[Senate Hearing 118-115] [From the U.S. Government Publishing Office] S. Hrg. 118-115 PROMOTING A RESILIENT ECONOMY FOR HAWAII FARM BUSINESSES ======================================================================= FIELD HEARING BEFORE THE COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP OF THE UNITED STATES SENATE ONE HUNDRED EIGHTEENTH CONGRESS FIRST SESSION __________ AUGUST 18, 2023 __________ Printed for the use of the Committee on Small Business and Entrepreneurship [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Available via the World Wide Web: http://www.govinfo.gov __________ U.S. GOVERNMENT PUBLISHING OFFICE 53-542 WASHINGTON : 2024 ----------------------------------------------------------------------------------- COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP ONE HUNDRED EIGHTEENTH CONGRESS ---------- BENJAMIN L. CARDIN, Maryland, Chairman JONI ERNST, Iowa, Ranking Member MARIA CANTWELL, Washington MARCO RUBIO, Florida JEANNE SHAHEEN, New Hampshire JAMES E. RISCH, Idaho EDWARD J. MARKEY, Massachusetts RAND PAUL, Kentucky CORY A. BOOKER, New Jersey TIM SCOTT, South Carolina CHRISTOPHER A. COONS, Delaware TODD YOUNG, Indiana MAZIE K. HIRONO, Hawaii JOHN KENNEDY, Louisiana TAMMY DUCKWORTH, Illinois JOSH HAWLEY, Missouri JACKY ROSEN, Nevada TED BUDD, North Carolina JOHN W. HICKENLOOPER, Colorado Sean Moore, Democratic Staff Director Meredith West, Republican Staff Director C O N T E N T S ---------- AUGUST 18, 2023 Opening Statements Page Mazie Hirono, U.S. Senator from Hawaii........................... 1 Jill Tokuda, Congresswoman from Hawaii........................... 2 Witnesses Mr. Dilawar Syed, Deputy Administrator, U.S. Small Business Administration, Washington, DC................................. 3 Prepared Statement........................................... 6 Mr. Chris Kanazawa, State Director for Hawaii and Western Pacific Rural Development, U.S. Department of Agriculture, Honolulu, HI 11 Prepared Statement........................................... 13 Ms. Sharon Hurd, Chairperson, Hawaii Department of Agriculture, Honolulu, HI................................................... 17 Prepared Statement........................................... 19 Dr. Mark Wright, Professor and Extension Entomologist, College of Tropical Agriculture and Human Resources, University of Hawaii at Manoa, Honolulu, HI (on behalf of Dr. Ania Wieczorek, Interim Dean and Director, College of Tropical Agriculture and Human Resources, University of Hawaii at Manoa, Honolulu, HI).. 26 Prepared Statement of Dr. Ania Wieczorek..................... 29 Mr. Joseph Burns, Interim State Director, Hawaii Small Business Development Center, Honolulu, HI............................... 35 Prepared Statement........................................... 38 Mr. Randy Cabral, President, Hawaii Farm Bureau, Volcano, HI..... 41 Prepared Statement........................................... 43 Mr. Murray Clay, President, Ulupono Initiative, Honoulu, HI...... 52 Prepared Statement........................................... 54 Questions for the Record Mr. Murray Clay Responses to questions submitted by Senator Hirono........... 68 Clay Addendum 1, Maui Wildfire and Water Resources Map........... 73 Clay Addendum 2, Wildlife and Surface Water Imagery Map, Map dated August 16, 2023.......................................... 74 Clay Addendum 3, Wildlife Surface Water and Recycled Water Map, Map dated August 16, 2023...................................... 75 Mr. Chris Kanazawa Responses to questions submitted by Senator Hirono........... 76 Additional Letters/Statements for the Record Ms. Alejandra Castillo, U.S. Economic Development Administration Statement dated August 18, 2023................................ 79 PROMOTING A RESILIENT ECONOMY FOR HAWAII FARM BUSINESSES ---------- Friday, August 18, 2023 United States Senate, Committee on Small Business and Entrepreneurship, Hilo, HI. The committee met, pursuant to notice, at 9:30 a.m. HST, in University of Hawaii at Hilo, Haleolelo Lumi Pahiahia, 113 Nowelo Street, Hilo, Hawaii, Hon. Mazie Hirono presiding. Present: Senator Hirono [presiding], and Representative Tokuda. OPENING STATEMENT OF SENATOR HIRONO Senator Hirono. This hearing of the Senate Small Business committee will come to order. Good morning and thank you for joining us at today's field hearing, as I mentioned, of the Senate Committee on Small Business and Entrepreneurship. I thank our witnesses for being here today, and everyone who made this hearing possible, including the University of Hawaii at Hilo College of Hawaiian Language, which is hosting us here. I would like to begin by acknowledging the tragedy that continues to unfold on Maui, as well as the fires here on Hawaii Island. In the last week, we have all witnessed wildfires tear through our communities on these islands, devastating businesses and homes, displacing residents and visitors, causing injury, and claiming lives. Those who have lost their lives remain in our thoughts, as do their loved ones. While the devastation is on an unimaginable scale, these communities are resilient, and we will rebuild together. That rebuilding will take time. As we begin this long process, we must do so with an eye toward resiliency and sustainability. We need to make sure other communities in Hawaii and across our country are taking steps to mitigate the risks of fires and other natural disasters. And we are seeing many more natural disasters--the frequency and the harm of these natural disasters or events that we are seeing, as I said, more and more. One of the most important lessons we can learn from the tragedy that we are experiencing is the importance of active management of our lands and agriculture. Farms and Ag producers have long played a vital role in our State, not only feeding our communities, but also managing and caring for our land. It is critical that they have the support they need to prosper across our State. During today's hearing, we will hear about Federal programs that are available to support Hawaii's communities and businesses, including farm businesses recover from the devastation we have witnessed over the past week. Already, the Small Business Administration has unlocked financial assistance for businesses and individuals impacted by these fires. Additionally, Federal agencies from FEMA to the USDA have provided human, financial, and other assistance to support our recovery efforts. And just days ago, I welcomed SBA Administrator Guzman to Maui to witness firsthand the destruction, and I am grateful for her support and the support of the SBA. According to the U.S. Small Business Administration, the SBA, there are more than 140,000 small businesses in Hawaii. And Administrator Guzman mentioned to me there are some 700 small businesses in Lahaina. These small businesses employ over 270,000 workers and make up more than 99 percent of all small businesses in our State. Of these, more than 2,000 small businesses are in agriculture, forestry, fishing, and hunting. Many of these businesses have been significantly impacted in the past days. As Congress prepares to consider the once every five years Farm Bill, I want to ensure we are considering the needs of these businesses. Supporting farm businesses is critical to our economy, our land, and the sustainability of our communities moving forward. I look forward to hearing from our witnesses today about what the Federal Government and other organizations on the ground are doing to support our communities, and what more we can do in the months and years ahead. And now I am glad that we are joined today by Representative Jill Tokuda. And for her opening remarks, Congresswoman Tokuda. STATEMENT OF CONGRESSWOMAN TOKUDA Ms. Tokuda. Thank you, Senator. First of all, I would just like to express my sincere gratitude to Senator Hirono and the Senate Small Business and Entrepreneurship committee for hosting today's field hearing. I appreciate this opportunity to also sit side by side, listen to the testimony, ask questions, and engage and participate in what will be a very important discussion on promoting resiliency among Hawaii's farm business and our agriculture industry. As a member of the House Agriculture committee in Congress, I am advocating for policies in this year's Farm Bill that reflect the needs of our farmers, ranchers, and producers, the struggles they have, but more importantly, the hope and the opportunity that they see, as agriculture is a thriving part of an economy going forward here in our islands. You know, there is a lot I wanted to say before this hearing started. When we were thinking about this weeks ago, and as Senator Hirono so eloquently said, so much has happened in the last week that really shifted all of our thoughts and our minds, and where our hearts are at this very moment. What I can say is, though, we have experienced devastation here in Hawaii before. Agriculture is no stranger to this as well. If you think of the way of sugar and pine, we know that at the end of the day we must stick together, pull together to be resilient, to overcome, and provide for our families and for our communities. Right now, going through the State, talking about the Farm Bill over the last so many months, I have heard from farmers, ranchers, and producers of the struggles they have had to be able to manage what is a small business--but big business to them. But what their hopes are is that we can continue to have agriculture thriving here for generations and generations to come. Focusing on this resiliency that we have had historically with agriculture---- [Technical problems.] Ms. Tokuda. Even the mic agrees. This is a very important topic, worthy of amplification. But knowing the struggles that we have been through, through agriculture, I think there is much that we can learn together in terms of where we must go heading into the future. To all of the members of the panel today, thank you for being here to express your--both your support, your guidance, and your insight in terms of where we can go. You know, Ag must continue to be part of the equation when it comes to a resilient economy for Hawaii. And while most of our agriculture farmers, and ranchers, and producers are small, it is, as I said, big business for us here in Hawaii. So, mahalo, again for being here today, and I look forward to the engagement and discussion. Senator Hirono. Thank you, Congresswoman Tokuda. Today's hearing will feature two panels of witnesses. Panel one will feature Federal and State witnesses who have experience working on programs that support businesses, including farm businesses. These witnesses have a detailed knowledge of these programs and will be able to answer questions about how the programs work, and the impact they have on businesses. Our panels include Chris Kanazawa from USDA, Sharon Hurd from the Hawaii Department of Agriculture, and Dilawar Syed, Deputy Administrator of the Small Business Administration. Thank you all for being here. I should also note that Mr. Syed, our recently confirmed Deputy Administrator of the SBA, traveled all the way from Washington, D.C. to be here with us today, so a special mahalo to you, Administrator Syed. And with that, we will now hear from our witnesses, starting from you, Mr. Syed. STATEMENT OF DILAWAR SYED, DEPUTY ADMINISTRATOR, U.S. SMALL BUSINESS ADMINISTRATION, WASHINGTON, D.C. Mr. Syed. Aloha. Thank you, Senator Hirono, for holding this hearing. Let me start by offering my deepest--my deepest condolences to all those who have lost loved ones. You know, so many precious lives lost. It is unimaginable. The pictures just keep getting worse and worse. Our hearts are heavy, but I want you to know, Senator and Congresswoman, and members of the community, that we are absolutely committed, committed to supporting the people of Maui for as long as it takes, because we know, as you mentioned, this is going to be a long, long, sustained recovery. SBA Administrator Guzman was on the ground last weekend with FEMA Administrator Criswell to survey the damage, and they joined you. And since my arrival in the State early this week, I have spent time with their teams to ensure that our plans, SBA's plans, are adequate to meet this daunting challenge, and I will continue to do so. As a frontline disaster relief agency, SBA is providing low interest loans to affected residents, businesses, and non- profits in Maui. We have already accepted hundreds of applications, loan applications, and approved--I am happy to report, that we have approved the first set of home loans over the last couple of days. SBA staff is on the ground. As of last night, we had 34 folks fully focused and dedicated to the disaster recovery. 