Big beef: Safeway breaks ties with iconic ranch as local meat industry struggles to grow

HONOLULU (HawaiiNewsNow) - A huge investment in local beef production by an Idaho billionaire has turned into a mixed blessing for people with high hopes for homegrown food on store shelves.

HNN Investigates has been examining an ongoing beef over beef, which led to a major grocery chain breaking ties with Hawaii’s most iconic ranch.

When Idaho rancher and investor Frank Vandersloot bought the Hawaii meat processing plant in Paauilo on Hawaii Island and another one on Oahu, he was hailed as a potential savior of the meat industry in Hawaii.

But his business practices have caused conflicts among major players in the industry, including Parker Ranch.

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The turmoil is most evident on the Big Island ― whose pastures produce 70% of Hawaii’s cattle, most of that from the massive Parker Ranch.

‘We’re not going anywhere’

Parker CEO Neil “Dutch” Kuyper said no one should worry about the stability of the ranch.

“We are not going anywhere,” said Kuyper. “We’ve been here since 1847. We are going to be here forever.”

But one Parker Ranch product is going away.

Its premium beef brand ― Paniolo Cattle Company ― will no longer be on the shelves of Safeway stores after July 5. Parker Ranch invested years and millions of dollars to develop and market the product.

“I’m not unhappy that Paniolo is going away; we’re very proud of it,” Kuyper said. “But if somebody else thinks they can do it better and that’s going to result in investment, that’s a good thing.”

When Kuyper talks about “somebody else,” he means Frank Vandersloot.

He’s founder of the Melaluca home and wellness products empire and has invested $27 million to expand the state’s two biggest slaughterhouses, essentially controlling the supply of local beef to Hawaii grocery stores.

“It’s certainly not a financially profitable endeavor for me or for our operation,” Vandersloot told Hawaii News Now. “But at this stage of my life, I need to be doing good stuff for other people so that’s why we are doing it.”

After taking control of the Big Island beef plant in Paauilo in February 2021, Vandersloot pledged to keep existing relationships with Parker and other ranchers. But he also said he wanted to increase the number of cattle ranchers who had access to processing so he could get more cattle to process into store quality product.

‘We’re not done’

“We’ve kept those promises,” Vandersloot said. “We said we were going to build it and now we’ve built it, we’re not done. But the industry has been very, very positive and responsive to what we’ve done.”

Vandersloot buys cattle for his brand, “Kamaaina Ranches,” and said his goal is to get more ranchers to sell him their full-grown cattle instead of sending their calves to mainland feed lots.

He said that’s the key to eventually making the slaughterhouse sustainable.

“The secret sauce is volume, getting enough beef through the plant to pay for all the labor, the electricity,” Vandersloot said. The plant will double in capacity once it received county permits to add storage and refrigeration units. In recent years, more than 90% of the beef consumed in Hawaii was imported from the continent. Ironically, much of that beef consumed here started out as Hawaii-raised calves that were shipped to mainland feedlots.

Zanga Schutte, of Z-Bar Ranch in Waimea, was among the vast majority of ranchers who shipped out calves.

That is, until he started doing business with Vandersloot. “We are blessed to have Frank here,” Schutte said. “And the reason I say that it is opened up a market for us as a producer.”

Schutte said prices Vandersloot offers ranchers for cattle are fair.

‘It really is a disappointment’

But Michelle Galimba, owner of 9,000-acre Kuahiwi Ranch in Kau, says Vandersloot cut payments for her cattle by 20%. “It really is a disappointment. I mean it, and painful,” Galimba said. “You feel like you’re not valued.”

Galimba is a Hawaii County Council member and advocate for local agriculture.

She has arrangements for Kuahiwi to provide high-quality beef to Foodland stores, but said higher prices on the mainland, after the pay cut from Vandersloot, are tempting.

“I can make more money sending to the mainland all day long right now,” She said.

Vandersloot defended his pricing policies, and said he is offering the same prices in what he calls “an even playing field” for both large and small ranchers.

‘Plenty of room for everyone’

“Its commodity market,” Vandersloot said. “There is plenty of room for everyone.”

Meanwhile, Parker Ranch said Vandersloot raised what he charged Parker to process Parker’s meat for Safeway.

Kuyper said that made Parker’s bid to Safeway less competitive.

“We were prepared from day one that Paniolo Cattle Company could end up being the sort of proverbial sacrificial lamb if it meant someone was going to come into Hawaii and put capital to work in meat packing,” Kuyper said.

“So I am not angry about this at all.”

After Parker’s Paniolo deal fell through, Vandersloot won a bid to put its brand on Safeway’s shelves.

“And now the good news is that instead of just one ranch be on the shelves of Safeway, they’re going to be over 170 different ranches on the shelves at Safeway,” Vandersloot said.

Kuyper said the ranch can move on.

“We are great. We are in fine condition,” Kuyper said said.

Parker has other customers for its beef and an offer from Vandersloot to pay what he calls “premium” pricing for Parker’s high grade cattle, which would likely end up back in Safeway under the Vandersloot brand.

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