Shell corporations? Hawaiian farmers push a plan to counter island macadamia posers.

For decades, tourists to Hawaii have brought home gift boxes of the islands’ famous chocolate-covered macadamia nuts for friends and family, but these days many of the kernels in the package might not be Hawaii-grown.

This little-known fact is surfacing at the state Legislature as lawmakers wrestle over legislation that would force macadamia-nut processors of iconic brands like Mauna Loa to disclose whether their products contain nuts from outside the islands.

Growers want the measure to protect their crops and farms, while commercial nut brands say what Hawaii needs is more capacity to process mac nuts locally.

It’s the latest tussle over labels for agricultural products from a specific geographic area, a topic familiar to Hawaii due to long-running disputes over Kona coffee. It echoes similar challenges faced by maple syrup producers in Vermont and distilleries in Champagne, which have had to fend off sparkling wine producers from other places trying to appropriate the French region’s name.

Foreign nuts are being “marketed cleverly as Hawaiian,” said Jeffrey Clark, chief operating officer of a trust that owns Hamakua Macadamia Nut Company.

“It’s not clear to consumers what is Hawaii grown and what is foreign grown,” Mr. Clark told state lawmakers during a recent committee hearing. “It creates a problem for the farmers here in Hawaii.”

The stakes are high for Hawaii’s 600-plus macadamia nut farmers, many of whom have small operations. Combined, they produced $62.7 million in nuts in 2021, just ahead of coffee in value and second only to seed farms that research genetically engineered corn.

Growers say they can’t find buyers for their kernel and unharvested nuts are falling from their trees. Some farmers are giving up and trying to sell their equipment.

In response, state lawmakers are due to vote on legislation May 1 that would require consumer packages to disclose when they contain macadamia nuts grown outside of Hawaii. The measure would take effect on Jan. 1, 2026, if it becomes law. The governor has not indicated whether he will sign it.

Macadamia nut trees are native to Australia and were introduced to Hawaii in 1881 by a Scotsman who managed a Big Island sugar mill. The first major attempt at commercial planting dates to 1948. Chocolate-covered macadamia nuts took off the following decade. In the 1970s and ’80s, Hawaii harvested more than 10 times the amount of the next four major producers combined.

But today, Australia, South Africa, China, and Kenya all grow more than Hawaii. In 2022, the state’s production plummeted 29% from the year before, according to industry data.

Hawaiian Host Group sells macadamia nuts under some of the state’s most venerable brands. Their rectangular boxes of Hawaiian Host chocolate-covered macadamia nuts are favorites of tourists and locals alike. Their blue-colored Mauna Loa cans and bags are among the most recognizable macadamia products on store shelves.

The company’s chief administrative officer told lawmakers in a Senate committee hearing that the amount of foreign macadamia nuts the company buys varies depending on the Hawaii crop.

“We try to purchase as much local macadamias as the growers will sell to us,” Michelle Leon-Guerrero said.

CEO Ed Schultz told lawmakers his company buys one-third of the mac nuts grown in Hawaii. It’s been doing so at a 35% premium to Australian prices in 2023 and that Hawaii’s nuts need to be competitive with those from Down Under, he said.

He said what the industry needs is more processing capacity. Toward this end, Hawaiian Host wants the industry to form a co-op to run a new processing facility on the Big Island. Many growers are reluctant to join such a project without a labeling requirement that will differentiate their nuts from others around the world.

Nathan Trump, the president of the Hawaii Macadamia Nut Association, said Hawaii macadamia nuts have strong brand recognition. But he said the status quo turns the nuts into a commodity.

“When you look at things like Vermont maple syrup, New Zealand beef – different country of origin matters because quality matters to consumers,” he said. “If they understand the country of origin, I think they’ll be able to make the decision if they want to pay a higher price.”

Vermont law says no maple product may be labeled as being from Vermont, or labeled in a way that implies it was, unless it was 100% produced in Vermont in compliance with state standards.

In Europe, Champagne makers came together in the 19th century to prevent sparkling winemakers operating elsewhere from using the French region’s name for their beverage. Today, European Union rules allow products to obtain a geographical designation if they have a specific link to where the product is made.

State Rep. Kristin Kahaloa’s Big Island district sits on the western slopes of Mauna Loa, the volcano that is the namesake of the popular nut brand. She said smaller farmers and producers want both labeling requirements and more processing capacity, and she agrees.

“Mauna Loa is the name of our mountain,” Ms. Kahaloa said. “It’s about keeping a special agricultural product that is part of the fabric of our community on our island.”

This story was reported by The Associated Press.