29 are actually in Maui, but 4 of them are in Honolulu helping coordinate the effort. And we opened a business recovery center in Maui on Wednesday. If you are watching or later on if you see this, if you are affected and you want to apply for an assistance, the fastest way to do that is to register through disasterassistance.gov. You can also apply through FEMA's mobile app for assistance or by calling FEMA hotline at 1-800-621-3362. Now turning to the subject of today's hearing, it is an honor to be here as the Deputy Administrator of the SBA. Because of supporters like yourself and your leadership, Senator Hirono, I am honored to have been confirmed by the U.S. Senate in a bipartisan word, and very proud to be serving our nation's 33 million small businesses. And let me say this, the tragedies that we have seen here that have befallen on this State is one of the reasons why this is such a privilege to serve and help these communities recover. I want to thank you for inviting me to talk about our work to support small businesses in Hawaii and help them realize their entrepreneur dream. Now, the SBA district office in Hawaii serves the largest geographic region of any district in the nation, Senator. They not only serve Hawaii, but also Guam, the Northern Mariana Islands, and other U.S. territories. Hawaii, just like the rest of the United States, is experiencing a record boom in new small businesses applications. From 2021 to 2022, nearly 38,000 Hawaiians filed applications to start a small business. That is, for context, 63 percent higher than the rate we saw before the pandemic. Last year, when it comes to capital access at core programs, SBA approved more than $19 million in 7(a) loans and almost similar amount, $19 plus million in 504 loans to Hawaiian owned businesses. In 2023 so far, we are actually tracking higher when it comes to loan volume. And to date, we have approved 115 small businesses for 7(a) loans worth $41 million. Another very important way we help small businesses is by plugging them into SBA services through our resource partner network. In Hilo, we have our Hawaii Small Business Drop in Center that provides in-person services to business owners on the Big Island. Last year, the overall SBDC network in Hawaii served more than 1,250 clients, helped 67 new businesses get started, and supported more than 3,300 local jobs. I want to highlight one of these success stories in Hilo. Emily Taaroa was born in the Big Island and studied agriculture at the University of Hawaii. She and her husband started Punachicks. Many of you may be familiar with the business. It is an organic chicken farm. Today, their operation encompasses more than 25 acres, and their chicken is sold all across the State. And this business benefited from resources available through SBA resource partner. But we also want to acknowledge that there are many agriculture businesses that don't have access to those resources, that we have got to reach to them. And yesterday we met a number of coffee growers in Kona Center who clearly could use our assistance as well, especially when it comes to exporting. We know that only 11 percent of agri-businesses in Hawaii export internationally, and we want to change that. SBA Office of International Trade helps businesses access the capital necessary to enter foreign markets. We also provide grants to State organizations to help small businesses export through the State trade expansion program, or STEP. Since 2018, Hawaii has received $2.6 million in STEP grants, which has led to $5.8 million in exports. As the Administrator and I travel across the country, the number one challenge we hear from small businesses is about access to capital. And especially when it comes to small dollar lending, Senator, especially under $150,000, that has dried out and it has gone down significantly over the past decade. So, to address this gap, SBA has unveiled two very important new rules this year to reduce the unnecessary burden that prevents some lenders from participating in our programs. Based on feedback we see from our lending partners, we have simplified the process for lenders to make an SBA loan. We also are working to drive more competition in the marketplace so that business owners in Hawaii have more options to secure financing that is backed by SBA. We removed an outdated moratorium on small business lending companies, SBLCs, which will expand access to capital in the underserved market. And let me underscore that point, that moratorium on SBLCs had been in place since President Reagan's Administration. For 41 years, we could only support 14 SBLCs in our entire union. And now, thanks to the lifting of the moratorium, we have the opportunity to open three more SBLCs that will serve communities such as Hawaii. Again, Senator, thank you so much for the opportunity to be here and look forward to your questions. [The prepared statement of Mr. Syed follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Senator Hirono. Thank you very much. Now we are going to hear from Chris Kanazawa, who is the State Director for Hawaii and Western Pacific Rural Development, USDA. And this is your second iteration, right, in this position. So, I am really glad that we have someone who is already familiar with many of the issues that come to you, and I have known Chris for a long time, and he is a can-do guy, and that is the kind of person--as is Administrator Syed, by the way. We want only can do people to come and talk with us about how we can support our businesses, especially in the Ag sector. So, Chris, please. STATEMENT OF CHRIS KANAZAWA, STATE DIRECTOR FOR HAWAII AND WESTERN PACIFIC RURAL DEVELOPMENT, U.S. DEPARTMENT OF AGRICULTURE, HONOLULU, HAWAII Mr. Kanazawa. Aloha. Thank you, Senator Hirono, Congresswoman Tokuda for the opportunity to speak before the Senate committee on Small Business and Entrepreneurship to share the role of the United States Department of Agriculture's role--mission area, how it plays in advancing prosperity for farmers and ranchers, as well as always, rural communities. I am Chris Kanazawa, Hawaii State Director for USDA Rural Development. My area of responsibility covers the State of Hawaii, the U.S. territories of Guam and American Samoa, the U.S. Commonwealth of the Northern Mariana Islands, and three freely associate States of the Republic of Marshall Islands, the Federated States of Micronesia, and the Republic of Palau. Hawaii Rural Development has five offices in the Hawaiian Islands of Maui, Kauai, Molokai, and here on the Big Island of Hawaii. On behalf of the USDA Rural Development, I would like to offer my heartfelt condolences to those who have lost loved ones in the wildfires in Maui. My mother was from Maui, and so I have much aloha for the island and the community. It is impossible to measure the devastation that these wildfires have brought to Hawaii and Maui when you consider all the lives that have been lost and upended. For as long as it takes, the Biden-Harris Administration and USDA will deploy every resource at our disposal to help the families and communities rebuild their lives and homes. We are thankful that all of our employees and families are safe. However, Maui is a small community, and we all know someone who has been affected by the wildfire. Our employees grieve for the community of Lahaina, just as all of Hawaii grieves. The loss of a historic community with rich culture, while tragic, cannot compare to the devastating emotion felt by our employees and all the people of Hawaii. Rule development continues to be strong and is already working to utilize resources at our disposal to help displaced communities. Rural development programs, while not designed as emergency response programs, will help rebuild the quality of life and increase economic opportunities for the community with financial assistance for housing, small businesses, farms and ranches, health, education, and social community facilities, infrastructure, and utilities. I have submitted written testimony that provides more detail on Rural Development's ongoing programs that support small businesses and agriculture producers, and I am happy to follow up on any questions you may have. But I would like to spend my time with you today to talk about the Rural Development is doing--what Rural Development is doing as it relates to the current disaster efforts. We are reaching out to all of our housing borrowers affected by the wildfires with we care letters, offering claims and payment assistance packages. Rural Development has increased its housing repair grants from $30,000 to $40,000, and waiving age requirements. We are taking inventory of vacancies in Rural Development's multifamily housing projects that may be used to offer temporary housing for displaced residents. Rural Development also has emergency and intermittent--and imminent community water assistance grants that are available to help communities prepare and recover from an emergency that threatens the availability of safe, reliable drinking water. Rule Development is the long term rebuilding partner. We are here for the duration and standby ready to support our rural communities. Rural Development programs will play a key role in rebuilding the devastated communities from the ground up. Rural Development's rural housing services will provide financial assistance for affordable housing and community facilities, for medical, education, social, and public service needs. The Rural Business and Cooperative Services will assist small rural businesses for facilities and equipment, technical assistance, energy efficiency systems and improvements, and working capital. And the Rural Utilities will finance basic water and wastewater infrastructure, telecommunication, high speed internet, broadband, and electrical infrastructure. This committee, and the agencies on this panel, have the greatest opportunity to support these businesses to rebuild and reopen, and Rural Development and USDA are prepared to stand by and help. Mahalo, Senator Hirono, Congresswoman Tokuda for this opportunity to share with the committee, USDA Rural Development's activities in supporting small businesses, agriculture, and rural communities. [The prepared statement of Mr. Kanazawa follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Senator Hirono. Thank you very much, Mr. Kanazawa. Sharon Hurd is the Director of the State Department of Agriculture. I know you have a lot of experience in supporting agriculture, but it remains a very challenging for us to really support Ag in the way that will contribute much more to our food sustainability. So, please go ahead with your testimony, Ms. Hurd. STATEMENT OF SHARON HURD, CHAIRPERSON, HAWAII DEPARTMENT OF AGRICULTURE, HONOLULU, HAWAII Ms. Hurd. Thank you, Senator Hirono, Representative Tokuda. With Maui at top of mind, with Hawaii Island top of mind, I am going to--I am honored and privileged to have this opportunity to speak on behalf of the Department of Agriculture. On my testimony, on behalf of the topic, promoting a resilient economy for Hawaii businesses, is basically going to be ways to improve and expand on the Federal programs that support Hawaii businesses in the agricultural sector. Our Congressional delegation does a fabulous job bringing us the kinds of grants that we need. They really do. If you-- grants.gov, you