SB3256

SECTION 1. The legislature finds that the State's geographic isolation presents unique challenges for farmers, ranchers, and local food producers, particularly in the form of high transportation costs. Located thousands of miles from the continental United States, the State relies heavily on shipping for the import and export of goods, significantly increasing the cost of transporting agricultural inputs such as feed, fertilizer, and equipment, as well as the export of locally grown and produced products. According to a 2021 survey by the department of agriculture and biosecurity, thirty-nine per cent of farmers, ranchers, and allied operators identified shipping costs as a significant barrier to expanding their operations, particularly on the islands of Maui, Kauai, and Hawaii. These findings illustrate the persistent economic pressure transportation expenses place on the State's agricultural sector.

The legislature further finds that the United States Department of Agriculture's Reimbursement Transportation Cost Payment (RTCP) Program has successfully supported geographically disadvantaged farmers and ranchers by offsetting high transportation costs and improving market competitiveness. In 2022, the RTCP provided approximately $3,000,000 in reimbursements nationwide, and in fiscal year 2025, the program remains active with approximately $3,500,000 in federal funds available to support eligible producers. The continued federal investment demonstrates both the necessity and effectiveness of transportation-cost mitigation programs in geographically isolated regions such as the State.

The legislature additionally finds that establishing a state-level program modeled on the RTCP would further alleviate the high transportation costs faced by local farmers, ranchers, and food producers, enabling them to operate more sustainably and remain competitive in local and export markets. According to the United States Department of Agriculture's latest agricultural census, the State has approximately seven thousand farms. Although not all farms may qualify under the United States Department of Agriculture's "geographically disadvantaged" criteria, a significant proportion would likely qualify at the state level. A state program would complement federal assistance by expanding eligibility, addressing unmet transportation needs, bolstering local food security, and reducing the State's dependence on imported goods. Additionally, such a program would stimulate economic growth by allowing producers to reinvest savings into expanding operations, creating jobs, and enhancing the resilience of the State's agricultural sector and rural communities.

Accordingly, the purpose of this Act is to support the agriculture industry and economic growth in the State by:

(1) Establishing the Hawaii agricultural transportation assistance program, to consist of:

(A) A reimbursement program for geographically disadvantaged farmers and livestock producers to mitigate the high costs of transportation for agricultural products, inputs, and supplies; and

(B) A grant program to assist small-scale farmers, ranchers, food hubs, and agricultural producers in rural or underserved areas with transportation costs directly related to the production and distribution of agricultural commodities;

(2) Requiring the department of agriculture and biosecurity to submit annual reports to the legislature on the progress and outcomes of the programs; and

(3) Appropriating funds to implement the program.

SECTION 2. Chapter 141, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"Part . hawaii agricultural transportation assistance program

§141-A Definitions. As used in this part:

"Department" means the department of agriculture and biosecurity.

"Eligible transportation costs" means expenses incurred for the intra-island, inter-island, and out-of-state transportation of agricultural products, inputs, and supplies, including but not limited to:

(1) Fertilizers, seeds, and other agricultural inputs;

(2) Equipment and machinery;

(3) Livestock and feed; and

(4) Finished agricultural goods to same-island, inter-island, national, or international markets.

"Geographically disadvantaged farmer or livestock producer" means a farmer or livestock producer located and operating in the State who:

(1) Is a producer of an eligible agricultural commodity in substantial commercial quantities; and

(2) Incurs transportation costs for the transportation of the agricultural commodity or input used to produce the agricultural commodity.

§141-B Hawaii agricultural transportation assistance program; established. There is established within the department the Hawaii agricultural transportation assistance program, which shall consist of:

(1) The agricultural transportation reimbursement program; and

(2) The agricultural transportation grant program.

§141-C Agricultural transportation reimbursement program; established. (a) There is established within the department, as part of the Hawaii agricultural transportation assistance program, the agricultural transportation reimbursement program, which shall provide reimbursements for the eligible transportation costs of geographically disadvantaged farmers or livestock producers.

(b) Reimbursement rates for the agricultural transportation reimbursement program shall be determined by the department and may vary based on the type of agricultural product, input, or supply transported.

(d) To be eligible for reimbursement, an applicant shall:

(1) Be an individual, corporation, or organization domiciled in the State;

(2) Provide documentation demonstrating that the costs incurred were eligible transportation costs; and

(3) Provide documentation of expenses, including invoices, receipts, or any other required supporting documents.

(e) The department shall prepare any forms necessary to meet the requirements of this section.

(f) The department shall publish on its website the reimbursement rate schedule as well as any forms required by the department for application for reimbursement.

§141-D Agricultural transportation grant program; established. (a) There is established within the department, as part of the Hawaii agricultural transportation assistance program, the agricultural transportation grant program, which shall provide grants to assist small-scale farmers, ranchers, food hubs, and agricultural producers in rural or underserved areas with transportation costs directly related to the production and distribution of agricultural commodities.

(b) The program shall provide grants to subsidize transportation costs for the movement of raw or processed agricultural products, agricultural inputs, and agricultural equipment within the State, or to and from markets, ports, or other destinations necessary for the applicant's agricultural operations.

(c) The department shall develop standards, policies, and procedures for administration of the agricultural transportation grant program.

(d) Requests for grants shall be submitted to the department in accordance with administrative rules adopted by the department. Each request shall, at a minimum, state:

(1) The name of the farmer, rancher, or agricultural producer requesting grant funds;

(2) The expenses necessary for the transport of raw or processed agricultural products, agricultural inputs, and equipment; and

(3) The size and location of the agricultural operation.

(e) Each applicant shall provide proof that the applicant:

(1) Has United States citizenship or lawful permanent resident alien status and is a resident or domiciliary of the State;

(2) Grows or produces raw or processed agricultural products in the State;

(3) Complies with applicable federal, state, and county statutes, rules, and ordinances;

(4) Complies with applicable nondiscrimination laws;

(5) Does not use state funds for entertainment or lobbying;

(6) Allows access for monitoring, evaluation, and auditing;

(7) Satisfies any other standards required by the source of funding; and

(8) Meets all standards in rules adopted by the department.

(f) The department shall prepare any forms necessary to meet the requirements of this section.

§141-E Hawaii agricultural transportation assistance special fund; established. (a) There is established in the state treasury the Hawaii agricultural transportation assistance special fund, to be administered by the department, into which shall be deposited:

(1) Appropriations made by the legislature;

(2) Federal funds received for purposes aligned with this part;

(3) Private contributions, grants, or donations; and

(4) Any other revenues received.

(b) Moneys in the fund shall be used for the agricultural transportation reimbursement program under section 141-C and the agricultural transportation grant program under section 141-D. Expenditures may be made without appropriation or allotment.

§141-F Rulemaking. The department shall adopt rules pursuant to chapter 91 necessary to implement this part.

§141-G Reports to the legislature. Beginning with the regular session of 2027, the department shall submit a report to the legislature no later than twenty days prior to the convening of each regular session, which shall include:

(1) The number of program participants and the amount of reimbursements and grants;

(2) A breakdown of inter-island and out-of-state transportation costs;

(3) An assessment of program impacts on agricultural productivity and competitiveness;

(4) An evaluation of program effectiveness;

(5) The sources and expenditures of special fund moneys; and

(6) Findings, recommendations, and proposed legislation."

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 to be deposited into the Hawaii agricultural transportation assistance special fund.

SECTION 4. There is appropriated out of the Hawaii agricultural transportation assistance special fund the sum of $ or so much thereof as may be necessary for fiscal year 2026-2027 for implementation of the Hawaii agricultural transportation assistance program.

The sum appropriated shall be expended by the department of agriculture and biosecurity for the purposes of this Act.

SECTION 5. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

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

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	3256
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII