A number of changes have been made in ranching operations to progress toward profitability. Ranching operations have transitioned to a cow/calf operation due to the high cost of raising cattle to maturity in Hawaii. The primary purpose of Parker Ranch’s herd now is to produce calves. Once weaned, these calves are shipped to the mainland US to complete their growth.
Transportation costs are offset by lower grain costs, the elimination of a Hawaii-based slaughter operation and the more rapid growth of calves on mainland grasses. A biannual breeding season resulting in two calf crops fills mainland beef demands when other operators are not able to do so. In addition, open range ranching has been replaced by less labor intensive ranching in smaller fenced paddocks. Parker Ranch reduced its livestock workforce from 79 in 1991 to 12 in 2007. Overall employee numbers decreased from 112 in 1991 to approximately 50 employees today.
Parker Ranch also sought to improve the quality of its beef through genetics and animal husbandry to increase its value to market. Parker Ranch participates in an innovative marketing plan geared around two branded beef programs called Ranchers Renaissance and Country Natural Beef, whereby grocery retailers pay premiums to ranchers that consistently produce a higher quality of beef. With two branded beef distribution channels, Parker Ranch has executed its cattle marketing plan to the point that it generates solid profits.
Reducing ranching expenses and increasing revenue have positioned Parker Ranch to be a low cost provider in a commodity-based market. Cattle ranching, even in the best of times, remains a challenge.
Today, Parker Ranch continues to explore diversification of assets in order to provide the Trust, as its sole stockholder, with income to fund Beneficiaries and fulfill its mission. Modern ranches must rely on diversification to survive, from cattle ranching and forestry to tourism and retail.
Parker Ranch Center
Parker Ranch Center was sold in October 2005 to M & J Wilkow Ltd., a Chicago-based real estate investment trust. The Parker Ranch Store, along with the Parker Ranch Museum & Visitor Center, both owned and operated by Parker Ranch Inc., continue to operate from the Parker Ranch Center.
As the first residential development in the 2020 plan envisioned by Richard Smart, land was sold in 2001 to a developer who subsequently built 44 condominium homes that were offered for sale in 2002.
Luala’i at Parker Ranch
Luala’i at Parker Ranch, a residential joint venture development between Parker Ranch and Schuler Homes, launched in August 2002. The project features 3 and 4 bedroom single-family market entry homes. The development meets a goal of the Parker Ranch 2020 Plan initiated by Richard Smart in 1986.
In 2001, Parker Ranch negotiated the sale of Parker Square , a 17,642 square-foot retail and commercial office building in Waimea to Kauai-based Niu Pia Farms Ltd. Sale proceeds allowed Parker Ranch to reinvest in other projects including Parker Ranch Center.
In keeping with the Trust’s strategy to develop an investment portfolio, lands outside the core of ranch operations or business use were sold. In 2006, the Ranch successfully concluded negotiations with the U.S. Army for its acquisition of approximately 24,000 acres of land in an area known as Keamuku. This sale allowed a significant portion of long-term debt to be paid off. The balance sheet has been strengthened, and there is improved liquidity and debt reduction An investment portfolio, not tied to land or cattle, has been established producing a reliable income stream for beneficiaries.
The challenge of remaking an outdated operation has been addressed by a progressive corporate model reorganization of Parker Ranch, Inc. These organizational changes have been made to lead the Parker Ranch family of companies toward the goal of providing income to help the Trust to fulfill its goals. Through 2008, nearly $15 million in cash and land has been distributed to Trust beneficiaries.
Parker Ranch Inc. has reorganized into six divisions, or companies, to improve business operations through consolidation, exploring new opportunities and clarifying issues of responsibility, accountability and reporting.
The structure of the Ranch has evolved to a modern efficient corporate governance model with a slate of highly qualified and professional individuals who were retained to fill the new management structure.
Parker Ranch Inc. Leadership
Neil “Dutch” Kuyper joined the company in February 2011 as its Chief Executive Officer and President. Kuyper was born and raised on Oahu and returns to Hawai’i with his family after 20 years of increasingly senior executive positions on the mainland and in Asia. Kuyper served most recently as Chief Operating Officer with Capricorn Investment Group, previously holding the same position with Morgan Creek Capital Management, following extensive experience with Wellington Management, Boston Consulting Group and Coopers & Lybrand.