can see all the grants that they bring. But I am here to testify that the main challenges that Hawaii small farmers face in seeking Federal grants are, the first thing is that applying and administering the grants is really tough. It is very complex. You really need a simplicity HR, or some kind of a back room to help you with it, because it is complicated. The second thing that is difficult for small farmers to attach themselves to a Federal grant is that sometimes the concepts that the Federal grant supports, it is pretty, I am going to say, ivory tower and kind of a theoretical type concept. Sustainability, climate change, climate resiliency, cooperative interactions, all really important concepts, but to a small farmer, they don't find a way to attach themselves to that to secure the funding that they need. And the third thing that I am going to see is a challenge to the small farmers in accessing Federal grants, is that while they are doing that, there is actually a loss of productivity while executing the grant. In the 2017 Census of Agriculture, of the 7,328 farms in Hawaii, 78 percent of the farmers reported farm value sales of less than $25,000. So, 78 percent reports less than $25,000. Those are subsistence farmers or farmers that do farming on the side. We have to help these farmers scale up, provide them some sort of resources because they are ready. They are ready to bust out. They just need to know how to do that. 62 percent reported farm value sales of less than $10,000. And small family farms make up 91 percent of all the Hawaii farms. Many of the new farmers are immigrants from Southeast Asia or new farmers from the local population. So, while there are various solutions to these three barriers that I just mentioned--for instance, include funding in the grant to--for a service provider to help them actually administer the grant. Develop grant programs that focus on the farmer, how to support their operations, provide what they need, and meet the conceptual goals that the nation needs to meet. And then the third is to create outcomes and indicators that the small farmer find--sorry, create outcomes and indicators that the small farmer finds value, he can benefit from that, and continue to benefit from that. The outcomes and indicators need to be relevant to them. Okay, so what I want to say is those are good challenges, but what is going on today is really helpful. And what it is, is that recent Federal programs such as the Regional Food Business Center Program, Hawaii was awarded $30 million, UH. The Resilient Food Systems Infrastructure Program was a $3.2 million award block grant. Partnerships for Climate Smart Commodities was $40 million. The reason I highlight these grants is because they are top down grants. They are large amounts of money, but they make-- they force the community to collaborate. Department is not competing with UH, is not competing with groups who are working together to come up with a program that is rich and robust, then we were able to help the farmer with their programs. If their farmers are not writing it, we are. These really robust grants are really good for the direction that we are going. I think it is wonderful. Programs, however--programs such as the specialty crop block grant program or micro grants for food security, they also are wonderful and really make a difference, are game changers for the small individual type farmers. So, the programs you are providing, excellent. I like to focus on the regional type partnerships as well as the individual farmers. And I think the pandemic has really focused this on resilience. And I think a lot of our programs today are focused on resilience. So, thank you for the opportunity. Waiting for the questions. [The prepared statement of Ms. Hurd follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Senator Hirono. Thank you. We will now move to approximately 20 minutes of questions from me and Congresswoman Tokuda. So, Ms. Hurd, since we heard from you last, you talked about a lot of Federal grants that are available. Are they-- first of all, are the grants applicable enough in terms of the criteria for small businesses, particularly farmers, to apply for these grants, or are there aspects to these grants that make it hard for our people to qualify? And also, if there is enough in grant funds that go to our farmers. And I think I heard you say that the 75 percent of our people in Ag what, make less than $25,000? So, are those some of the limitations in applying for Federal grants in the Ag sector? Ms. Hurd. I think what you are doing today is really---- Senator Hirono. Can you get closer to your mic, please. Ms. Hurd. Yes, sure. I think what you are doing today is really good. You are actually targeting that group of people that are reporting income of less than--sales of less than $25,000, with grants like the current Resilient Food Systems Infrastructure grant. The one component in that grant that was really insightful was the equipment piece. You awarded between $10,000 and $100,000 to small businesses for equipment with no match. Now, that is a really impactful piece because if you are a food hub and all you need is additional refrigeration to take in food from an additional 20 farmers--refrigeration is expensive for a food hub, but with this $100,000 limit, they can go out and buy four different freezers and start really scaling up, and helping the farmer then, passing it on to the farmer to grow more and make more. So that is--that was good. As far as what you said earlier, do we need more money? Senator, the micro grants for food security was a wonderful grant. It was difficult to administer, but the amount of money, $5,000 made such a difference to the individual homeowner. Senator Hirono. And are those grants from USDA? Ms. Hurd. Yes, USDA AMS. Senator Hirono. So, I think that we need to recognize how important it is for flexibility for USDA. And Mr. Kanazawa, I visited with the largest food bank in Hawaii. And one of the most desirable things that their clients need are fresh fruits produce. They cannot use, as far as I understand, USDA money for those items that they--our food banks have to use private sources of funds to acquire the fresh produce. And we don't get enough of it, and this is something that I want to very much follow up with you that we don't get, I think, our share, Hawaii, our share of the kinds of this kind of produce that goes to other food banks in the rest of the country because of just distance, because of other limitations. And for Ms. Hurd, we would like our food banks to purchase food from our farmers, and right now they can't use Federal resources to do that. So somewhere along the way, we need to have these things come to, you know, a cooperation and to identify that this is an issue, and to work on it because this is another way that we can support Ag in Hawaii. And Ag in Hawaii needs a lot of support. And even the food banks being able to purchase our farmers produce, that would be, I think, a very positive step. So. Mr. Kanazawa, I would really like your assistance in figuring out this part of USDA's limitations. Mr. Syed, I know that SBA is one of the agencies in what we refer to as the, all of the family of State--Federal agencies that are present on Maui, and SBA is going to be a long term partner in our recovery. So how long will SBA be on Maui, can you tell us, in terms of helping the recovery efforts there, because there are some 700 businesses, small businesses. I don't know whether they have already signed up. I mean, they are still going through a huge time of loss. So can you just talk a little bit about how your presence will continue on Maui, which is my hope and expectation. Mr. Syed. Absolutely, Senator. So, we were on the ground literally as soon as the disaster hit. And what I can assure you is that we will stay on the ground as long as it takes to support those who need us. Small business owners, as well as residents, because we also process home loans, as well as folks who have lost personal property, including cars. And you can see in pictures, virtually everyone lost their vehicle as well. So, in short, we are going to stay there, as the President said, follow the response, and SBA, I can speak on behalf of the SBA Administrator, that we will be on the ground for as long as it takes. Let me also share with you that when you look at what has happened in the country when it comes to fire disasters, Paradise, California, my home State, it was big news about a year ago, two years ago, devastation that we had never seen in the State. The city has yet to recover. This takes a long time---- Senator Hirono. Yes. Mr. Syed. And this is even frankly, more challenging here. You know, we were talking with the disaster teams and normally they have been--experience with flooding and tornadoes, and often that, you know, folks that are stranded, they are helping them. And they go door to door, and there are no doors here, Senator. Like there is nothing in this community. So, the playbook is different. It is going to have to take us to stay there for a long haul, talk to resource partners, build relationships in the community. The community is dispersed all over the place. They have gone to the families. They have obviously, some of them are in shelters. So, we are going to have to put this for a very, very long time, and we are committed to doing that. Senator Hirono. Thank you. And when I mentioned the Federal family of agencies, I am talking about not only SBA, and I think the SBA has been there at every disaster and their long term commitment is very much appreciated. But the Federal family includes the Department of Defense, Energy, of course, USDA, EPA, DOT, Army Corps. So, this is what we refer to as a Federal family of agencies. And the continuity of effort will be very much required because the recovery of Maui, as well as on the Big Island, will take time and resources, and we need to have a continuing commitment. As we focus on the support for Ag, with especially as Congresswoman Tokuda is on the Ag committee and we are working on the five year new Farm Bill, it is going to be really important that that bill reflects a lot of support for the kind of agriculture that we have in Hawaii. We are not the commodity crops. We are specialty crops. Everything in Hawaii is considered specialty crops. And for too long, in my view, our Ag programs have supported the commodity crops. That would be cotton, soybeans, you know those are the big commodity crops and we do not have any of those. So, I want to make sure, working with Congresswoman Tokuda, that the next Farm Bill very much reflects the commitment to the small farmers that we have. Mr. Syed, you also referred to the coffee growers yesterday at Kona, and I think they said that they don't have that much familiarity with SBA and what programs SBA offers. So, what is the thing that you mention to them that you would be committed to doing in working with them? Mr. Syed. Absolutely. And well, actually, let me echo what you said. Hawaii is the only State in the union that produces coffee. And I think many of us are coffee drinkers and we should appreciate that. So, I hear you that there should be greater awareness of SBA resources to our agriculture businesses here, including coffee growers. So, what I proposed was that I want to lead a session, a virtual session, where we can expose our breadth of our services and programs to Kona based coffee growers so they know what are the various loan programs, other entrepreneurial programs, so they can benefit from. We have welcomed the new head of Rural Affairs. You know, Ania is here with me, and so she will help lead-- and I will personally be involved in that as well, to make sure that folks know what programs we have to support them. Senator Hirono. I am really glad that you heard from the coffee brewers directly, because one of the challenges that we always face is really the awareness of the people here, and I would say especially in the rural communities, awareness of the support they can get from Federal programs. So, they need to know about it. Outreach is really important and follow through. So, it was really great that you were there. Congresswoman Tokuda. Ms. Tokuda. Thank you. And I just wanted to reiterate as well, Senator Hirono did mention our desire to be able to purchase more food for our food banks from our local producers. She and I are actually leading up the effort to really make sure in the 2023 Farm Bill that we have the TEFAP direct purchase go through, so noncontiguous States like ourselves can really make sure we can do direct purchasing and we can purchase right from our farmers and get nutritious food into-- to our people, onto their tables. So really appreciate her leadership on this particular effort and working with me on this. Mr. Syed, you know, I want to take it from two approaches, one, the lender's perspective, and one, the applicant's perspective. So, I wanted to start with the applicant's perspective, which I think is important. You mentioned a decline in small dollar lending that we have seen likely primarily among the 7(a) small loan programs, so $150,000 or less. Is SBA able to offer technical assistance, and for us here in Hawaii, language access for those individuals that really need it to make these loans more accessible for people? Can we look at even more streamlining and simplicity because of the disastrous situation that we are in? And I know collateral requirements are still in existence for loans of $50,000 to $150,000. Is there some consideration to maybe removing some of those collateral requirements? And as you look at Lahaina, going up to $500,000, we are going to see significant loans needed given the scale of the damage. Can we also consider some additional easing back of the collateral requirements, given the kind of money that is going to be required of people who right now have nothing? Mr. Syed. Absolutely. So, it is two very important points that while we are on the ground, we want to make sure we assist applicants who, by the way, are traumatized right now as we speak, assessing what all they have lost, which is virtually everything and what their decisions are about rebuilding their lives and businesses. And when I was looking at the data, there is a significant, you know, minority population, obviously, the Vietnamese communities, the Filipino community, native Hawaiian population, and we are looking at what language assistance we can provide. I was talking to our Lieutenant Governor Luke the other day when we were at the food bank, and she made a very good point, and she said, while some of the folks may be language wise okay, but when it comes to filling an application of this nature, it gets pretty technical, and you want to provide that support. So, we will bring in language resources to that and to make sure that there is no friction in the process of them filling out forms. With respect to collateral, my understanding is that collateral is not a requirement, but we do ask folks, in the current process to actually, if the ability to have collateral in there. We will explore what is possible here, again, to take those burdens off, given that folks have lost everything. There is no--in many cases, perhaps there is no collateral to be even provided, and we have to see that. We have to be empathetic to that. So, we will look what we can do there, what the rules there are, and if we need to also make some changes---- Ms. Tokuda. Very much appreciate that. Yes, and maybe looking now at the lenders portion, you mentioned in your testimony that earlier this year, you took steps to simplify and streamline the process, so we have more lenders, more competitions. Just given where we are right now in a disaster situation, we need to increase the amount of lenders and competition. Is there anything more we can do to remove additional complexities to the program so we can get people timely access to the funds that they need? Mr. Syed. So, I think the pandemic, you know, taught us this lesson that you had--it was really community banks and CDFIs, local banks that actually reached underserved, that reached black owned businesses, brown owned businesses. The big banks did not do that. And here again, we have a similar situation. And that is precisely why, Congresswoman, we have been making these steps, realizing that we are going to see more instances of these disasters in the face of climate change, and we want to make lending more available at folks' doorstep. So, what we are hoping is that when it comes to Community Advantage Program that we do have, which we didn't talk about in my testimony, that there are--my understanding is there are lenders from Hawaii who are applying. I hope it will encourage more lenders to apply. And if they of course, if they go through the process, that they could be one of the--one of the sources of capital that is backed by--supported by SBA that can be made available in the community. What we have to recognize is, I think you all have said this, this is not a one-week, two-weeks, one-month, two-month, six-month, one-year problem. This is a multi-year problem. Even if some of those banks are not, let's say, available today, and even if they come online, let's say, in a year from now, they would still add a ton of value because there is so much that has to be built. We are literally in a war zone like situation, and everything has been raised to ground. So, the good news is that we are--our reforms have created an environment where we are welcoming these local banks now, learning from the pandemic lessons, and thanks to the Administrator's very strong leadership. And we want to invite non-local banks institution to apply so they can be in the communities offering these loan products backed by SBA. Ms. Tokuda. We definitely would love to see more local participation---- Mr. Syed. Absolutely. Ms. Tokuda. They understand our community and are very sensitive to where everyone is at right now. I would also encourage--I am heartened to hear that you will be leading a virtual session for more of our producers. I would encourage as well, if it is possible to do some in- person throughout our islands. Broadband access is sometimes difficult for, you know, some of our communities, and even having the time to log on to a virtual session can be difficult. So, I am sure working with our offices, if we can take it to the people, I think that would be outstanding as well. And language truly is an issue. This county is the most populated with non-English speakers in the entire State. So, it is not just Tagalog or Spanish, it is Ilocano, it is many of our, you know, different languages as well. So, you know, please top us to assist in this particular process. Mr. Kanazawa, I just have one quick question. You really covered a lot of good things. Now, in terms of the Value Added Producers Grant, this is long term really that we are looking at--in order for people to rebuild and to continue to sustain and build their operations throughout our State, we know that they need processing facilities, they need access to things that will allow them to create value added products. Now, it is hard for a producer to do one by one. Have you been looking at funding, perhaps co-op type of opportunities for a number of different growers or producers in a region line? Lahaina could actually be one of these particular areas where, whether it is commercial kitchens or processing facilities, being able to access this is something they can afford to do on their own, but as a group it might really propel an industry forward and support numbers of different applicants. Mr. Kanazawa. Yes. I totally agree. Given the size of our farms, our small farms, it is important to ensure that there is some industry infrastructure that is available. And so Rural Development does have funding for food hubs, innovation centers that will provide for centralized processing. So, we do provide that broad regional infrastructure. In addition to that, though, specific to, as you mentioned, the Value Added Producers Grant, we are--Rural Development provides funding to help the profitability of our farmers, whether it be through our Value Added Producers Grant, whether it be even our Rural Energy for America Program that lowers costs. As an example, here on the Big Island, there is a Hawaii Oulu producers cooperative that has used our Rural Energy for America Program Grant, and they have been in--and this cooperative is made up of over 100 small farms across four islands. They have been able to generate over 65--67 percent of their energy through a solar photovoltaic system, and they have been able to save over 84,000 kilowatt hours through this. So, all of this, what we look at in supporting our Ag community, is how do we find ways to improve their profitability. And so, through individual programs that help individual farms, as well as the regional infrastructure, Rural Development is prepared to support. Ms. Tokuda. Thank you. And Mr. Kanazawa, I would just ask, I know you eloquently stated the ways that you are supporting our community now, but if you can help provide our office with information how immediately you are providing relief to folks in Maui on housing, access to drinking water, and broadband. These are three critical areas to keep people safe and connected, which we are prioritizing right now. But we would love to go to continue to put that out towards the community, to let them know what you are doing. And we know in the long term, you are going to be a valuable asset to providing in these areas. Mr. Kanazawa. Yes. Ms. Tokuda. And Ms. Hurd, I would just state that I do know--I appreciate the comments of all the things that are needed from a technical assistance perspective, and the needs of farmers, and the grants that are available. I just commit to continuing to work with you to make sure we have the capacity to actually apply and execute these grants because we know that there is money out there, but these are very busy folks that are helping to feed everyone, and we need to make sure we have that technical assistance, the capacity to apply for the money they deserve. Thank you, Senator. Senator Hirono. Thank you. And Congresswoman Tokuda, I am really glad you happened to mention the importance of food hubs. As it turned out, I visited the Malama Kauai food hub, and this is an actual building where the farmers, some small farmers who could never afford to have a building like this, where they can bring their produce process to value added, a certified kitchen, all of that, without some support. And I have provided $2.4 million in earmarks, so, for that. And so there are things that we can do along those lines. But I would say that food hubs are a really important way that we can support the small farmers in scaling up value added, all of that. I have one question more for Mr. Syed. Can you tell me whether the Supreme Court's affirmative action decision has impacted SBA's ability to target women and minorities in your programs? Mr. Syed. Senator, I am glad you asked the question. Obviously, we are tracking this. We are--we don't see an impact, or we have not seen any guidance made available. But I can also follow up with you to see whether something that I am not aware of that we are doing differently. Senator Hirono. I think to the extent that SBA programs target women for a particular kind of support, that--I think that is something that the SBA could have an impact. So, you know what, I just want everyone to know, the Supreme Court's decisions have an impact on a lot of different things that you may not think is being resolved or addressed by the Supreme Court. But this is one area that we are tracking because the Small Business committee spends quite a lot of time talking about and asking SBA whether they are meeting their target growth goals for supporting minority businesses and women owned businesses. With that, we are going to take a five minute recess for the second panel. I thank