SB3318

SECTION 1. The purpose of this Act is to support state goals for climate and food resiliency.

Part II

SECTION 2. The legislature finds that local agriculture is an essential component of achieving the State's climate, food resiliency, and economic development goals. Strengthening local food systems and climate-conscious local agriculture is critical to the environmental and economic health of the State. To achieve the State's sustainability targets, economic incentives are necessary to implement sustainable, resilient, and equitable farming statewide.

Therefore, the purpose of this part is to establish a tax credit for farms that practice sustainable agricultural practices.

SECTION 3. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235- Agroecological and climate-smart farming practices tax credit. (a) There shall be allowed to each qualified taxpayer subject to the tax imposed under this chapter an agroecological and climate-smart farming practices tax credit that shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.

(b) The amount of the tax credit shall be equal to the qualified expenses of the qualified taxpayer, up to a maximum of $25,000 per taxpayer per taxable year. The total amount of tax credits allowed under this section shall not exceed $ for all qualified taxpayers in any taxable year; provided that any taxpayer who is not eligible to claim the credit in a taxable year due to the $ cap having been exceeded for that taxable year shall be eligible to claim the credit in the subsequent taxable year.

(c) In the case of a partnership, S corporation, estate, or trust, the tax credit allowable shall be for qualified expenses incurred by the entity for the taxable year.   The expenses upon which the tax credit is computed shall be determined at the entity level. Distribution and share of the credit shall be determined by rule.

(d) Every qualified taxpayer, before March 31 of each year in which qualified expenses were incurred by the taxpayer in the previous taxable year, shall submit a written, certified statement to the chairperson of the board of agriculture and biosecurity identifying:

(1) Qualified expenses incurred in the previous taxable year; and

(2) The amount of the tax credit claimed by the taxpayer pursuant to this section, if any, in the previous taxable year.

(e) The board of agriculture and biosecurity, in consultation with the department of taxation, shall establish clear standards for certifying qualified expenses and eligible farming practices, which shall be reflected in administrative rules adopted by the department of agriculture and biosecurity to ensure uniformity and efficiency in administering the tax credit.

(f) The director of taxation:

(1) Shall prepare any forms that may be necessary to claim a tax credit under this section;

(2) May require the taxpayer to furnish reasonable information to ascertain the validity of the claim for the tax credit made under this section; and

(3) May adopt rules under chapter 91 necessary to carry out the purposes of this section.

(g) If the tax credit under this section exceeds the taxpayer's net income tax liability, the excess amount may be refunded or carried forward for up to five consecutive taxable years. All claims for the tax credit under this section, including amended claims, shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(h) For the purposes of this section:

"Agroecological and climate-smart farming practices" means sustainable farming practices that promote soil quality and health; fertility management for organic and conventional farming systems; preventative and biological pest management; crop rotation, cover cropping, and polycultures; and the conservation or restoration of native and Polynesian-introduced plants to agricultural landscapes. Sustainable farming practices shall include but not be limited to Native Hawaiian agricultural systems such as loi kalo wetland cultivation, dryland field systems, agroforestry, and loko ia fishponds.

"Net income tax liability" means income tax liability reduced by all other credits allowed under this chapter.

"Qualified taxpayer" means a farmer that adopts agroecological and climate-smart farming practices."

Part III

SECTION 4. The legislature finds that one in three households in Hawaii are struggling to secure consistent access to food. This data paints a sobering picture of families in distress, underscoring the need for immediate action to restore the basic dignity of nourishment to every household across the islands.

The legislature further finds that the crisis disproportionately affects the most vulnerable in Hawaii:  the keiki. Nearly thirty per cent of children in Hawaii are growing up in food-insecure homes, some enduring entire days without a meal. When experiencing hunger, keiki can face increased risk of cognitive issues, aggression, anxiety, behavioral problems, depression, and suicidal ideation. For families facing hunger, fresh, healthy produce is often one of the first things removed from grocery lists, negatively affecting long-term health.

