The University of Hawaii Agribusiness Incubator Program in Honolulu isn’t a typical incubation program. “We realized pretty quickly that we’re different from other incubators,” says Steven Chiang, director of AIP. “We’re a business consultancy in agriculture.” The reason is simple: Agriculture requires land, unlike many other incubation businesses.
The program provides hands-on consulting, less in the science of growing things than in the business of marketing them. “We take an active role, for instance, in project management,” Chiang says. “We take on the load of some of the bits – say, developing anything that ends in ‘plan.’ We help them set up a Web site and get their products out there.”
AIP offers a variety of agribusiness-related services, from assistance in basics such as accounting and applying for commercial loans to marketing, and in cooperation with the University of Hawaii and other local organizations, help with agricultural and product processing issues. In eight years, AIP has assisted more than 200 businesses, leading to hundreds of new Hawaiian jobs.
The tropical island state is isolated in the middle of a vast ocean, and it’s impossible to travel to all parts of the state without resorting, no pun intended, to boats or aircraft. Most consumer goods and many foodstuffs must be shipped in, increasing their cost and making prices high for the islands’ 1.4 million permanent residents. Large international companies own vast tracks of land and ship products globally. Yet smaller, locally based agricultural businesses have not always had an easy time of it.
To help support Hawaiian small businesses, the University of Hawaii obtained funding from the U.S. Department of Agriculture National Institute of Food and Agriculture, which has a special category for native Alaskan and native Hawaiian businesses. AIP opened in 2004.
Because AIP offers no space, the program charges graduated fees for services to guarantee their clients have “skin in the game.” Large, established companies seeking special project assistance pay higher fees than small start-ups. “The first part of our service is free, typically up through formulation of a strategic plan,” Chiang says.
AIP accepts almost all applicants so the program can become overwhelmed with clients, Chiang says. In those cases, clients may be deferred until staff can accommodate their needs. He also says AIP does not use a strict graduation requirement, since they work with all stages of companies. “They can always come back to us for advice,” Chiang says. “But there is definitely an active period that usually ends when a defined project is done.”
Chiang describes an example of a typical AIP case. A pineapple grower on the island of Maui that had been in business since 1912 and had contributed significantly to Hawaii’s reputation as the world’s source of the fruit was considering going out of business. Global competitive forces caused the company to lose $100 million over several years, so two managers spun off the pineapple business and went to AIP for advice. That advice included playing to the company’s strengths.
Now, almost the entire pineapple crop is sold in Hawaii instead of shipped to the mainland. The company has been a success, Chiang says, “saving 70 agricultural jobs, keeping 1,000 acres of land in agriculture and continuing the legacy of pineapple on Maui island. Since then, the company has added 11 more employees and increased sales by almost $1 million. Their success continues, as the business plans to add another 13 jobs and is expecting another increase in sales.”—Dennis E. Powell
Keywords: Incubator management - general, Agriculture incubator
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