How much coffee does this farm produce?

This question is asked constantly. It’s often a lead-in to, “how much money will I make on this farm?” The answer to both is “that depends…” I’m not trying to avoid answering the question, but I believe sometimes the complexity of the question is not grasped by the asker. Historical production records are the best place to start, but may not tell the whole story. Here’s why.

The first indicator of how much coffee cherry can be produced on a farm is the number of trees. While the amount of cherry produced per acre varies from year to year, (depending on pruning, rainfall, fertilizing, storms, etc.), one relatively fixed component of cherry production is the number of trees per acre.

Trees per acre is a strict mathematical computation of spacing of trees. Older Kona Coffee farms were planted on an 8ft by 8ft grid giving about 680 trees per acre. More modern farms, with mowed grass between the rows, tend to be planted closer within the rows and have wider space between rows. 6ft by 10 ft spacing would give gross trees per acre of 726. Mathematically, trees/acre = 43560/(length X width) in ft. Any road, houses, sheds etc would be reduce that number.

So here are three questions I always ask when viewing a coffee listing.
1. “How many trees are on the farm?” The number of trees multiplied by an average cherry production per tree will give a rough guess on cherry production.
2. “What is the tree spacing?” I also usually ask this as a cross check.
3. “Are the production records available?” This reveals yield, not profit.

See, I told you this was a numbers game. It’s a bit like mental gymnastics. More production variables to follow.

Fred Cowell, R(S), Kona Home & Land Realty LLC
(808) 323-3300 office, (808) 936-3032 direct, (808) 323-3309 fax

Coffee Numbers Game

Welcome to October,

The town is buzzing with activity with the Ironman Triathlon World Championships this coming Saturday. There are lots of numbers: up to 1800 competitors doing a 2.4-mile ocean swim, 112-mile bike race and 26.2-mile run. Months of preparation leading up the big day. Needless to say, it’s an incredible numbers game for each of the participants.

Coffee farm ownership is likewise a numbers game. I often get questions on the numbers. I’ve heard some outrageous claims of production numbers, growing costs, and net profits. As with anything, it pays to do your homework. Often, if it sounds too good to be true, it’s too good to be true. There are also many good “rules of thumb” to go by. I’ll try to cover some of these later in later individual segments.

One of the best sources of coffee numbers is through the University of Hawaii, College of Tropical Agriculture and Human Resources (CTAHR). Anything related to agricultural production can be found under their roof. Be careful, it’s a little like drinking from a fire hose.

http://www2.ctahr.hawaii.edu/oc/freepubs/pdf/AB-11.pdf links to numerous publications, both free and for sale. Search for coffee from here.

More specifically, this link will take you to a 1998 fact sheet with spreadsheet covering coffee economics: http://www2.ctahr.hawaii.edu/oc/freepubs/pdf/AB-11.pdf

Dive in, enjoy the numbers. It may prompt more questions than answers, but be reassured that answers are available from reliable sources if one knows where to look. I’ll be happy to be of any assistance in pointing you to the sources or pointing out good coffee properties. Drop me a line anytime.

Until next time,

Coffee Farms – Leasehold vs Fee Simple

So you’re thinking about joining the ranks of Kona Coffee farmers. A key consideration is the form of ownership or land tenure. The two most common forms land tenure in Kona are leasehold and fee simple. Fee simple means you own the property outright. Leasehold means you’ve purchased a lease giving you the right to use that property for the term of the lease. One of the largest land owners in Kona is Kamehameha Schools, also known as Bishop Estate. An estimated 1200 acres of the approximately 3600 acres of Kona Coffee land is owned by Kamehameha Schools. My simple math puts that at about one third of the total acreage.

Fair purchase price for a fee simple farm is dictated by most recent sales. In today’s market, productive coffee land is selling for about $150,000 per acre with no house. Obviously, some locations will drive a higher price/acre, some lower, but this should serve as a decent benchmark.

Leasehold is a different story. Because you’re only leasing the use of the land for the term of the lease, the price is dependent on the amount of time remaining on the lease. Often times the time remaining on the lease is not long enough to be financed by a lending institution. The amount of annual rent charged by the lease will also influence the value of the lease. Triggering a default clause within the lease contract can dramatically increase your lease rent payments. Needless to say, assuming a lease for leasehold property requires an extremely careful analysis to avoid paying too much.

We have many wonderful coffee properties on the market today in Kona, each with its own charm and character, both fee simple and leasehold. However, please take the time to carefully consider your desires and match them to the right farm at the right price. I’ll be happy to help.

A hui hou,

Kona Coffee Cultural Festival

I’m still adding informative text to the book on leasehold vs fee simple coffee property. In the meantime, I’ve added the link to November’s Kona Coffee Cultural Festival. It’s very well attended from all over the world. It runs from November 2nd to 11th. Be sure to check it out. Unfortunately, it’s also a very busy time for the coffee farmers who are usually in the busiest part of their picking season. My mom has been helping run the art competition for years. Needless to say, it’s about more than just drinking really good coffee. I know that in the past some coffee property owners have timed the listing of their property to coincide with the November arrival of coffee visitors. A hui hou,

Kona Coffee is Looking Good

plump-beans.jpgThis blogging stuff isn’t so tough after all. Enjoy the spectacular vista from our farm in Captain Cook looking south toward Honaunau. Perfect Mauka (uphill) elevations around 2100 ft and summer daytime tempratures averaging near 75 have plumped up and ripened our coffee cherry very nicely. Most farms have been harvesting for about a month. Our higher elevation farm just finished the first picking round. I’ll have more photos up soon. Next, I’ll have a short primer on fee simple vs leasehold land ownership. A hui hou!

Welcome to my new Blog

Aloha and welcome to my new Kona Coffee Real Estate Blog. I’m very blessed to live in an absolutely wonderful location doing the things I love most; growing some of the best coffee in the world, sharing a love for our coffee cultivaton culture, and helping others to find their niche within our market. I look forward to sharing up-to-date data on our Kona Coffee real estate market, along with coffee growing tips, and interesting local information. Bear with me as I get more proficient on the Blog technology. I’m pressing ahead full steam.

Aloha!

Aloha and welcome to my new blog, part of the Aloha Living Blog Network. I look forward to sharing with you both a professional and personal perspective on real estate in this area. Stay tuned!