 370 people locally, according to documents filed with the commission.
The shipping company cannot raise its rates without permission from the state Public Utilities Commission, a regulatory agency charged with overseeing the entities that provide services like electricity, gas, water and interisland transportation.
In January 2019, the commission approved a 4.3% rate increase, but that figure was less than a third of the 13.3% Young Brothers originally asked for in December 2017.
The shipping company was forced to accept a lower rate after the Consumer Advocacy Division of the Department of Commerce and Consumer Affairs found discrepancies in the figures used to justify the proposed price hike, according to documents filed online with the Public Utilities Commission.
The consumer advocate then launched an investigation of Young Brothers, and found that its application for a rate increase was based on figures that made it appear as though the company was in a worse financial position than it was.
According to the agreement, the company reached with the consumer advocate for the 2019 rate increase, Young Brothers representatives underestimated potential earnings and overestimated costs by millions of dollars.
Many of those who stand to get hit hardest by the proposed shipping costs are often not privy to the complex negotiations that ultimately affect their bottom line, according to Eric Hansen, who works for Go Farm Hawaii, a University of Hawaii-sponsored program that teaches students how to start and run their own commercial farm.
“It’s really important to check in with us guys,” he said after testifying Thursday. “No one’s really understanding what’s really going on in the trenches.”
Gordines echoed Hansen’s sentiment. He said he attended the meeting to make sure that farmers’ voices were heard.
“Agriculture needs our support. And when it comes to decision making, the best people to talk to are the farmers. Not the non-farmers. Not the people that plow with a pencil,” he said. “Don’t bite the hand that feeds you.”
This story has been edited to reflect accuracy.
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Caleb Loehrer, staff writer, can be reached at 245-0441 or cloehrer@thegardenisland.com.
