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Idaho billionaire Frank VanderSloot took control of Hawaii’s largest slaughterhouses in 2019 and set about revitalizing the local beef industry with the local ranchers.

Disagreements quickly surfaced.

VanderSloot’s mainland business ideology has upset some existing relationships built on decades of collaboration, while the newcomer says he is working to level the playing field for all producers and create a viable industry.

“We’re not here to make money. We’re here to help change an industry because it needs to be changed,” VanderSloot said.

The issue boiled over noisily and publicly when Parker Ranch recently announced its exit from Safeway’s shelves, which will see its flagship Paniolo Cattle Co. brand replaced by VanderSloot’s Kamaaina label.

It is a symptom of the yearslong disagreement over whether local beef should continue to be marketed and sold as a premium product or if it should compete with U.S. commodity beef.

“It’s just this very frustrating learning curve for those of us who have been around for years,” Kuahiwi Ranch coowner Michelle Galimba said in an interview. “When are you (VanderSloot) going to see that it’s different?”

Hawaii’s local beef is different than most American beef because it’s raised exclusively on grass, unlike grain-fed mainland cattle.

That difference means Hawaii’s beef can fetch more on the shelf, evidenced by the per-pound price of cattle carcasses doubling to $2 from 2010 to 2019, according to Parker Ranch president Neil “Dutch” Kuyper.����

Demand is exceeding supply, which means local beef should be treated as premium product and priced accordingly, according to Kuyper.

“Commodity beef is what ends up in frozen burritos and pizza toppings, or other highly processed foods. Alternatively, fresh, branded high-quality grass-fed beef is a natural healthy specialty protein akin to wild caught fish,” Kuyper said.

But how much Hawaii’s slaughterhouses are paying for cattle has remained flat over the past five years, only underscored by the commodity beef industry’s current spike in prices.

Reluctant Benevolence

VanderSloot took over during a watershed moment in the industry.

The Oahu slaughterhouse was heavily in debt to ranchers and there was little interest in taking over the Paauilo facility.  

VanderSloot says his investments in Hawaii’s beef industry were made reluctantly, because no one else was willing to make them.

And he says the Safeway deal was struck only after Parker Ranch and the grocery behemoth could not come to an agreement.

Safeway did not respond to requests for comment.

Concerns that VanderSloot is monopolizing Hawaii’s beef industry have only deepened since the slaughterhouse takeover.

A bill was introduced at the Legislature in 2021 aiming to quell that concern, imposing several restrictions, including a provision that would prevent his brands from using more than 50% of the meat coming out of plants. That failed.

VanderSloot made his fortune with the wellness company Melaleuca but he has invested deeply in ranching in Hawaii and in his native Idaho, where he is currently building a processing facility that could process 600 cattle per day. .����

In Hawaii, VanderSloot’s businesses lost more than $6 million last year, according to financial records provided to Civil Beat. He says he has invested $27 million in his Hawaii slaughter operations.

He sees Hawaii’s beef industry being fully sustainable within 10 years.  

“It’s got to operate in the black or someday it’ll die because I’m not going to be here forever,” the 74-year-old said. “I’ll subsidize it for a while.”

The ranching community has been rankled by interactions with some of VanderSloot’s staff and by how quickly he invested his money in the slaughter operations.

Bigger ranches believe that the stagnant prices are to compensate for the heavy initial investments.

“He chose to overbuild the plants,” Kuyper said.

VanderSloot says he is trying to create space on the slaughter line in the market for smaller ranches. They will also be able to sell to VanderSloot, as part of the Safeway program.

“Instead of the 40 ranches that were serviced prior to us buying it, we’re now servicing 172 ranches,” VanderSloot said.

VanderSloot has offered an olive branch by asking Parker Ranch to participate in his Safeway program, but both the ranch and VanderSloot are adamant they don’t need each other.

Parker Ranch announced last week that KTA Supermarkets on Big Island tripled its order for the ranch’s beef.

VanderSloot says he can fulfill his Safeway contract without Parker Ranch.

Ranchers question whether they have been receiving their fair share of the price for the on-the-shelf product.

The prices producers have received per pound for their cattle remains a key question for Sen. Tim Richards, vice chair of the Agriculture and Environment Committee.

The generational rancher came out in support of the 2021 bill that would have limited VanderSloot’s power over the industry.

Ultimately, Richards says, the system needs to be more collaborative and equitable to benefit everyone.

“Right now, the way things are set up, I don’t see us heading in that direction,” Richards said.

Prices Remain Stagnant

Beef under banners like Maui Cattle Co., Kuahiwi or Paniolo Cattle Co. appeared on shelves through collaboration after slaughterhouses, supermarkets, suppliers and ranchers together had agreed upon the most mutually beneficial deal.

Those deals came after years of effort by a few local ranches to keep beef cattle in Hawaii during the 1990s, after inflated prices for feed, among other things, led many ranchers to send their cattle to the mainland.

“What we did was we had open communication with the rancher, the customer and the processor at all times,” Jill Mattos, former Paauilo slaughterhouse co-owner, said.  

The collaboration went further for the Paauilo plant, which VanderSloot now owns, as prices were decided by calling around and asking what was reasonably beneficial for the plant and ranchers.

“That hasn’t happened for four years,” Kuyper of Parker Ranch said.

And while some accommodations for those existing deals were made earlier, they steadily dropped off, because VanderSloot believes they unfairly favored some ranches over others. That’s seen Kuahiwi Ranch’s revenue dropped by 20%, or about $100,000.

Since 2017 prices have remained stagnant, a situation both VanderSloot and ranches have different takes on.

VanderSloot says he has absorbed inflation by keeping prices flat, while Kuahiwi and Parker ranchers take issue with the fact inflation has not factored it into the prices he has paid them.

In June, the price at the Paauilo slaughterhouse was lifted by an average of $0.20 per pound across all grades of cattle, while ranchers are also being offered a premium of up to $2.75 to supply higher grade beef to the Safeway program he now controls.

“I’ve never heard anyone say ‘you pay too much for our cattle’,” VanderSloot said.

Slaughterhouse space has been cramped for years and mobile or modular slaughter facilities have been one solution that’s emerged with varying success. Operations like the Hawaii Islands Meat Cooperative have been slaughtering cattle for small ranches which are sending the carcasses to Molokai to be processed and labelled with ranch names.

That’s in direct response to goings-on in the beef industry and wider meat sector, according to Micah Richards of Mauka Meats.

But for the entire industry, there are several questions that remain about how to best fill the market.

One of those has to be incentives for ranchers to keep their beef on island. And another is how to make sure there’s a place for the entire animal, from hoof to horns, from ranches big and small.

“You have to solve the entire puzzle every time you get one of these animals,” Richards said.

“Hawaii Grown” is funded in part by grants from Ulupono Fund at the Hawaii Community Foundation and the Frost Family Foundation.