the first panel for your testimony. Mahalo. Mr. Syed. Mahalo. Senator Hirono. Five minute break. [Break.] Senator Hirono. The hearing will resume. We will now convene our second panel. Just to reiterate, in panel one, we heard from Federal and State witnesses who have experience working on programs that support businesses. And these witnesses shared their knowledge of the programs and answered questions about how the programs work. And, of course, there is always room for improvement. We thank them again for being here. In panel two, we will hear from private and academic witnesses who have firsthand experience working with businesses and who are familiar with the challenges they face. They include Mark Wright from the College of Tropical Agriculture and, what is it, Human Resources--sorry, CTAHR, Joe Burns from Hawaii Small Business Development Center, Randy Cabral from the Hawaii Farm Bill, and Murray Clay from the Ulupono Initiative, a nonprofit organization focused on locally produced food, renewable energy, and clean transportation. Thank you all for being here. So, with that, we will start with our first witness, Dr. Wright. STATEMENT OF MARK WRIGHT, PROFESSOR AND EXTENSION ENTOMOLOGIST, COLLEGE OF TROPICAL AGRICULTURE AND HUMAN RESOURCES, UNIVERSITY OF HAWAII AT MANOA, HONOLULU, HAWAII Dr. Wright. Good morning. Aloha. I am Mark Wright. I am speaking on behalf of Dr. Ania Wieczorek, our Interim Dean, who is just recovering from COVID. I am here to come and speak on her behalf. I am with the College of Tropical Agriculture, University of Hawaii at Manoa, statewide responsibilities for research extension and education in agriculture and a broad range of topics. With a funding college of the University of Hawaii, as you probably all know, we play a role in wide ranging transdisciplinary education, which provides extensive support in agriculture and natural resource management, including things like invasive species management and so on, which are fundamentally important, as we know, to the State. During the past few years, our college underwent a strategic positioning effort, during the whole pandemic in fact, during which we collected data from more than 5,000 individuals regarding requirements of various stakeholders in the State. And the result was a strategic document outlining four main initiatives. Among those was enhancing economic development for an adaptable and resilient community and well-trained workforce. And among this economic development was one of the main initiatives. One of the big things that came up was the needs of small agricultural operations that require access to free resources for education and training to strengthen their well- being and their ability to contribute to economic development and the people of Hawaii. We need to be proactive in making locally produced food widely available to our population and a vibrant tropical agriculture of value added products to global communities, particularly in the State vulnerable to natural and human disasters, as we have seen recently, that can certainly have significant negative impacts on our food and food security and economy. I will give you a few examples of impacts that the College of Tropical Agriculture and Human Resources have and continue to have. We are particularly active in the area of biosecurity and food security, particularly the management of invasive species. Insects and disease pests caused 20 to 100 percent crop losses in many cases, as I mean, I am sure you have seen as you have been traveling around. We have entomologists and plant pathologists to work on managing these problems, developing environmentally friendly options for managing these pests. Some examples of the recent development of integrated pest management for coffee berry borer, a severe pest of coffee, which has saved approximately $132 million for that industry in terms of pest management alone. We work in other crops such as macadamia nuts, papaya, vegetable crops, the whole range. Turf and landscape pest management is another huge issue. You are probably aware of the issues we are having on Oahu and now Kauai with coconut rhinoceros beetle which decimates coconut palms. CTAHR is also involved in food safety training. We have a program that has been able to train almost 560 farmers recently in complying with food safety requirements. We work on culturally important staple foods and specialty crops, things like taro, ulu, and then floriculture as well, of course. We have a sustainable organic Ag program that contributes to training people in organic agriculture statewide, as well as contributing to workforce development. We have Hawaii-One-Ag Program, which focuses on students developing their education in terms of being able to work immediately in agriculture. Our GoFarm Program does a similar thing where we have immediate training for people who are interested in entering the agricultural sector. Natural resource and environmental management is another substantial component of what we do with people working on natural environment, working on invasive species management, fire management, and many other issues related to environmental management. Our college research addresses family and consumer issues. For example, healthy family development, the role of older people in society, providing environments that are healthy for young people, and developing a good economic sense and so forth. So, in summary, we require lots and lots of resources to be able to contribute to continuing to do these things and be an economic driver in the State. And I will stop there. Thank you. [The prepared statement of Dr. Ania Wieczorek follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Senator Hirono. Thank you. Joe Burns from the Hawaii Small Business Development Center. STATEMENT OF JOSEPH BURNS, INTERIM STATE DIRECTOR, HAWAII SMALL BUSINESS DEVELOPMENT CENTER, HONOLULU, HAWAII Mr. Burns. Thank you, and aloha, Senator Hirono. Aloha, Congresswoman Tokuda. Thank you very much for the invitation today to testify here, and also thank you very much for what you are doing for all the residents of Maui who are suffering terribly. So, the Hawaii SBDC is a program of the University of Hawaii at Hilo and is funded in part through a grant from the Small Business Administration. We opened in 1990 and have been hosted continuously since then by UH Hilo. We have five service centers statewide on the four major islands, and we are one of 63 accredited SBDC programs across the country created by Congress in 1980. So, in the first two quarters of this year, we advised 945 unique clients, and materially assisted with just under $20 million in attributed capital acquisition. So, my comments today, I have three of them. First, I want to talk about Federal agencies which support Hawaii small agricultural businesses. So, I have three. The first one is obviously the USDA. And we work closely with the USDA, especially through two of their flagship guaranteed loan programs--one is the Community Facilities Guaranteed Loan Program, and the other is the Business and Industry Loan Guarantee Program. So, our role is to provide advisory services in terms of writing the required feasibility studies. And doing so, we contributed to the funding of agricultural and rural development projects for probably over the last 13 years since I have been here at least. And so, I want to mention three examples. One is a coffee school with career and workforce development training on the cultivation, processing, roasting, and cupping of coffee. A cattle ranch refinance right here on the Big Island, lowering their financing expenses and supporting their expansion into the agritourism sector. And the third one is a rural, urgent care medical clinic on Kauai, which is not really an agricultural project per se, but the clinic helps to attract and retain rural residents such as farm owners, farm workers, by providing urgent medical care in the rural community that surrounds it. So that is USDA. Second one is the SBA, Small Business Administration. So, the Hawaii SBDC, as a resource partner of the SBA, provides export business advisory services to Hawaii businesses involved in the SBA State Trade Expansion Program, which Mr. Syed mentioned, the STEP Program, and that is administered through DBEDT at the State level in Hawaii. And we call it the ``HiSTEP'' Program. So, we cover areas such as export planning, international market research, export financing, including the SBA's excellent guaranteed export finance programs. And the reason I mention that is because these services and export loans are very, very helpful for local, value added Ag product creators. Senator Hirono talked about commodities. We don't produce commodities, but we do produce specialty products. So, these would fit in that category. And then some examples of HiSTEP assistance that we provided to value added Ag businesses include a vertically integrated cocoa grower and craft chocolate manufacturer and exporter, a distiller of heirloom Hawaiian sugar cane varietals producing high quality rum, and a manufacturer of reusable cloth food reps using 100 percent Hawaiian beeswax. And then the third program we probably don't think about in terms of agriculture, but that is the Treasury Department's Small Business Credit Initiative, SBCI, which provides funding support for both equity and debt access to capital programs. And there is also a technical assistance element of the program under which the Hawaii SBDC will be receiving funding to provide businesses, financial literacy and management improvement services to socially and economically disadvantaged entrepreneurs and very small businesses outside of Oahu. So potential recipients of this technical assistance would tend to be farm and rural businesses just because of their location. My second comment relates to how to improve Federal programs that support agriculture and rural communities. One specific idea refers to the USDA Community Facilities Guaranteed Loan Program, which I mentioned. There is a requirement that under certain circumstances applicants must obtain the examination opinion of a CPA attesting to the validity of the assumptions in the financial feasibility report. In our experience, it has been very difficult to find those local CPAs who are willing and capable to do that examination opinion when it is required. So, then our applicants have to turn to the mainland CPA firms, which in our experience are very expensive and sometimes not willing to do it because they don't know Hawaii very well. And that creates a barrier to completing a potentially valuable project. So, I would just like to ask if there is not such a mechanism already, I wonder if the USDA would consider making available specific funding to facilitate that CPA examination opinion when it is required. And my last comment is, I would very much like to thank Senator Hirono for co-sponsoring the SBDC Improvement Act of 2023, which reauthorizes the national SBDC Program, enhances its effectiveness. There are three provisions of the bill that I would like to highlight before I close. One is Section 2, which adds depth and detail to the existing mandated reporting to Congress with respect to the SBDC's annual entrepreneurial development activities. Section 3 allows SBDC to use a limited amount of SBA cooperative grant funding for marketing purposes. And Section 7 strengthens the protection of client confidentiality. So, in closing, may I say that we are grateful for the committee's continuing support of Federal programs which help to sustain agriculture and rural businesses in Hawaii for the accomplishment of the shared goals of reducing food insecurity, removing barriers to pursuing agriculture, and providing the capital and technical assistance necessary to foster a robust agricultural community. Thank you. [The prepared statement of Mr. Burns follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Senator Hirono. Thank you. I just want to note that I think there is an echoing in here. It is a little bit hard for us to hear you all but speak into the mic. And apparently our mic is picking you up, but if you can, you speak very clearly into the mic. Randy Cabral, Hawaii Farm Bureau. You have vast years of experience in being an advocate for our farmers, so---- Mr. Cabral. Unfortunately, five minutes, not going to be able to cover it. Senator Hirono. What was that? Mr. Cabral. Five minutes is not going to be able to cover a whole lot of stuff. [Laughter.] Senator Hirono. You have a lot to impart. Thank you. Please proceed. STATEMENT OF RANDY CABRAL, PRESIDENT, HAWAII FARM BUREAU, VOLCANO, HAWAII Mr. Cabral. Aloha, Senator Hirono, Congresswoman Tokuda. Thank you for the opportunity to provide testimony. My name is Randy Cabral. I am President of the Hawaii Farm Bureau. Organized in 1948, the Hawaii Farm Bureau is comprised of 1,800 farm families members statewide, and we serve as Hawaii's voice of agriculture. The Farm Bureau is the biggest general agricultural organization in Hawaii. We represent our members' interest in public policy at a county, State, and national levels. We operate as a trade group for agriculture. The Hawaii Farm Bureau believes that if we want to focus on improving Hawaii's agriculture industry, we need to assist our farmers and ranchers by addressing the many challenges that they face, such as land use, access to affordable water, labor, transportation, invasive species, disaster preparedness, crop insurance, food safety, agricultural theft and vandalism, research and development, pesticide regulations, access to capital and marketing, just to name a few. I would like to take the time to discuss a few priority issues that we would like to see more Federal support for. Number one is invasive species have become one of the most challenging problems impacting Hawaii. Many invasive species are damaging Hawaii's environment and State's economy. Agriculture has a vested interest in this matter and is one of the major casualties when invasive species are introduced. Every year, numerous new pests are introduced into the State, such as the coqui frog, coffee berry borer, axes deer, macadamia felted coccid, little fire ant, coconut rhinoceros beetle, small hive beetle, varroa mite, two-lined spittlebug, just to name a few. We must do a better job of protecting Hawaii's agriculture industry's environment and the general public by preventing the introduction and establishment of harmful pests. Our port of entry biosecurity program is essential to prevent invasive species from entering the State. USDA inspect, check in, and carry-on luggage for outbound passengers from Hawaii. But there is no USDA inspection of luggage pre-entering into the State. The only barrier is the State Hawaii plant and animal declaration form that passengers fill out on the plane before arrival. It is essential that more effective measures be put in place and that Hawaii needs to have USDA help. Second item is farm labor. Shortage of agricultural labor has been an ongoing problem for years but has gotten worse. The shortage of willing and able workers, affordable housing for farm workers, and competition from alternate employment are several of the pressing farm related issues that need to be addressed. The H-2A program was created to fund--provide farmers with legal workforce to fill jobs on a seasonal basis when there is insufficient number of willing and available U.S. workers. An H-2A employer's labor costs frequently approach 40 percent or more of their total production cost. And for many of these producers, H-2A labor costs typically constitute 80 to 90 percent of their total annual payroll. Many of Hawaii small producers simply cannot afford to participate in H-2A program. There is a need to be an alternative H-2A State programs that would work for the small producers. Transportation. Hawaii's position as the world's most isolated location, as well as being in a series of islands, presents major challenges to the State's agriculture industry. One of the barriers to expanding agriculture in Hawaii is the cost to transportation. Hawaii's farmers and ranchers rely heavily on air and ocean transportation to bring agricultural inputs such as equipment, feed, fuel, fertilizer, agriculture machinery for their production. Inter-island transportation has been a major issue with neighbor island farmers and ranchers. The majority of agricultural lands are on the neighbor island, yet the population center is on Oahu. Neighbor Island farmers and ranchers are disadvantaged when competing with fellow farmers and ranchers on Oahu due to the additional transportation cost of bringing in supplies and sending products out. Each increase in interisland shipping rates means increased cost to these farmers and ranchers, cost that usually cannot be passed on to the vendor. USDA FSA's Reimbursement Transportation Costs Payment Program provides some relief for the high cost of transportation but is currently nowhere near enough to support enough relief. We need the cap increase to recognize the transportation costs in Hawaii are expensive and necessary. While costs rise, the reimbursement program is capped at $8,000 per year. Renters spend hundreds of thousand dollars in ocean freight per year. For example, one rancher spent almost a quarter million dollars on transportation in 2022, but based on their reimbursement program, they got only $8,000, 3.6 percent of the cost. I guess with that, I will stop--thank you. [The prepared statement of Mr. Cabral follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Senator Hirono. Thank you. Murray Clay from the Ulupono Initiative. So, you have been in--your organization has been an advocate for sustainable food, etcetera, etcetera, and you know, are we making improvements? Mr. Clay. We are. Do you want me to---- Senator Hirono. Please, go ahead. STATEMENT OF MURRAY CLAY, PRESIDENT, ULUPONO INITIATIVE, HONOLULU, HAWAII Mr. Clay. Okay. Yes I have--so sounded like a question. So, aloha, Senator Hirono and Congresswoman Tokuda, and any members of the committee. Appreciate the opportunity to speak with you all today. The Ulupono Initiative is an impact investing firm, as you alluded to. We work across the State to try to increase local food production, renewable energy, clean transportation, and better management of our freshwater resources just to help Hawaii be more sustainable and resilient. So, we are talking today about the significance of Federal programs and how Federal dollars can be leveraged to support the food system and producers across the State. For the past 14 years, Ulupono has worked and engaged with various sustainable projects in food to really try to increase that local food percentage in Hawaii. We provide financial and technical assistance. We partner with Government, profit, and nonprofit organizations, including many who have testified here today. So Federal funding resources do play a key role in ensuring our remote island State is able to increase its self-sufficiency, especially as we are highly dependent on imported food. During the COVID pandemic, Ulupono supported the agricultural industry by connecting Federal monies with local needs to support local farmers and ranchers who had lost many of their markets due to restaurant and hospitality industry closures. One particular example is the Farm to Foodbank Program, where Government, private, and philanthropic funds were leveraged to purchase locally grown food for food banks to distribute to those in need in our community. This did several things. It kept farmers afloat with a new market opportunity that they didn't have before. It supported local food banks who struggled to get the normal shelf, stable food that they would regularly carry. And it fed thousands within the community that were needy because they lost their jobs virtually overnight because of the shutdown of tourism. Our unemployment went from 2 percent to over 20 percent virtually overnight with the lockdowns. So, another way that Ulupono has supported the agricultural sector is by funding grant writers to help the local farmers and ranchers get those Federal program funds. The majority of Hawaii's producers, as was mentioned, I think by Director Hurd, are less than $25,000 a year in sales, and they operate on farms that are less than 10 acres in size. So, through many conversations with these stakeholders, we know that small farmers often don't have the time or resources to apply for those grants themselves. Having a dedicated resource to support them in doing so has been really instrumental. So, over the last 10 years, Ulupono has funded a number of grant writing programs, and the total cost of all those programs over 10 years was $1.5 million. Those grant writers over those same 10 years brought in $133 million of Federal funding. That is 88 times what it cost to fund the grant and loan writers. So, it is a huge leverage opportunity. In anticipation of the 2023 Farm Bill, we also engaged with stakeholders to help identify which Federal programs would be the most effective for helping producers here in Hawaii. And we collaborated with many of the folks that have testified here, including the USDA Rural Development, the Hawaii Farm Bureau, the Hawaii Department of Agriculture, and other smaller and statewide groups. So, of the 21 Federal programs that were identified as being useful, we narrowed it down to six priority programs. These are, the Reimbursement Costs Transportation Program, which addresses part of what Mr. Cabral was talking about, the Rural Energy for America program, the Specialty Crop Block Grant, the Non-Insured Crop Disaster Assistance Program, the Livestock Forage Disaster Program, and the Micro Grants for Food Security Program, which were also mentioned today. So, for your consideration, you will find that our written testimony suggests that amendments for each of these programs, which we think will make it more effective for what producers are actually facing here in Hawaii. In light of what happened on Maui and Hawaii Island last week, these and future Federal programs will be especially critical to support the local agriculture industry and providing relief to local farmers, ranchers, and food producers as they recover from these devastating wildfires. It is worth exploring opportunities to make better use of the Ag land that we do have. Much of it, as we know, is fallow. Reuse water in the area to produce productive green firebreaks rather than just barren strips of land with no fuel. And increasing capacity around securing Federal funds that you, as our Congressional delegation, have helped make available. So, I do thank you for the opportunity to testify, and I am happy to take questions. [The prepared statement of Mr. Clay follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Senator Hirono. Thank you very much. We will now go to our 20 minute questions. I am really fascinated by the way, Mr. Clay, that you have a grant writing program. And what are the-- what kind of people sign up for the kind of training that you provide to enable them to successfully receive grants? Just very briefly. Mr. Clay. Sure. So, we presently fund grant writer. Our longest funded grant writer is here on the Big Island at the Kohala Center. We also fund grant writers at OCA, which is more focused on Oahu. And then with the Farm Bureau that kind of works, of course, statewide. So those three grant writers work with their constituents in their geographic or across the State region to help them even know what they should be applying for and how to apply for it. Because without those skills, you are taking a very, very busy farmer and trying to get them to apply this very complicated thing. And it is all well intentioned, but they just don't know how to do it. And so rather than having those funds go to just those that have the best writing skills, they go to those where they have the greatest need and can impact our food sector the best. Senator Hirono. So clearly, there are a lot of grants that have been made available, by