Tobacco Settlement Agreement Fund Oversight Committee




<MeetMDY1> March 14, 2006


The<MeetNo2> meeting of the Tobacco Settlement Agreement Fund Oversight Committee was held on<Day> Tuesday,<MeetMDY2> March 14, 2006, upon adjournment of both chambers, in<Room> Room 131 of the Capitol Annex. Representative Carolyn Belcher, Chair, called the meeting to order, and the secretary called the roll.


Present were:


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


Guests:  Keith Rogers and Brian Furnish, Governor's Office of Agricultural Policy; Laura Knoth and Brian Alvey, Kentucky Farm Bureau; Shannon Pratt, American Cancer Society; Tonya Chang, American Heart Association.


LRC Staff:  Lowell Atchley and Kelly Blevins.


Opening the meeting, the presiding chair, Representative Belcher, asked Mr. Keith Rogers and Mr. Brian Furnish, executive director and deputy director respectively of the Governor’s Office of Agricultural Policy (GOAP), to present their monthly report of state and county projects reviewed at the previous Agricultural Development Board (ADB) meeting. (The Committee approved the February 2006 minutes once a quorum was established later in the meeting.)


After briefly reviewing the February model program list, Mr. Rogers turned to three ADB-approved projects with state and local impacts. The first, a $6,000 Jessamine County FFA Alumni Association proposal, would assist 4-H and FFA projects. The second proposal, Lexington Lions Club, involved $100,000 in Fayette County funds to build a livestock education and show facility. The third proposal was Jackson County Cattlemen’s Association’s plan to establish model programs in forage improvement and hay, straw and commodity storage, using $150,000 in Jackson County funds. Committee members posed no questions about the projects.


Next, Mr. Rogers proceeded to report on the status of three producer cooperatives that had received board loans – West Kentucky Growers Cooperative, Kentucky West Nursery Cooperative, and Green River Produce Marketing Cooperative.


Mr. Rogers said the West Kentucky Growers Cooperative voted earlier in the week to accept the ADB’s proposal to take possession of the Owensboro facility. An auction of property and equipment in February raised about $600,000, with the money going to repay a bank loan and settle back taxes. The remainder went to the Agricultural Development Board to settle outstanding loans, he said. As a part of the settlement process, the board agreed to give the cooperative about $5,800 pay some growers, and over $31,000 to cover remaining debts and assorted costs involved in dissolution of the facility. Mr. Rogers said some prospective businesses had looked at the facility for future usage as a produce distribution site, but it would most likely be 2007 before the facility could be operating again.


Responding to Senator Boswell, Mr. Rogers said they intended to keep the infrastructure intact. He also explained in greater detail to Representative Arnold the outcome of the previous auction, and elaborated on the accounts payable and accounts receivable for Chairman Belcher. He said they were requiring the cooperative to handle their accounts payable and receivable.


Next, Mr. Rogers discussed the status of the Kentucky West Nursery Cooperative, located near Murray. The cooperative’s members had voted to dissolve, he said. The dissolution would be gradual and the ADB would likely be repaid all it was owed, he added.


The Green River Cooperative at Horse Cave had ceased operations, according to Mr. Rogers. He said they met previously with the cooperative’s board and discussed the potential for an outside business to operate the facility as a satellite site. If the deal does not materialize, they would move toward liquidation, he told the committee.


During the discussion of the cooperatives, Representative McKee asked about the future of vegetable production in Kentucky.


Mr. Rogers said he believed farmers could profit from vegetable production, with the realization that such production involved intense management and high risk. But he was more pessimistic about vegetable cooperatives. He said the cooperative concept had not worked in Kentucky, in part because of management and cooperative boards not having the discipline and financial commitment in the enterprises.


The meeting ended at approximately 5:45 p.m.