Cover Story: Parker Ranch - Home of the Hawaiian Cowboy

Published on Mon, 10/22/2012 - 10:42am

I feel a particularly special responsibility,” said Dutch Kuyper, President and CEO of Hawaii’s historic Parker Ranch.  “Staring at me now is a portrait of A.W. Carter, who ran the Ranch as manager from 1899 to 1937.”  Kuyper’s high-ceilinged office is just off the grand parlor of sixth-generation Parker family home “Puuopelu.”   It looks over windswept green pastures and aloha-tended gardens, a spread ascending into the foothills of Kohala and Mauna Kea mountains of “the Big Island” and beyond.

Here, 10,000 mother cows, mostly Angus and Charolais, graze—some descended from the first cattle that came to Hawai‘i as a gift from British seafarer George Vancouver to King Kamehameha I in 1788.  Once one of the largest privately-owned cattle ranches in the world, Parker Ranch has evolved as Hawai‘i evolved, adeptly adapting to ever-changing influences, demands and the faces of time.  Today, Parker Ranch remains the second largest private landowner in the State of Hawai‘i.

“Businesses play a major role in the economy of a community,” he said.  “As a business, we not only employ directly and indirectly a lot of the community in ranching—we also have a historical and social role in this community (Waimea) as part of our heritage.” 

“It’s about ‘shared values,’” said Kuyper, who took the reins at Parker Ranch in 2011. Originally from Oahu, he spent 28 years on the U.S. mainland and in Asia, working with prestigious firms such as Capricorn Investment Group and Wellington Management before returning to Hawai‘i with his family. “We have thought through our responsibility to the community of Waimea, and to the ranching community as a whole.  And our guiding principles affirm the Ranch’s stewardship of natural and cultural resources and commitment to supporting an economically sustainable Waimea community.” 

Kuyper and his leadership team face the challenges of escalating energy costs, feed costs and more with a kind of courageous sense of “kuleana,” community responsibility.  “You can’t just rely on a legacy business model,” said Kuyper.  “The most important thing to do is adapt, to be resilient, and to deploy the assets you have in different, inventive ways.” 

The “legacy business model” Parker Ranch is based on was created by adaptation, by innovators dealing with change in changing times.  The story begins with five cows, presented to the King, who proclaimed them to be “kapu” (off limits).  Released into the wild, with no natural predators and bountiful food sources, the animals multiplied rapidly.  And when Massachusetts sailor John Palmer Parker arrived 20 years later, wild bullocks ran rampant across the countryside, creating serious hazards to farms, animals and humans.
Parker formed a relationship with the King, perhaps due at least in part to the spanking-new American musket he proffered—the perfect solution to the bovine overpopulation.  Parker, given exclusive permission to hunt cattle and trade beef, tallow and hides to visiting ships, soon became a man of wealth and influence, husband of the King’s granddaughter, Chiefess Kipikane.  The couple was awarded two acres of land, which would grow into Parker Ranch through the next century.

Hawai‘i had already transformed itself from essentially a feudal agricultural society to a small nation with a monetary system, trading with Europe, Asia and America.  When a new law allowed private landownership for the first time, Parker purchased over 2,000 acres and leased more from King Kamehameha III, who had brought the first cowboys to Hawai‘i in 1832, possibly pre-dating their counterparts in the American West. 
After visiting California, the king invited Spanish-Mexican vaquero to train islanders, already skilled on horseback, to rope and handle cattle.  Because they spoke Spanish (Español), they were called “paniolo” by the new Hawaiian cowboys, who quickly learned and adopted paniolo skills and culture into their own. 
Today’s paniolo, some fifth and sixth generation Parker Ranch workers, many with Parker or Kamehameha ancestry, care for the Ranch’s 130,000 acres of rich grazing land and tend its 850 miles of fence, over 300 paddocks, corrals and a water system with 175 miles of pipeline, three large reservoirs, 145 water tanks, three dams, and 650 water troughs. 

Perhaps most importantly, the paniolo serve—as does the Ranch itself—as an ongoing, living link with the legacy of ranching Hawai‘i.  In celebration of that legacy, this summer Parker Ranch hosted its 50th Annual Fourth of July Rodeo and Horse Races.  A spectacular day attended by thousands, the state-wide Rodeo is filled with paniolo-style pageantry and high-spirited riding and roping competition.

“To me part of ranching is risk-taking,” said Kuyper, looking at A.W. Carter’s portrait. “And, in a way, cowboys are exemplary risk-managers.  The land they are responsible for, from a stewardship standpoint, the value of the cattle, the judgment and experience required to be effective in that role—these things are extremely important to us.  We are a large ranch, highly dispersed and we rely heavily on the expertise and professionalism of our paniolo,” he said.