the way, through some of the really huge bills that have been enacted by Congress. So, the infrastructure bill, the COMPETES Act, the omnibus bill, and there is more money, for example, to fight climate change--some $300 billion. A lot of--there is substantial amounts in grants. And that is why what you are doing to train grant writing is really important, although part of it is that we could make the, say the application process more clear or shorter, whatever we need to do along those lines. Thank you very much. By the way, that you said that you identify six priority grants that really make a difference. Are all of these grants being reauthorized? Is there any danger of any of these grants ending? Mr. Clay. I am not certain about risk of them ending, but in our written testimony, we put in specific recommendations for awarding changes and requirement changes that would make it more beneficial to folks here in Hawaii based on our outreach to local folks, local farmers and ranchers here. Senator Hirono. Please let us know. And then we do have the Deputy Administrator of SBA, to the extent that SBA grants are very complicated. And in fact, there was a reference that, Mr. Burns, about the CPAs, having a hard time where--and they need to be certified. Whatever you were talking about, that makes it harder for our people to apply for these particular loans. Not sure, but we need to--if you can get with our Deputy Administrator on, maybe we make it easier for us to access the programs that we need. Mr. Cabral, can you explain how the management of rangelands on Hawaii Island helped with wildfire containment? Mr. Cabral. Yes, absolutely. I think most pastureland is well managed by the tenants or landowners through grazing. They make sure that they keep down invasive species, which has been a problem with the fires in Lahaina, overgrowth of guinea grass. You know, they have the resources and equipment necessary to control what they have growing on their particular parcels, and they can control the grazing so that you don't have this high fire load. I think that makes a big difference. Around the Lahaina, there was no control of the invasives and grasses around it, and that I think is a major factor in that fire. Senator Hirono. So, did these farmers work with any organization to alert them to what they could be doing to make sure that the wildfires are contained? Should that occur? I think there is a statewide organization, the Wildfire Management Group---- Mr. Cabral. Yes, I think we have been---- Senator Hirono. Have the farmers worked with---- Mr. Cabral. We have participated in some of these wildlife management groups in the past. And so, it is something that I think we can be part of, and I think we would be more than happy to be part of that group to find solutions to the problem. Senator Hirono. There is an organization, I believe their name is the--I am looking at my staff because I meet with a lot of people. Yes, there we go, the Hawaii Wildfire Management Organization, and they have pretty much mapped the entire State as to wildfire vulnerabilities. And I think they also worked with your farmers and--on the Big Island to enable them to do what they needed to do. And I think that kind of awareness and cooperation is really going to be part of the lessons learned. And once again, for you, you mentioned that a top priority is invasive species. And that is something that Congresswoman Tokuda and I are going to continue to--she just joined the U.S. House, but I know she has an awareness of the need to continue funding research into combating invasive species. And you have indicated that is the number one priority that impacts our Ag community. And so, you know, I would appreciate any other kinds of requests that you would like to put to both me and Congresswoman Tokuda in how we can continue to combat invasive species. Mr. Cabral. I will tell you, Senator, under the past Administration, when Secretary Purdue was their head of Department of Agriculture, he came on a visit and I asked him point blank about helping with invasive species, that the USDA needs to do more. And his answer to me was, we do enough for Hawaii. I was floored by that response. Unacceptable, you know, as far as I am concerned. But that was the thinking back then. And I hope this Administration thinks differently and realizes that Hawaii is basically the invasive species capital of the world, I think. And we need--desperately need help. Senator Hirono. Thank you. I think that--you know, that is one of the things that I talk about a lot on the committees that I sit on. That for one thing, on the Energy committee, that focuses a lot on wildfires and to alert the committee members that Hawaii has its share of wildfires and the acreage burned is on a par with what happens on the mainland. And we don't have a Forest Service presence here as such, but we did meet with some Forest Service people. We do not have any national forests in Hawaii, and I am trying to bring that kind of a presence here. For--again, for Mr. Clay, how can ongoing efforts by Ulupono and other organizations to bolster our internal food supply chain and grow the volume of food we are producing in Hawaii help us better respond to disasters moving forward? Mr. Clay. So, I think we are all aware that we are, as was mentioned, the most isolated, populated landmass in the world. We are 85 to 90 percent dependent on imported food. We rely on just in time delivery of that food, and then not to mention tourism is our number one industry, which as we have seen, can go away virtually overnight. So, we are very, very vulnerable. I would say when it comes to food security, I would almost reclassify natural disasters in two different categories, when it comes to food security. One are disasters that impact our ability to import food. So, it doesn't matter whether it is a hurricane, a wildfire, a tsunami, that is one category. And that is mostly about damage to our ports and harbors that restricts our ability to import food. The worst possible situation would be damage to Honolulu Harbor and Honolulu International Airport because most of the large shipments of food come in via those ports. The other type, which is more like what we are seeing with some of the wildfires, not just on Maui but elsewhere, is damage to local infrastructure, which ironically makes it difficult to get both imported or local food in. Now, if you have the difficulty with imported food as we saw during the COVID pandemic, local food can step up and make a big difference. For example, when the slaughterhouses, the meatpacking plants in the mainland were being shut down almost across the nation because of COVID infections, it became very, very hard to find a lot of different meat products in the grocery stores, but across the entire COVID pandemic, Paniolo Cattle Company and Parker Ranch that we worked with did not miss a single delivery of local beef to the Safeway stores over that entire period of time. In fact, they increased production over that period of time. So local food can make a very big difference. But one of the other things that we got to remember is when these disasters happen, tourism often goes away with it. And when tourism goes away, the most lucrative market for farmers and ranchers, the restaurants and resorts, close down as well. So, we have to switch that funding, like we talked about before, as farm to food bank, so that the food banks that are having trouble getting food can buy directly from the farmers and ranchers because you have got farmers and ranchers that have food but no markets. You have got people out of work that need food but have no money, and you just put those two together and it can be really successful in growing. I would also point out that we are very focused on institutional purchasing efforts, including especially with the Hawaii State Department of Education and their legal requirement to get to 30 percent local food by 2030. Right now, that number is a fairly abysmal, 6.2 percent according to the report. Farmers and ranchers will grow. They will expand, especially with Federal resources. But they are only going to do that if they think the State is really going to follow through on this and really increase local production. And reaching that goal of 30 percent would mean an extra $14 million of market for local farmers and ranchers. So, we are focused on the institutional side of that problem as well. Senator Hirono. I think that kind of focus effort to purchase local by the Department of Education, you know, is--I have been trying to get them to put fresh pineapple in our school lunches. And for a long time, all of our cafeterias are so used to just open up the canned pineapple, that when we finally got some fresh pineapple, people have to figure out how to cut the pineapple, if you can believe it. So, there are a lot of things we can do. And one of the other things mentioned was the need for workers. Mr. Cabral, that is a nationwide need for farm workers. And there is a lot more focus in the Judiciary committee even on the visas that will enable our farms to keep going. And so, you know, there is a lot of, you know, connection to the awareness of what we need to do, and especially after COVID. We have a lot of areas where we can--immigration reform needs to happen. All of that. And obviously I will talk with you, mister--I am sorry, regarding the CPA issue. My time is up, so I am going to go to Congresswoman Tokuda. Ms. Tokuda. Thank you. Really quickly, I will just piggyback then on Senator Hirono's last comment about the CPA examination opinion. I am just wondering, I know you are asking for more funding to provide support since people are having to seek out CPAs on the mainland, as well as it gets very costly. But is there any look at an alternative process to ensuring some of the financial validity without having to do the CPA examination opinion? It is very hard for folks, especially on the neighbor island, to be able to actually access this kind of professional service, and so, are you looking at an alternative process to the CPA examination opinion? Mr. Burns. Thank you for the question. So that is a requirement of the USDA. So, we don't have the ability to change that. So that is why I mentioned in this specific program, which is the community facilities program, that at a certain level, they do require that. So normally when we write the feasibility study, if it is at a certain level, that requirement is not necessary. But at a certain level it kicks in, and that is where we have encountered that difficulty. So, we don't have the ability to change that requirement. That is part of the USDA. Ms. Tokuda. USDA. Okay, so that is something we can discuss with the USDA about alternatives to even having this examination process, which is particularly onerous for our people. I just also did want to reiterate and confirm that I know SBA is opening a business recovery center, has already in Maui and Kihei, and you have SBDC representatives on site to assist with connecting people with resources. So, thank you for doing that. Just want to move over to Mr. Cabral. Randy, thank you so much for your advocacy and help. We could spend all day talking about the areas of knowledge that you have. In particular, I want to focus in on the disaster, you know, assistance programs that we have. I know even before the fire I spoke with farmers who have spoken about the fact that the disaster eligibility cycle is not meeting up with the demands we have to date. You know, for some of these programs, you can only apply twice in 10 years, and we know disaster is striking much more frequently because of climate change. And, you know, so we actually have been pushing some reforms in the Farm Bill to decrease that, you know, that time of period because people need to access funds when disaster strikes. And so, to the point of the disaster assistance programs of various ones, I know, Mr. Clay, you mentioned a number of those in your testimony. What are farmers finding prohibitive or challenging in terms of being able to apply for these disaster assistance programs? How can we reduce some of the barriers? What are they seeing they really need? Because whether it is a bridge washing out and they can't get their produce to market, whether it is something taking out entire crop, invasive species, axis deer, you name it. What can we do better when it comes to disaster awareness-- assistance programs, excuse me, that our farmers need to make it easier to draw down and apply for? Mr. Cabral. I know there is talk of like a small business or loans, right, low interest loans. But I think a lot of the farmers are already in debt. So, getting another loan is not going to help them. So, I think grants would be the preferred method for these farmers. And also, there are a lot of immigrant farmers, that there is this language barrier. They don't understand the programs. So, we need to have somewhere where they can go and get interpreters to help them process whatever it takes to be able to get help. So those are the kinds of stuff I think that could help. Ms. Tokuda. Absolutely. You know, are they also finding--at this point, grants definitely versus loans because they are already cash strapped, but are there other challenges you are seeing with some of these loans just in terms of whether it is the amount of money and resources we are able to support folks with, reimbursed folks with? You mentioned that with the RTCP program, the Transportation Reimbursement Cost Program is being helpful, but quite frankly, not enough to match the, you know, the costs and whatnot. So just giving us some insight in terms of where we need to beef up certain programs, whether it be grants, reimbursements, or loans, because farmers, quite frankly--it is becoming a make or break, whether you are part of the fire damage or not, to be able to survive. So, any thoughts on these--? Mr. Cabral. Yes, I mean, if you take the, for example, the ranchers that got impacted on Maui. They are going to need feed. But the cost of importing that feed is really hard for them to do. So, they need help in being able to get either reimbursement costs or grants to be able to import this feed for the cattle while they recover from that. And I think like some of the farmers lost their market in Lahaina, so they need help in finding new markets. And one way of helping them, we talked about the food basket, food banks. Purchasing local food. And by giving grants to the food basket, food bank, they can then purchase from these farmers and help them recover from that market. During the pandemic, we were able to get around three quarters of a million dollars from private resources, and we took that money and bought from struggling farmers and ranchers, and then gave it to the food basket on the Big Island. So, programs like that could really help. Ms. Tokuda. Thank you. I know those are very, very helpful for a lot of different people and for all of our farmers. I wanted to jump to Mr. Clay. You know, as Senator mentioned, you folks did some significant investments over the last decade in terms of supporting farmers and their efforts to draw down what is a very large amount of Federal grant money. So, there is money available on the table. Based upon what you have seen in terms of the technical assistance work that you have provided, what kind of changes and supports do we need to be providing to make it easier for farmers, ranchers, and producers to be able to take advantage of all the Federal funds that are available to start, sustain, grow, rebuild their businesses? We have talked a lot about language access. We have talked a lot about increase--you know, streamlining forms. But based upon your real life experience, really what do we need to do to connect farmers and producers with the money they so desperately need right now? Mr. Clay. So, to start, I am going to piggyback because it is relevant to something that Randy just said, which is translation services, essentially. So, I know we are here mostly talking about Federal programs, but just as an example. The city and county of Honolulu recently did a small grant program for $50,000 of grants to a whole bunch of farmers. And we worked with the Pacific Gateway Center to fund translation services. And I believe that because of that ability for them to understand and apply, I want to say three-quarters, but don't quote me on that, but it is definitely more than half of the winners of those grants speak English as a second language. So, if they can't access that, they can't understand it, they don't even know what they qualify for. Translation can be a big deal. Another one I would say is these grant writers, keep in mind that they are just gems. They are so valuable because they are not just taking farmers and ranchers that come to them and say, hey, I would like to apply for a value added producer's grant. They don't even know what is out there. They don't know what is available. And so, these people kind of counsel them on what grants are available and then help them with the application, sometimes with the business plan and some other things to get these monies in. So, I would say we have a kind of scarce resource here. There is only maybe a half dozen of those types of folks in Hawaii that I am aware of that are really good at pulling down that Federal funding, that know how to do it, and can counsel farmers and ranchers to know what to apply for and how to do it. And we have got to hold onto them. There is not many of them here in Hawaii. And training them, I think was mentioned, training more of such people would be a benefit as well. Ms. Tokuda. Thank you. You know, and I would--I know there has been a number of different panelists here and some of these questions I feel like are made for many of them. But just broadly, and Senator did touch upon this in terms of the role, and Randy, you talked about this too, the role agriculture and our Ag practices to play in climate change mitigation. I mean, for example, when we take a look at wildfires and brush fires, you know, are we maximizing our placement of farms, maybe targeting, you know, grazing lands, agroforestry techniques to really be able to slow down a lot of the fire that we are seeing. Obviously, invasive species, as Randy mentioned, plays a role in accelerating the impacts on our land as well, whether it be, you know, fallow lands, whether it be barren lands, all of these different things. We are, in fact, the invasive species capital of the world, as was mentioned. We are also the extinction capital of the world. Two very, you know, unfortunate things that we are known for. But sadly, when we do nothing in terms of resources and actually addressing this, it turns deadly. We can't feed ourselves, and you have wildfires like what we have just seen. So, there are real consequences and costs, life costs if we do not act quickly on managing our invasive species threat. So just wondering, I am speaking to CTAHR now, to Dr. Wright, is there anyone also working closely with our Department of Agriculture, with our Farm Bureau, our actual producers, to take a look at how we are studying this role of agriculture, how we need to be more proactive in terms of the use of our Ag lands, much of which are fallow, that now need to be productive, whether it be agroforestry, whether it be grazing lands, to really understand that we are dealing with climate chaos right now and we will continue to see more and more of these types of incidents, and we have an opportunity to preempt and prevent some of this using these particular techniques? Dr. Wright. Yes. So, we do have a program in the Department of Natural Resources and Environmental Management that considers wildfire prediction modeling and so on, and I think they are looking at the way land is used and the spillover effects of fallow lands with invasive species. And in general sort of since the college recognizes that invasive species is a major impact and that it results in these horrendous, disastrous events like wildfires and so on, so it is a big driver in the college. We are constrained by lack of resources such as quarantine facilities for biocontrol for invasive species, for example. And those are things we plan for. We have a number of groups of people that work in those areas. Does that answer your question? Ms. Tokuda. Well, I think it just points to the fact that we have a lot more work to do. And as is brought up in this hearing, while right now our only protection is a sheet where you check off a box when we have threats of invasive species, we have noxious weeds, we have guinea grass. We have so many things that are quick burns. We have to do more, or it will turn deadly for many of our communities. So, thank you, Senator. Mr. Cabral. Congressman, if I could make one comment. In Ag---- Senator Hirono. Can you speak into the mic--? Mr. Cabral. We are not able to do a whole lot without water. Water is going to be the key to a lot of stuff that we need to do. And unfortunately, there is a lot of controversy over water. If you look at Lahaina and the controversy of taking that extra flow to fight fire versus the farmer, you know, that was an issue that I think played out across the islands. East Maui water system is so controversial, but we need to be able to share water. We need water development to make sure we can protect these areas, create green space. If we are going to put in agricultural crops, we need water, otherwise, we are not going to be able to do anything. Senator Hirono. Excuse me--thank you very much. As we focus on sustainability and resilience in our communities, agriculture has a very large role to play. And yes, agriculture faces many challenges. Part of what we do in Congress is, is to point out how unique Hawaii is, not the least of which that we are very isolated, the thousands of miles of ocean. That presents unique issues for us in terms of transportation and all kinds of other elements, invasive species that other States may not have--not faced quite to the extent that we do, and the need to research at CTAHR and other places for all of that. So, this is a hearing that brings together agencies from the Federal Government, as well as State and local advocacy groups, to bring to bear how important our focus is on food sustainability and resilience. And this is one of the ways that we can be much more focused and proactive in what we need to do. But it is a lot. And things like our ability to get grant money, if we don't apply successfully for those grants, we are leaving money on the table that can be brought to bear. So, it is a lot of organizations, Federal, State, and local coming together to address the issues that we face. And by the way, I am glad that the Pacific Gateway Center was mentioned because they are a group that provides language services, etcetera, and they enable a lot of immigrants who come to our State to succeed. And I know for a fact that they have enabled restaurants, for example, to get the kind of help that they need from Pacific Gateway Center. And one restaurant that we have been to is Istanbul, and they got their start at Pacific Gateway Center. So, there are organizations that not very many people here know about, but they are plugging away, just as all of us are and all of you are. Thank you very much for the two panels. And for the record, our committee will remain open for two weeks for questions for the record. And of course, we would ask the witnesses to respond promptly to those questions. And I want to thank Congresswoman Jill Tokuda for joining us, because she sits on the Agriculture committee and is going to be very focused on putting into the Farm Bill those kinds of provisions that will be very, very focused on what we need to be pushing for, for Hawaii. So, thank you, Jill, for being here. There being no further business, the committee stands adjourned. [Whereupon, at 11:25 a.m. HST, the hearing was adjourned.] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] [all]