Statement by Chris Kanazawa, Hawaii State Director, USDA Rural Development — August 18, 2023 (Senate Committee on Small Business)

Summary

Written testimony provided to the Senate Committee on Small Business and Entrepreneurship by Chris Kanazawa, Hawaii State Director of USDA Rural Development, dated August 18, 2023. The statement thanks Senator Hirono, describes the director's area of responsibility across Hawaii and the Western Pacific, and offers condolences to the Lahaina community after the wildfire, stating that Rural Development stands ready to help rebuild. It describes challenges facing small-scale agricultural producers in Hawaii and outlines Rural Development programs including the Value-Added Producers Grant, the Rural Energy for America Program, Water and Environmental Programs, housing and Community Facilities programs. It also describes two clean energy programs under the Inflation Reduction Act, PACE, with $1 billion in funding, and New ERA.

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         Testimony Provided to the Senate Committee on Small Business and
                                 Entrepreneurship

                   Statement by Chris Kanazawa, Hawaii State Director

                                    USDA Rural Development

                                         August 18, 2023


Thank you Senator Hirono for the opportunity to speak before the Senate Committee on Small
Business and Entrepreneurship to share the role the United States Department of Agriculture’s
Rural Development mission area plays in advancing prosperity for Hawaii’s farmers and
ranchers, as well as for all of Hawaii’s rural communities.

I am Chris Kanazawa, Hawaii State Director for USDA Rural Development. My area of
responsibility covers the State of Hawaii, the US Territories of Guam and American Samoa, the
US Commonwealth of the Northern Mariana Islands, and three Freely Associated States of the
Republic of the Marshall Islands, the Federated States of Micronesia, and the Republic of Palau.
Hawaii Rural Development has offices on 5 of the Hawaiian islands (Oahu, Kauai, Maui, Molokai,
and Hawaii).

On behalf of USDA Rural Development, I would like to offer my heartfelt condolences to the
families and the Lahaina community for their tragic loss. My mother was from Maui and so I
have much Aloha for the island. Please know that Rural Development stands ready to provide
all of its resources to help Lahaina, as well as to the communities of Kula and Kihei, rebuild.

We are thankful that all of our employees and their families are safe. However, Maui is a small
community, and we all know someone who was 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 the people of Hawaii.

Rural Development continues to be strong and is already working to utilize the resources at our
disposal to help the displaced community. Rural Development programs, while not designed as
emergency response programs, will help rebuild a quality of life and increase economic
opportunities for the community with financial assistance for housing, small businesses, farmers
and ranchers, health, education, social community facilities, and infrastructure and utilities.

Here in Hawaii, as well as across the nation, rural communities are a source of food, water,
natural resources, commercial and military workforce, and rich culture. When rural
communities thrive, everyone benefits. Under the Biden-Harris Administration, we striv e to
strengthen and support rural communities across America and the Western Pacific to ensure the
access to infrastructure, health care, social services, and technology are available.

Yet rural agriculture communities face complex challenges with access to capital, lack of
infrastructure, and limited utility and social services. This is especially true in Hawaii. Nearly
80% of Hawaii’s farming and ranching industry is comprised of small-scale agriculture
producers, with average farms ranging from 10 – 250 acres and gross revenues less than
$50,000.1

This scale of operations presents major challenges like high transportation and shipping costs,
labor shortages, high cost of production, limited access to capital, and the geographical
challenges facing island communities, especially in Hawaii. That’s why earlier this year, USDA
announced new Regional Food Business Centers that will provide national coverage
coordination, technical assistance, and capacity building to help farmers, ranchers, and other
food businesses access new markets and navigate federal, state, and local resources, thereby
closing the gaps to success. The center located in Hawaii is led by the Hawaii Good Food
Network and will serve not only Hawaii, but other remote communities as well.

Additionally, Rural Development programs provide these communities with impactful resources
related to access to capital and credit for affordable housing, water and wastewater
infrastructure, community facilities, high speed internet, and business development. With
patient capital, Rural Development offers resources to assist rural communities in the
investment of schools, hospitals, housing, water, electric, broadband, energy efficiency, and
resources for agricultural businesses. Access to these essential services provide the foundation
in strengthening rural communities.
USDA Rural Development Programmatic Support

Given the small scale of Hawaii’s agricultural producers, they are at times overlooked as
businesses that contribute to their rural economies, but USDA Rural Development knows that
these producers are rural businesses and job creators.

Through the USDA-Rural Development Rural Business Cooperative Services branch, we have
programs that provide business owners and agricultural producers with access to affordable
capital essential to business development, growth, and job creation.

The Value-Added Producers Grant has been a popular program among farmers and ranchers
that helps them enter into value-added activities related to the processing and marketing of
new products. The goals of this program are to generate new products, create and expand
marketing opportunities, and increase producers’ income. The VAPG provides Planning Grants
for conducting feasibility studies and developing business plans and Working Capital Grants for
marketing and advertising expenses, value-added processing costs, distribution, and certain
inventory and salary expenses.