The legislature also finds that this emergency disproportionately impacts Native Hawaiian and Pacific Islanders in the State the most, with more than forty per cent of households experiencing food insecurity, a reflection of longstanding inequities in access to resources, economic opportunity, and essential services. The legislature believes that the State's communities should not bear this burden alone.

The legislature recognizes that Hawaii's food banks worked with over five hundred agency partners, such as schools, community-based nonprofits, churches, community centers, and food pantries, to distribute more than twenty-nine million meals in 2024.

The legislature additionally finds that, to try to bridge the gap between the State's food banks and their partners to bring fresh, Hawaii-grown produce to families, the food banks have partnered with five hundred seventy-five local farms and food hubs to create a consistent market for Hawaii agricultural producers, strengthening the State's community food systems and creating a healthier, more resilient Hawaii.

The legislature notes that efforts to invest in local agriculture and support local farmers builds resiliency within the State and avoids greenhouse gas emissions from the shipment of food to the State. As the cost of importing food continues to rise, increasing the State's reliance on local agriculture is not only a sustainable solution but also a necessary one. With proper support, farmers across Hawaii have the potential to grow more fresh, nutritious food that can directly serve those most in need. By strengthening the connection between local farms and community food systems, the State can reduce its dependence on imports and ensure that more families have access to Hawaii‑grown produce like uala, choy sum, bok choy, long beans, ulu, kalo, and more.

The legislature further finds that programs that encourage partnerships between farmers and food assistance programs can make a profound impact. By investing in Hawaii-grown agricultural producers, the State can support not only local farmers but also the communities they feed. This approach aligns with the values of malama aina--caring for the land--and ensures that the State honors the deep connection between the land and the people of Hawaii. Uplifting local farmers will also uplift the entire community, fostering a more resilient food system that can withstand future challenges.

Accordingly, the purpose of this part is to establish and appropriate funds for the Hawaii farm to families program to fund food banks in the State to purchase, store, and transport fresh, Hawaii-grown or -produced food to food insecure communities. This program will serve the State's food needs, provide Hawaii's agricultural producers with a market to support their operations, and keep moneys circulating within the State to boost the local economy.

SECTION 5. Chapter 141, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"Part . hawaii farm to families program

§141- Definitions. As used in this part:

"Department" means the department of agriculture and biosecurity.

"Food bank" has the same meaning as in title 7 United States Code section 7501(5).

"Fresh, Hawaii-grown or -produced food" means fruits, vegetables, nuts, coffee, eggs, poultry and poultry products, livestock products, milk and milk products, aquacultural and maricultural products, and horticultural products that are one hundred per cent grown, raised, and harvested in Hawaii.

§141- Hawaii farm to families program. (a) There is established the Hawaii farm to families program to be administered by the department. Under the program, the department shall relieve food shortages by providing funds to food banks located in the State to facilitate consistent supply chains of fresh, Hawaii-grown or -produced food to food insecure communities.

(b) Food banks that receive support pursuant to this section shall use the funds to purchase, store, and transport fresh, Hawaii-grown or -produced food in the State to recipients at no cost to the recipients.

§141- Rules. The department shall adopt rules pursuant to chapter 91 necessary to effectuate the purposes of this part."

SECTION 6. The department of agriculture and biosecurity shall submit a report to the legislature no later than twenty days prior to the convening of the regular sessions of 2027 and 2028, which shall include a summary of the activities of the Hawaii farm to families program, including:

(1) The amount of funds expended by the program;

(2) Food banks participating in the program, broken down by county;

      (3) Amount of food purchased and distributed, by volume and dollar value;

      (4) Category of food purchased and their island origin, by volume and dollar value; and

      (5) Any other findings and recommendations, including any proposed legislation.

SECTION 7. 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 implement the Hawaii farm to families program.

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

Part IV

SECTION 8. The legislature finds that the State currently imports nearly eighty-five to ninety per cent of its food, making the State vulnerable to external supply chain disruptions. Farm to school programs provide an opportunity to increase local food procurement and resilience, reduce the State's reliance on imported goods, reduce greenhouse gases that would have been emitted from shipping food into the State, and strengthen the State's agricultural economy.

The legislature additionally finds that Act 137, Session Laws of Hawaii 2025, further clarified the expectations of farm to school meals by requiring the department of education to ensure that by January 1, 2030, fresh local agricultural products and local value-added processed, agricultural, or food products shall constitute a minimum of thirty per cent of the total food purchased during each calendar year, as measured by the per cent of total food cost.

The legislature also finds that expanding local farm procurement in farm to school initiatives would support Hawaii's small- and medium-sized farms and that prioritizing the procurement of locally grown Native Hawaiian crops, such as kalo, uala, and ulu, aligns with Hawaii's commitment to food sovereignty, climate resilience, and indigenous agricultural practices. Increasing local farm procurement in schools would provide stable, institutional markets for the State's farmers, thereby fostering economic growth and workforce development in the State.

Accordingly, the purpose of this part is to require the department of education to develop systems to support local farms and encourage participation in the State's farm to school meals systems.

SECTION 9. Section 302A-405.6, Hawaii Revised Statutes, is amended to read as follows:

"§302A-405.6 Farm to school meals. (a) The department shall ensure that by January 1, 2030, fresh local agricultural products and local value-added processed, agricultural, or food products shall constitute a minimum of thirty per cent of the total food purchased during each calendar year, as measured by the per cent of total food cost.

(b) The department shall:

(1) Streamline the procurement process to make it easier for small- and medium-scale farmers to sell to schools, including simplifying contracting requirements and increasing flexibility in sourcing policies;

(2) Develop a statewide database of local farms that are eligible and interested in supplying food for school meals to facilitate farm to school meal connections;

(3) Increase financial incentives for schools to purchase locally sourced food through grant programs, subsidies, or farm to school meal budget allocations; and

(4) Ensure culturally appropriate foods, such as kalo, uala, and ulu, are incorporated into school meal programs.

[~~(b)~~] (c) The department shall submit an annual report to the legislature no later than twenty days prior to the convening of each regular session, beginning with the regular session of 2022, containing the following information:

(1) The status of the department's progress in meeting the local farm to school meal goal;

(2) The percentage of food served in public schools that consists of locally sourced products, by county, as measured by the percentage of the total cost of food;

(3) The costs associated with the farm to school meals program and any savings realized;

(4) A list of all large purchases of locally sourced products and the identity of the seller;

(5) A list of meals on a school menu consisting of the largest percentage of locally sourced products, as measured by the percentage of the total cost of food;

(6) The percentage of fresh food served, by county, as measured by the percentage of the total cost of food;

(7) The percentage of processed food served, by county, as measured by the percentage of the total cost of food;

(8) A description of the training conducted to prepare cafeteria staff for cooking meals from scratch; and

(9) The percentage of locally sourced products purchased from the department's largest distributors, as measured by the percentage of the total cost of food.

[~~(c)~~] (d) For the purposes of this section:

"Fresh local agricultural products" means fruits, vegetables, nuts, coffee, eggs, poultry and poultry products, livestock and livestock products, milk and milk products, aquacultural and maricultural products, and horticultural products that are one hundred per cent grown, raised, and harvested in Hawaii.

"Local value-added processed, agricultural, or food products" means at least fifty-one per cent of the product's primary agricultural product shall be grown, raised, and harvested in Hawaii.

"Locally sourced products" means fresh local agricultural products or local value-added processed, agricultural, or food products.

"Primary agricultural product" means the major agricultural product in a processed or value-added agricultural or food product."

Part V

SECTION 10. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 11. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 12. This Act shall take effect upon its approval; provided that:

(1) Section 3 shall apply to taxable years beginning after December 31, 2025; and

(2) Part III shall take effect on July 1, 2026.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	3318
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII