SB3221

SECTION 1. The legislature finds that increasing local agricultural production is essential to the long-term sustainability and food security of the State. However, local agricultural producers face significant economic challenges, particularly with the high costs of transporting agricultural products and necessary supplies across the State. In a recent survey report on Hawaii commercial agricultural expansion, thirty-nine per cent of participating local ranchers and farmers cited shipping and transportation costs as a leading barrier to the expansion of their agricultural production. These transportation costs place undue strain and financial burdens on farmers and ranchers, limiting their ability to compete in local markets and reducing the overall productivity of Hawaii's agricultural sector. Additionally, in response to the economic tariffs being implemented by the Trump administration, the Hawaii department of transportation harbors division, reported that effective July 1, 2025, the tariff for wharfage and pipeline toll rates will reflect a 4.1 per cent increase, further adding to the strain on local producers.

The legislature recognizes that, to successfully scale up local production, the establishment of a cost reimbursement program that offsets the increased transportation costs of agricultural producers is necessary to ensure growth in the agricultural sector. The financial relief provided by a cost reimbursement program would help strengthen local agriculture, encourage greater self-sufficiency, support the State's broader efforts to diversify its economy, and promote sustainable agricultural practices.

Accordingly, the purpose of this Act is to establish a local agriculture transportation cost reimbursement program to ensure that certain local agricultural producers, including those that manage livestock and produce essential commodities, and those engaged in floriculture and nursery production, receive support to offset the high costs of transporting goods to market and to obtain necessary supplies.

SECTION 2. Chapter 145, Hawaii Revised Statutes, is amended by adding a new section to part II to be appropriately designated and to read as follows:

"§145- Local agriculture transportation cost reimbursement program; rules. (a) There is established within the department of transportation a local agriculture transportation cost reimbursement program to reimburse eligible agricultural producers for a portion of the producer's costs to transport agricultural commodities.

(b) To be eligible to receive reimbursement payments pursuant to this section, an agricultural producer shall:

(1) Be an owner of livestock or a producer of agricultural commodities in the State, a cooperative aggregator or food hub, or a start-up or small-scale farmer demonstrating commercial intent that earns below the threshold of gross receipts under paragraph (3);

(2) Incur costs for transporting in a covered motor vehicle or through air cargo, parcel, or water cargo carrier services:

(A) Livestock, livestock products, or agricultural commodities to market within the State; or

(B) Supplies for the use of the agricultural producer; and

(3) Provide to the department of transportation proof that the agricultural producer has annual gross receipts totaling $ or more.

(c) The total amount of reimbursement payments disbursed pursuant to this section shall not exceed $ in any year; provided that no single producer shall receive more than $25,000 or fifty per cent of their eligible transportation costs per fiscal year, whichever is less; provided further that no single cooperative aggregator or food hub shall receive more than $50,000 or fifty per cent of their eligible transportation costs per fiscal year, whichever is less.

(d) The department of transportation shall submit an annual report to the legislature no later than twenty days prior to the convening of each regular session. The report shall include:

(1) The total number of producers reimbursed;

(2) The total amount of funds disbursed; and

(3) Any recommendations for improvements or modifications to the program.

(e) For the purposes of this section:

"Agricultural commodity" has the same meaning as defined in section 145-21, including nursery production.

"Covered motor vehicle" means a motor vehicle:

(1) Registered and owned by an owner of livestock or a producer of agricultural commodities in the State; and

(2) Used for the transport of livestock, livestock products, agricultural commodities, and supplies within the State."

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2026-2027 for the department of transportation to fund and administer the local agriculture transportation cost reimbursement program established pursuant to this Act.

The sum appropriated shall be expended by the department of transportation for the purposes of this Act.

SECTION 4. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2026-2027 to establish and fund one full-time equivalent (1.0 FTE) position within the department of transportation to administer the local agriculture transportation cost reimbursement program established pursuant to this Act.

The sum appropriated shall be expended by the department of transportation for the purposes of this Act.

SECTION 5. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2026.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	3221
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII