Tobacco Settlement Agreement Fund Oversight Committee


Minutes of the<MeetNo1> 7th Meeting

of the 2003 Interim


<MeetMDY1> December 8, 2003


The<MeetNo2> 7th meeting of the Tobacco Settlement Agreement Fund Oversight Committee was held on<Day> Monday,<MeetMDY2> December 8, 2003, at<MeetTime> 1:30 PM, in<Room> Room 131 of the Capitol Annex. Senator Vernie McGaha, 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 David Boswell, and Joey Pendleton; Representatives Adrian Arnold, Carolyn Belcher, James Comer, Thomas McKee, and Tommy Turner.


Guests:  Ed Nelson, Genie Fortunato, Beth Tillery, Carla Gerding, John Gerding, Bonnie S. Cecil, John Grant, Mattie E. Clay, Charlie Ison, John Clay, Grace Ramey, John Ruggler, Shanna Herron, and Blake Oliver, Community Farm Alliance; Mark Farrow, Kentucky Department of Agriculture; and Bob Rowland, Kentucky Association of Tobacco Outlets.


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


Senator Vernie McGaha, Co-Chair, asked for and received approval of the minutes of the November 14 meeting. He then asked Mr. David Bratcher of the Agricultural Development Board to present the projects considered at the Board's November meeting.


During the explanation of the Buffalo Trace Area Development District project which establishes a revolving loan fund within the District, Representative Tommy Turner expressed the belief that similar programs should be made available in other areas of the state. Also, in response to a concern expressed by Representative Roger Thomas, Mr. Bratcher said that the BTADD would not be collecting its usual fee to administer the revolving loan program.


Mr. Bratcher was then asked by Senator McGaha to explain the several projects related to wineries, including In Town Winery, the River Valley Winery, and the Felice Vineyards. The Senator expressed two specific concerns about funding these and other wineries that have already received ADB funding. He noted that some of the wineries were not in counties with tobacco production, which is a criteria for receiving funds. Second, he noted that Kentucky growers have yet to produce grapes in sufficient quantity to satisfy the needs of all the new wineries in the state. Mr. Bratcher responded that although a winery may not be in a tobacco producing county, like the Jefferson County In Town winery, the winery will be buying grapes produced in tobacco dependent counties. Also, Mr. Bratcher agreed that in some cases Kentucky growers will not be able to supply all the wineries because the ventures are new and not all grape growers are in full production yet. However, he said that if planting expectations are met then Kentucky will have sufficient production. In response to questions, he said there are now about 130 grape growers in the state and that about one ton of grapes are produced on one acre of farmland.


In discussing the Kentucky Forage and Grassland Council project, Senator McGaha noted the importance of avoiding projects that duplicate other existing government assistance programs. Mr. Bratcher pointed out that the ADB acknowledged that some aspects of the project did duplicate services of the Cooperative Extension Service and did not fund the duplicative aspects of the project.


Representative Thomas pointed out that the Barren River Regional Livestock Center project made use of an unused tobacco warehouse.


Senator McGaha noted during the discussion of the Kentucky Freshwater Prawn Alliance project that it will be extremely important to closely monitor the markets for the products to be produced by this as well as other funded projects. Several members noted the problems created when farmers are encouraged to shift production to new products before a market is readily available for what's produced.


There was a lengthy discussion about the project for James and Jeff Cotton. It was noted that the money was to be used by these individuals to partly defray their cost of purchasing portable irrigation equipment. The project applicants also indicated they would provide contract service to other farmers in the area. Several members questioned the funding of a project that seems to benefit only one individual. However, after a discussion, Senator Pendleton noted that the Cotton brothers were intending to provide a service that otherwise wasn't available in Caldwell County and that they have committed substantial money themselves to the project.


When Mr. Bratcher explained the projects that were denied funding, Representative Thomas made the point that he hoped that the Board clearly communicates to disappointed applicants the reasons for being turned down.


Also, after the explanation of the West Kentucky Corporation project for an Agritourism Advisory Council, Representative Thomas said he would like to see the Board's work on agritourism assistance be accelerated.


Next, Mr. Bratcher made brief remarks about the Board's annual report. A copy is on file with the meeting materials in the LRC library.


Representative Thomas then took over as the presiding officer. He reported for the Subcommittee on Rural Issues on possible changes to state economic development programs that would allow greater participation by farmers and farming businesses in the programs. He asked Mr. Bratcher to discuss the recommendations made by the Subcommittee on Rural Issues. Mr. Bratcher said that the first recommendation was that the number of employees in a business be lowered to 5 from 15 as the threshold number needed before qualifying for certain state programs. The second recommendation was that the University of Kentucky continue its pilot program to help develop entrepreneurs in counties underrepresented in qualifying for ADB funds. The third recommendation was that a system should be established to lower the match required of certain ADB fund recipients. He said the system could be based on an individual's adjusted gross income based on U.S. Housing and Urban Development income limits. Representative Thomas asked for and received approval of the report.


The final agenda topic was presented by representatives of Community Farm Alliance (CFA). Mr. Charlie Ison, President of the organization, explained that the CFA has canvassed farmers and determined that the greatest interest of farmers is in market development. Consequently, the organization drafted a model statewide farm marketing program. Key points of the proposed program include the establishment of regional marketing centers, providing technical assistance to farmers, and establishing a clearinghouse of marketing information. The materials explaining the CFA proposal are on file with the meeting materials on file in the LRC library.


The meeting adjourned at approximately 3:30 p.m.