Note 13 - Concentration Risks

12 Months Ended

Dec. 31, 2015

Concentration Risk Disclosure [Text Block]

(13)	CONCENTRATION RISKS

Nut Purchase Agreements.

In 2015, the Partnership has two lease agreements and one license agreement with Mauna Loa. The two lease agreements have a 99-year term with 64 and 65 years remaining. The license agreement has a term of 50 years with 15 years remaining. The payment terms of the lease and license agreements are 30 days after the end of month delivery. The Partnership relies upon the financial ability of the buyer of the Partnership’s nuts to abide by the payment terms of the nut purchase agreements. If the buyer was unable to pay for the macadamia nuts delivered by the Partnership, or if the buyer is late in payment, it could result in the Partnership’s available cash resources being depleted. If the buyer refuses to purchase the nuts, the Partnership would need to negotiate a nut purchase agreement with another buyer which might not be at the same terms or price. It is also possible that the Partnership might not be able to find a buyer for the nuts.

Nut Processing.

The Partnership has contracted with an off-island processor to crack and de-shell the macadamia nut kernel. There are few processors located on the island of Hawaii, and they charge higher processing fees than do off-island processors. If the Partnership cannot maintain the off-island processing arrangements, alternatives would result in higher processing costs to the Partnership.

Source for Macadamia Nuts.

All orchards owned or leased by the Partnership are located on the island of Hawaii. If some sort of major natural or man-made disaster were to strike the island and damage the orchards significantly, it would be difficult for the Partnership to replace that lack of local production with nuts purchased off-island.

Employees.

As of December 31, 2015, the Partnership employed 265 people, of which 177 were seasonal employees and four were part-time employees. Of the total, 21 are in farming supervision and management, 224 are in production, maintenance and agricultural operations, 18 are in accounting and administration, and two are in sales.

On June 20, 2013 the Partnership and the ILWU Local 142 agreed to two bargaining unit contracts, which are effective June 1, 2013 through May 31, 2016. These agreements cover all production, maintenance and agricultural employees of the Ka’u, Keaau and the Mauna Kea orchards. Although the Partnership believes that relations with its employees and the ILWU are good, there is uncertainty with respect to the ultimate outcome of the bargaining unit negotiations when the current agreement expires.