Tobacco Settlement Agreement Fund Oversight Committee


Minutes of the<MeetNo1> 6th Meeting

of the 2003 Interim


<MeetMDY1> October 14, 2003


The<MeetNo2> 6th meeting of the Tobacco Settlement Agreement Fund Oversight Committee was held on<Day> Tuesday,<MeetMDY2> October 14, 2003, at<MeetTime> 1:30 PM, in<Room> Room 131 of the Capitol Annex. Representative Roger Thomas, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Vernie McGaha, Co-Chair; Representative Roger Thomas, Co-Chair; Senators Charlie Borders, David Boswell, and Joey Pendleton; Representatives Adrian Arnold, Carolyn Belcher, James Comer, Thomas McKee, and Tommy Turner.


Guests:  Blake Oliver, Community Farm Alliance; Jeff Harper, Kentucky Farm Bureau; David Bratcher, Gene Royalty, and Sandra Gardner, Governor's Office of Agriculture Policy; David Sparrow, University of Kentucky, College of Agriculture; and Gay Dwyer, Kentucky Retail Federation.


LRC Staff:  Dan Risch, DeVon Hankins, Biff Baker, and Kelly Blevins


The minutes of the September 9, 2003 meeting were approved. Next, Representative Roger Thomas said that because the next scheduled meeting date is November 11, Veteran's Day, and because the Agricultural Development Board will not be reviewing state funded projects for referral to the committee in November, the November meeting is cancelled. Also as the December meeting date is Inauguration Day, Representative Thomas said the committee will meet on December 10 instead of December 9.


Mr. Gene Royalty and Mr. David Bratcher then presented the projects considered for funding by the Agricultural Development Board at its September meeting.


After a brief overview of model program funding requests, Representative Thomas asked Mr. Royalty to explain the model program for on-farm water enhancement. Mr. Royalty said that the very few requests for funding in this program have originated in six central Kentucky counties. He said the board has observed that the water improvement projects have dovetailed well with the forage improvement model program. He added that the funding is not used to extend water lines to residences.


In response to Representative McKee, Mr. Royalty said the board has asked the project applicant, who requested funding for equipment to improve water ponds, to resubmit the application. This board action was in response to comments made by committee members at an earlier meeting.


Representative Carolyn Belcher commended the funding of a project submitted by the Mount Sterling/Montgomery County Industrial Authority because the project will benefit the entire region surrounding Montgomery County. Senator Vernie McGaha, co-chair, applauded the emphasis on assisting tobacco producers in the Mercer County Conservation District project to boost participation in Agricultural Development Board funded projects.


Representative Thomas asked for a greater explanation of the Kentucky Center for Agriculture and Rural Development project. Mr. Royalty said the Center provides assistance and support to farmers wishing to establish marketing cooperatives. He said they also will help other small business ventures. He added that the state funding granted to the Center has allowed the Center to obtain matching USDA money.


Senator David Boswell asked if granting the Garrard County Conservation District requests for funding to buy a lime spreader indicated a new approach of the board to requests regarding multi-purpose heavy equipment. Mr. Bratcher indicated that the board has confidence in the management capabilities of conservation districts to run equipment loan programs.


The committee then discussed a request for funds by the Kentucky Aquaculture Association which was turned down by the board. The discussion centered on the difficult decisions by the board when a viable project in a county of low tobacco production needs additional state funds to preserve or increase its success and the project could, over time, confer benefits on tobacco farmers who are outside of that county. It was observed by the board representatives that the board adheres to the committee's guidance that tobacco dependent counties should be given first priority for state funds. Several members acknowledged the difficulties the board faces in its funding decisions.


Next, Dr. John Vahaly, presented the report "An Economic Assessment of Agricultural Development Fund Spending in Kentucky".  Dr. Vahaly, and his colleague from the University of Louisville, Dr. John Nelson, had prepared the report under contract with the board. A copy of the report is with the meeting materials on file in the LRC library. Here are two of the report's conclusions: 1. The farm income shortfall from lost tobacco production is predicted to be $366 million that can be recovered if state funding proceeds at approximately $50 million per year; 2. Model program spending has been fairly distributed across county extension service districts.


Last, Mr. Royalty and Mr. Bratcher gave a brief overview of the Center for Agricultural Development and Entrepreneurship. In essence, the Center, which is funded by the board, provides technical and educational assistance and financial aid to farmers to foster business skills and entrepreneurial initiatives.


The meeting adjourned at approximately 3:50 p.m.