Instrumental to the development of today’s professional paniolo, Alfred Wellington Carter was born and raised in Hawai‘i and educated at Yale Law School.  A respected Honolulu businessman and judge, he was hired by the Parker family who saw the need for a strong Ranch manager at the time.  Shrewd, innovative, magnanimous, family and community-minded, he took a more global approach to ranching, studiously learning every aspect of the industry and experimenting with new techniques. 

Carter improved operations and expanded Ranch holdings, began breeding horses, which he loved, took seriously the Ranch’s role as one of the island’s largest landlords and mentored numerous other ranchers in Hawai‘i.  The Parker Ranch became well known for its horse program, boasting General Patton and the Emperor of Japan as customers.   To enrich the Waimea community which had grown up around Ranch Headquarters, Carter created home ownership opportunities for employees, scholarship programs, educational and health resources.  He ran the Ranch for 38 years and under his (and later son Hartwell Carter’s) direction, Parker Ranch grew to over 500,000 acres and 30,000 head of cattle. 

After Carter retired, John Parker’s great-great-great grandson and the Ranch’s last private owner, Richard Smart became more involved in Ranch operations.  Deeply committed to Waimea and its people, he recognized that growth was inevitable and devised the “Waimea Town Center Plan.”  Intended to set aside sufficient lands to allow for uncongested growth and development, the Plan would also maintain the community’s rural ranching village character, and still provide for future business growth, employment, and housing.  To fund ranching operations, Smart authorized the sale of low-yield pasture lands that are now the site of world-class luxury resorts along the Kohala Coast.

When he died in 1992, Smart left the Parker Ranch in a trust to support healthcare, education and charitable giving through named beneficiaries in the Waimea community: North Hawai‘i Community Hospital, Hawai‘i Preparatory Academy, Parker School Trust Corporation, and The Richard Smart Fund of the Hawai‘i Community Foundation.

“Richard Smart had the foresight to focus on healthcare and education.  He put visionary thinking into Waimea as a sustainable rural community – to leave to these four beneficiaries,” said Kuyper.  “Now our leadership team has a responsibility not just to the Ranch, but to Waimea as well.” 

Originally, ranching operations were almost completely domestic—with all cattle raised and processed in Hawai‘i.  Over the last 20-30 years, with the availability of low-cost energy, Parker Ranch grew into more of a cow-calf operation, transporting calves to mainland feedlots for finishing, because it was more cost-effective to send the calves to the food source than vice versa.  Transportation costs are offset by year round forage production in Hawai‘i and the more rapid growth of calves on mainland grasses.

As many as 17,000 head of cattle are pastured on the Ranch at any given time, with the rest in pasture or feedlots on the mainland.  The Ranch’s 26,000 head of cattle are mostly Angus and Charolais, with about 300 breeding bulls.  The cowherd is divided into two breeding seasons, winter and summer, with about 50% of the herd in each season.  Parker Ranch participates in the Country Natural Beef and Hawaii Ranchers marketing cooperatives.

“The productivity of Hawai‘i ranches is much higher than other places because of the tropical climate,” said Kuyper.  “As a consequence, the industry in Hawai‘i evolved to become an exporter of calves, the major players here are primarily cow- calf operations.  This industry structure was sustainable as a long as energy costs were reasonable.”  However logical at the time, a business model based fundamentally on low-cost energy is not as effective today as it was previously, and , with today’s volatile oil and corn prices, the paradigm is shifting.

“The transition is going on; we are re-thinking operations designed for low cost energy and finding new and different ways to deploy the assets we have,” said Kuyper.  “This is a real leadership opportunity for this next generation of leaders.  What is ‘old’ is new again.  In an interesting way, we are examining strategies from a much earlier generation, when we fed and finished cattle here in Hawai‘i.” 

Parker Ranch sees a three-pronged strategy:  sustainable cattle ranching operations, land development and alternative land use.  “We face a risk of food and energy prices rising faster than incomes on a sustained basis.  But there are opportunities to offset the risk in all three areas.” 

“We own a lot of grass,” said Kuyper. “It may seem counter-intuitive, because it takes longer to put weight on the animals, but with mainland pasture and transportation prices going up – grass is more economical simply because we own a lot of it.”

With that in mind, Parker Ranch is partnering with the Ulupono Initiative to jointly fund pre-commercial trials for irrigated finish pasture beef production on the Big Island.  Part of a group of companies affiliated with Pierre Omidyar, founder of eBay, the Ulupono Initiative is a Hawai‘i-focused impact investing firm that uses for-profit and non-profit investments to improve the quality of life for island residents in three areas:  locally produced food; clean, renewable energy, and waste reduction. 

“Most cattle in the world is grass-fed,” said Kuyper.  “The U.S., Europe, and certain other places are exceptions…  Right now grass-fed beef may be a small market, but the demand is growing for local grass fed beef produced here in Hawai‘i, for island restaurants, resorts and dinner tables.” 

The pre-commercial trials with 100 head of cattle on 70 acres of pasture are collaborative studies between Hawai‘i Beef Producers (HBP), Parker Ranch and Kamehameha Schools (KS).  HBP owns the largest slaughterhouse on the island and KS is the largest landowner in the state.  The outcomes from all trials will be combined and shared with all partners as well as the Hawai‘i Cattlemen’s Association and the University of Hawaii’s College of Tropical Agriculture and Human Resources (CTAHR) to help determine which combination of methods are best for lowering the production costs and improving the quality of locally produced grass-fed beef.

“These trials are integral to helping further Hawaii’s agricultural sector, so it’s great to have Hawai‘i Beef Producers join,” said Kyle Datta, general partner for Ulupono Initiative. “We’re so pleased to be able to help catalyze this partnership with our local ranching community to help inspire other Hawai‘i ranchers to consider grass-fed as an option. In addition, the combined trials using the Hamakua Ditch Irrigation System will help provide insights on commercially viable water rates for finish pasture operations, which will be key to the expansion of local beef production and could have statewide implications.”

According to Kuyper, “The partnership with Ulupono is important on many fronts.  It can help to develop a strategic hedge for the ranching operation against the risk of rising energy prices, and should prove beneficial for producers as well as for consumers.” 

“Developing the agreement with Ulupono provides us with ‘transformational capital,’ said Kuyper.  “Transformational capital is very useful in situations like ours, where there is a fundamental value to assets, such as the land and the cattle, but those assets need to be deployed in a different way. It will give us continuity and flexibility during this period of transition.”

Kuyper cited as an example the Hū Honua energy bioenergy company on Hawai‘i Island’s east side.  What was a successful sugar mill was transformed in the 1980’s into a coal-burning electric plant and is now being recreated again as a 24-megawatt renewable energy facility, burning 100% biomass.  Exploring biomass production as a reliable alternative land use, Parker Ranch has already begun a collaborative effort, leasing 4,500 acres in trees to a third party who plans to market the trees for energy production using biomass.  Other alternative energy resources include the Ranch’s wind and solar assets, which have large potential to be developed for the Ranch’s benefit as well as for the beneficiaries of the Foundation trust and the community at large. 

Perhaps inspired by the Ranch’s example, the beneficiaries are doing some creative reinvention of their own with no small success.  North Hawai‘i Community Hospital just opened a new service area entitled “Kaheleaulani.”  A Native Hawaiian health program providing culturally appropriate, high-quality medical and behavioral health services, Kaheleaulani is led by Dr. Claren Ku‘ulei Kealoha-Beaudet, whose family, coincidentally, runs a 125-acre Hawaiian Homestead cattle ranch.

Hawai‘i Preparatory Academy last year achieved Living Building Challenge Certification for its Energy Lab, making it the world’s greenest K-12 school building. The facility also was awarded Platinum-level LEED (Leadership in Energy and Environmental Design) for Schools 2.0 certification by the U.S. Green Building Council. In the last three years, Parker School has proudly produced six National Merit Scholarship semi-finalists, three of whom went on to win Merit Scholarship Awards.

The Hawai‘i Community Foundation’s Richard Smart Fund supports health care, educational and charitable purposes that improve quality of life for the people of Waimea, including comprehensive  improvements to Waimea Elementary School,  grants to nonprofit organizations for organizational capacity-building, and scholarships.

That’s a lot, considering the story started with a few cows and a sailor who came ashore and decided to stay.   Yet the Parker Ranch leadership team is up to the challenge.  “One of the toughest things to do is prioritize what we think we have to do,” said Kuyper.  “What is important – besides family –when you look ahead 5-10 years in the future?” 

“You have to ask yourself ‘what are the opportunities, what are the challenges?  Then if you can, leverage the opportunities and have people to help you do that—linking values to goals, for a sustainable community.  And, at the same time, always ensuring that the heritage of the Ranch and our cultural roots are perpetuated for future generations.”

At the end of the day, when Kuyper and his team turn out the lights, one wonders if, on their way out the door, if they might hear Mr. Carter whisper, “well done.”

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