VanderSloot rescues jobs, gives ranchers $1.5 million in “game-changing” move for Hawaii’s cattle industryPublished at | Updated at
Bobby Farias was desperate.
The founder of Kunoa Cattle Company, a meat processing plant in Hawaii, couldn’t pay his employees, owed money to ranchers and had nearly a million dollars of cattle that had been slaughtered but not purchased.
That’s when Melaleuca CEO Frank VanderSloot stepped in. He not only bought the entire operation on the island of Oahu, but paid $1.5 million to the ranchers and several others who were owed money. The 50 or so employees of Kunoa, who were worried about their jobs, now have secure employment and every one of them received a pay raise.
“The path we were on wasn’t going to allow a future without Frank stepping in and helping us get back on track,” Farias tells EastIdahoNews.com. “The way it was set up, there was nowhere to go.”
Hawaii’s beef industry
Farias met VanderSloot years ago when the Idaho businessman needed to rent some corrals. VanderSloot’s Idaho Falls-based Riverbend Ranch has 500 cows in Kauai – cattle with some of the top genetics in the world.
The two men became friends and VanderSloot quickly learned how tough the cattle industry is on the islands.
“We can birth cows but getting them fed is the issue especially with what’s happened to the price of corn over the last 15-20 years,” says Scott Enright, the former chairman of Hawaii’s Department of Agriculture.
Ranchers typically send weaned calves to feedlots on the mainland, where they are slaughtered, processed and sold.
Less than eight percent of beef consumed in Hawaii is local, according to Farias, and 10 years ago he realized his business model was broken.
“Shipping calves to the mainland was getting increasingly harder to find sustainable margins,” he says. “Not only that, but we have around 100,000 mama cows in Hawaii and the facilities here couldn’t match the number of animals we had so overflow would go to the mainland.”
He launched Kunoa Cattle Company in 2016 in an effort to keep more cows local but ranchers needed sustainable prices and margins. Not only that, meat processing plants were closing across Hawaii.
“There used to be dozens of them spread around the state but with food safety regulations, we only have a few left,” Enright says.
Farias approached VanderSloot and explained his problem.
“I reached out to Frank and told him about where things were and where I thought they were headed,” Farias recalls. “We needed a lot of help cleaning up the financials and he was up to the challenge.”
Blackfoot cheese factory
This isn’t the first time VanderSloot has saved a region’s agricultural industry and its surrounding farms.
In 1993, two dairymen showed up at Melaleuca unannounced and informed VanderSloot that Kraft was closing the last cheese factory in the area. That meant 115 family-operated dairies had nowhere else to send their milk.
The men asked VanderSloot if he would purchase the Blackfoot plant and keep it open. Their passionate plea was effective. He bought the facility and spent more than $5 million to save the farms. The move meant approximately 825 jobs were safe.
“Frank told us he did not know anything about the cheese business and did not want to be in the cheese business,” dairymen Gaylen Claysen told Idaho Falls Magazine in 2014. “However, he wanted to help the farmers in the valley keep their farms…Without Frank VanderSloot, we might have all gone broke.”
Years later, after the factory stabilized and profitability improved, VanderSloot sold the plant. Glanbia Foods operates it today. Although VanderSloot lost over $500,000 in the venture, he says that saving the Blackfoot cheese plant and the local dairy industry is one of his proudest endeavors.
Future of Hawaii meat plant
Two weeks ago, VanderSloot held a special dinner in Hawaii for all Kunoa Cattle Company ranchers to pay them their past-due checks. He announced that he had purchased the company and it would be known as Hawaii Meats. Farias would continue to serve as president and all employees would receive a pay increase.
VanderSloot agreed to pay fair market value for the company, which is still being appraised, but that’s just the beginning. He plans to invest “several million dollars” into the plant and “greatly increase its capacity.”
“This is the right thing to do. We’ve got the resources to save this and it’s needed,” VanderSloot tells EastIdahoNews.com. “The cattlemen need a processing plant in Hawaii and we’re in the position to make it happen.”
Enright says it’s particularly important that Hawaii Meats is located on the island of Oahu, where 85 percent of the state’s population lives.
“This is a game-changer. It’s not that easy to put up a slaughterhouse and takes years of planning and permitting,” Enright says. “This is a rancher-friendly operation and with the infusion of capital, it will dramatically improve the industry.”
Meat from the plant will also be used for Hawaii’s farm-to-state program, according to Enright. This means local beef will be served at schools, hospitals and prisons across the state.
In addition, VanderSloot has also shipped 25 premium bulls from Idaho Falls to Hawaii with the intention of improving the genetic makeup of cattle on the islands, which is 40-50 years behind genetics on the mainland.
“It’s wonderful that Frank’s here and has his ranch here,” Enright says. “Having a rancher like him in the state is a real benefit. We’re very fortunate.”
WATCH OUR INTERVIEW WITH BOBBY FARIAS
EDITOR’S NOTE: In 2015, Melaleuca CEO Frank VanderSloot provided the seed money to launch EastIdahoNews.com. For a short time, he was an owner. He has never had anything to do with the operations of EastIdahoNews.com. Nearly two years ago, he totally divested his ownership.