Here on the Big Island of Hawaii, the Kawamata Farms, a hydroponic tomato farm, is a good
example of how a $250,000 VAPG provided the farm with necessary working capital to expand
their market to increase sales of its locally grown on-the-vine fresh tomato produce. The funds
were used to create customized packaging for its on-the-vine fresh tomatoes and marketing
collateral and distribution to its wholesale customers. Today they are producing more than
30,000 pounds of fresh tomatoes per week.




1
    Hawaii Department of Agriculture Hawaii Commercial Agricultural Expansion Survey 2021 Fact Sheet
Operational costs can be burdensome for small farmers. The Rural Energy for America Program
(REAP) gives agricultural producers and rural small businesses a way of reducing their energy
costs while participating in climate-smart practices. Thanks to the Inflation Reduction Act, REAP
has seen increased funding, allowing for more, and larger, awards to be made in rural
communities, where costs are especially high. Clean and efficient energy production is deeply
rooted in the social and fiscal fabric of rural communities as well as with Hawaii’s state
initiatives. In addition to being responsive to climate change and shifting from fossil fuels to
cleaner sources of energy, this transition also has a positive impact on the energy costs of
farming and ranching.

For example, this funding has helped the Hawaii Ulu (breadfruit) Producers Cooperative in
Kona, Hawaii. The Hawaii Ulu Producers Cooperative is a farmer-owned business with a
membership of more than 100 small farms on 4 Hawaii islands. The cooperative is working to
revitalize ulu (breadfruit) as one of the Hawaii-grown staple crop in addition to taro, (Kalo)
sweet potato (‘Uala), and pumpkin (Pala’ai) to strengthen Hawaii’s food security. Through REAP
grants, this agricultural cooperative was able to produce more than 67% of its energy needs
with a solar photovoltaic system and install energy efficient freezers, resulting in over 84,000
kW h savings per year.
Like all rural residents, farmers and ranchers also need essential community infrastructure,
which is fundamental to ensuring rural areas can provide a good quality of life and basic
services to residents. This backbone infrastructure includes clean and safe drinking water,
access to capital, and affordable housing.

Rural Development’s Water and Environmental Programs provide funding for clean and reliable
drinking water systems, sanitary sewage disposal, sanitary solid waste disposal, and storm
water drainage to households and businesses in rural areas. Recent successful projects have
benefitted native Hawaiian communities funding more than $31 million in water system,
wastewater, and storm drainage improvements serving native Hawaiian homestead residents on
three separate Hawaii islands. WEP funding of more than $9.5 million has also assisted county
governments with replacing aged water system mains and fire protection and addressing
wastewater disposal violations.

Through USDA-RD’s rural business programs like Rural Business Development Grants, Rural
Cooperative Development Grants, and Business & Industry Loan Guarantee Program, and the
Intermediary Relending Program, business have access to capital to grow their businesses.

Rural Development has programs that link family well-being with the prosperity of rural
communities. Essential to sustainable rural communities is the availability of affordable and
safe housing and access to medical and social services, as well as affordable clean energy .
Rural Development’s Rural Housing Services is committed to ensuring people living in rural
communities have equitable and affordable access to housing. Rural Development offers a
diversity of affordable loan and grant housing programs that include, Single Family, Multi-
Family, Self Help, Farm Labor Housing, and repair and renovation for the elderly and very low
income families.
Rural Development’s Community Facilities Programs offer direct and guarantee loans and grants
to develop or improve essential public services and facilities in rural communities. Rural
Development offers access to capital to local and state governments, public bodies, and non -
profit entities to fund health care and safety facilities, schools, libraries, community facilities,
and other public serving facilities.

Through the Inflation Reduction Act, two new programs designed to support clean energy
production have been developed.

The Powering Affordable Clean Energy (PACE) program is part of the Inflation Reduction Act,
which represents the largest investment in rural electrification since President Franklin Delano
Roosevelt signed the Rural Electrification Act into law in 1936. With $1 billion in funding, PACE
helps make clean, affordable, and reliable energy accessible to the people of rural Americ a.

Under PACE, USDA Rural Development’s Rural Utilities Service (RUS) will forgive up to 60
percent of loans for renewable energy projects that use wind, solar, hydropower, geothermal,
or biomass, as well as for renewable energy storage projects.

PACE funding makes it more affordable for rural Americans to use clean, reliable energy to heat
and cool their homes, run their businesses, and power their cars, schools, and hospitals.

The Empowering Rural America (New ERA) program helps rural Americans transition to clean,
affordable, and reliable energy. By reducing air and water pollution, New ERA funding improves
health outcomes and lower energy costs for people in rural communities. New ERA program
funding is available to member-owned rural electric cooperativ es, which have been the
backbone of America’s rural power delivery for nearly a century.

Conclusion

With offices across the Hawaii Island chain, in the Western Pacific, as well as 46 other Rural
Development State Offices across the nation, Rural Development strives to ensure that all
farmers and communities can benefit from USDA investments and we are working to ensure
equity is at the center of our programming in rural communities.

Rural America is the backbone of our economy and deserves access to a decent living on the
farm, a decent paying job, access to health care and education, clean drinking water,
broadband internet and the infrastructure needed to build and maintain a vibrant community.
The Biden-Harris Administration has been working hard to continuing to fight for rural
communities, and farmers, ranchers, and foresters who sustain them.


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