By Stewart Yerton
Go to the neighborhood grocery in Honolulu, and it’s hard to find a gallon of milk for less than $7.
But Bahman Sadeghi is hoping to change that. The chief executive of Meadow Gold Dairies, which Sadeghi acquired in 2020, has a long-range goal of bringing back Hawaii’s dairy industry.
He reckons that by producing milk locally, Meadow Gold can lower the price of a gallon of milk by 20%.
“The fundamental piece is producing local milk and processing locally,” Sadeghi said. “We process all the milk that is produced here locally today, which is from one farm. But that’s a very small portion of the total market size.”
An informal survey of Honolulu grocery stores shows the number can be a lot higher. Although big box grocers like Costco and Walmart typically offer better deals, prices at regular grocery stores on a recent morning were stunning.
A gallon of Meadow Gold milk at Safeway was running $8.69, while the store brand Lucerne was $7.49 and store brand O Organics was $8.79. At Times Supermarkets, Meadow Gold was on sale for $8.99 a gallon, marked down from a whopping $12.49 a gallon. Sunhearth brand was on sale for $6.99, marked down from a regular price of $9.69.
The retail prices are largely set by the grocers, based on the profit they want to make, Sadeghi said. But there’s a more basic reason for these high prices, Sadeghi said: Most milk consumed in Hawaii these days is shipped in.
That’s thanks to a steep decline in dairy farms. According to the Hawaii Department of Agriculture, Hawaii’s milk herds had dwindled to just 800 cows out of a total of 144,000 head, including calves, as of January — part of a trend in the works for years.
Sadeghi, meanwhile, had been involved in dairy and farming on Hawaii island from 1986 to 2011. Although a distribution and processing center on Sheridan Street in Ala Moana was not part of the deal, Sadeghi bought a King Foods distribution center in Waipahu separately from Y. Hata & Co. Ltd., a Honolulu-based distributor.
With the acquisition came a powerful brand. Founded in 1897, Meadow Gold holds a prominent place in Hawaii’s keiki culture, thanks in part to its passion, orange, guava beverage known as POG. There’s also the company’s cow mascot, Lani Moo, a well-known figure at children’s and school events. Finally, the company’s logo has been emblazoned on thousands of youth soccer jerseys over the years as the sponsor of the American Youth Soccer Association in Hawaii for more than 50 years.
Still, by the time Sadeghi bought the company, a key link to Hawaii was fading. With Hawaii’s dairy farms all but gone, Meadow Gold increasingly relied on mainland farmers.
To that end, Sadeghi is plunging back into farming. Meadow Gold bought more than 600 acres on the Big Island for a dairy farm and to grow feed. These include 450 acres near Hawi, acquired from Parker Ranch, and 160 acres near Pepeekeo.
But buying farmland is just the first step. Getting approvals from the government and neighbors is a much bigger obstacle.
Dairy Farm Failures Are Cautionary Tale
In 2018, after being slapped with fines from the Hawaii Department of Health amidst complaints from neighbors about run-off water carrying feces and urine, the 1,800-cow Big Island Dairy announced it would cease operations.
Around the same time, Hawaii Dairy Farm announced it would discontinue efforts to start a dairy farm on Kauai. The company attributed its decision to forgo building the 557-acre, pasture-raised dairy in Mahaulepu on regulatory hurdles. The project had also faced litigation over alleged Clean Water Act violations.
Sadeghi sees the fates of Big Island Dairy and Hawaii Dairy Farm as cautionary tales. Community support is key, he said. It’s also important for farms to consider things like terrain, topography, rainfall and proximity to neighbors. The size of the dairy and its farming practices also are key.
Sadeghi is convinced there are places suitable for dairy farms that won’t pose environmental problems or create nuisances for neighbors. The industry doesn’t expect special treatment, he said. But he said establishing fair, “fact-based” governmental regulations is key for the dairy industry to come back.
“When things take a long time, and the regulatory obstacles are dragged out, that doesn’t help any private industry,” he said. “I don’t expect the government to step in and support one private industry. We need to be economically viable on our own. Otherwise that cost is buried somewhere else.”
Much may depend on how much feed can be produced here rather than shipped in. Herd size also factors in, he said. The calculations are complicated: The need to import feed could offset a big herd’s beneficial economy of scale, he said.
‘Made With Aloha’ — In California?
A final hurdle facing Meadow Gold is a lawsuit, brought by, as Sadeghi puts it, “a competitor who’s trying to destroy our brand.”
In November 2021, a competing local milk distributor, Hawaii Foodservice Alliance LLC, sued Meadow Gold alleging the company was deceiving the public into believing its milk is produced in Hawaii, when little comes from the islands. The suit centers on Meadow Gold’s use of the phrases “Hawaii’s Dairy” and “Made with Aloha” on its milk cartons.
“Defendants deliberately mislead the consumer into believing that their Mainland Milk products contain nothing but milk originating in Hawaii to justify the high prices charged for what is actually milk produced from cows in the continental United States that is processed and packaged in California,” the suit says.
Meadow Gold “owns zero cows in Hawaii (with the exception of the mascot costume ‘Lani Moo’) and owns zero dairy farms in Hawaii,” the suit says.
Lawsuits involving purported Hawaii products not made here have had mixed results. The brewer of Kona beer in 2019 gave partial refunds to settle a lawsuit claiming it misled consumers on the mainland into thinking Kona beer was made in Hawaii, for instance.
A sign on Meadow Gold’s former Sheridan Street facility, pictured in 2018, notes the company’s long history in Hawaii, which dates to 1897. Now the company is being sued over allegations it has misled consumers about the origin of its milk
Paul Alston, an attorney who represents Meadow Gold, said Hawaii Foodservice is the state’s biggest wholesale milk distributor with 70% of the market, and is simply trying to squeeze out a bigger market share by hurting Meadow Gold.
“This is about the dominant wholesaler beating up the underdog,” Alston said.
Kelly LaPorte, an attorney with Cades Schutte who represents Hawaii Foodservice, denied his client is trying to “bowl over the little guy.”
Hawaii Foodservice gets its milk from the mainland, he said, including some from the same supplier that provides some milk to Meadow Gold, LaPorte said.
“But it doesn’t try to masquerade it as coming from Hawaii from a little farmer,” he said.
A trial is scheduled for 2023.
In the meantime, Sadeghi said Meadow Gold will keep pushing forward.
“Where we need to get to will take another 10 years,” he said. “We need more than the one dairy that I will add. We need others to come into production. So it’s not short-term. It’s about reviving our dairy industry.”
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