Tobacco Settlement Agreement Fund Oversight Committee




<MeetMDY1> November 14, 2006


The<MeetNo2> meeting of the Tobacco Settlement Agreement Fund Oversight Committee was held on<Day> Tuesday,<MeetMDY2> November 14, 2006, at<MeetTime> 1:00 PM, in<Room> Room 169 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, Brian Furnish, Bill McCloskey, and Stephen Yates, Governor's Office of Agricultural Policy; Mark Farrow, Michael Judge, Warren Beeler, Mac Stone, Anna Kendrick, Roger Snell, Kentucky Department of Agriculture; Rick Raque, Allied Food Marketers; Kaycie Len Carter and Nathan Brown, Community Farm Alliance; Tonya Chang, American Heart Association; Gay Dwyer, Retail Federation; and Laura Knoth, Kentucky Farm Bureau.


LRC Staff:† Lowell Atchley, Biff Baker, and Kelly Blevins.


Minutes of the October 10 meeting were approved, without objection, by a voice vote upon a motion by Rep. Arnold and seconded by Rep. Comer.


Chairman Belcher invited the first group of speakers to the table, Mr. Mark Farrow, Deputy Commissioner, Kentucky Department of Agriculture, Mr. Mike Judge, Executive Director of Agricultural Marketing for the department, Mr. Roger Snell, Staff Assistant with the department, and Mr. Rick Raque, President, Allied Food Marketers. The speakers discussed the departmentís marketing initiative under the Kentucky Proud program umbrella by using tobacco settlement funds.


At the outset, Mr. Farrow thanked the members and staff of the Agricultural Development Board (ADB) for their commitment to the Kentucky Proud program. He then introduced Mr. Judge, who thanked the Legislature for setting aside the tobacco funds for agricultural diversification. Mr. Judge told the Committee that Commissioner Farmer had said a mission of his was to sell Kentucky products to Kentuckians, add value to products and stimulate marketing.


Using a Powerpoint presentation, the speakers reviewed some of the successes of the program. Mr. Judge told the Committee that the program involved building relationships between farmers, retailers, and consumers. He said an important aspect was the identity of the products.


Mr. Judge said the Kentucky Proud program had become successful through the support of many groups, such as the Governorís Office of Agricultural Policy (GOAP), the Agricultural Development Board (ADB), states parks and the like. He indicated Alliedís leadership was a key to placing the Kentucky Proud products on store shelves.


The speakers mentioned some specific businesses producing a variety of meat, vegetable, grain, and milk products.


Mr. Judge reviewed the July 2004-June 2006 budget that utilized over $2 million in tobacco settlement funds. Almost $1.3 million of the budget was devoted to the Kentucky Proud program, which involved the development and promotion of markets for Kentucky agricultural products, retail sales, brand identification, and cooperative advertising.


According to Mr. Judge, the ADB granted the marketing initiative over $3.3 million for July 2006-June 2008. Funds would be used to assist retail and producers point of purchase endeavors, a restaurant rewards undertaking, Kentucky Proud branding, international marketing, trade shows, and implementation of a USDA grader certification effort.


In his remarks, Mr. Raque told the Committee they had been able to immediately link farmers with consumers. He said they were able to take an incredible program and put some finishing touches on it.


Mr. Raque mentioned that a significant aspect of the program was the cooperation between the department and other agencies and entities. He urged the Committee to show its continued support.


Representative McKee said the marketing initiative was more far-reaching than he realized. While there had been successes, he said some endeavors were not successful, such as the producer cooperatives. Mr. Judge indicated that, even though the cooperatives themselves were not successful, opportunities were opened up for producers. Mr. Raque added that companies still want to find producers in Kentucky communities.


In continuing discussion, Senator Boswell mentioned Kentuckyís growing season compared to other states that may have two seasons. Both Mr. Judge and Mr. Snell noted that some food markets desire locally grown products.


Senator Pendleton remarked that there was no need to apologize for the failure of the producer cooperatives.


Co-Chair McGaha said he was encouraged by the discussion. A dilemma, he indicated, had been that Kentucky farmers could produce but could not market their products.


Following that discussion, Chairman Belcher asked Mr. Keith Rogers and Mr. Brian Furnish, Executive Director and Deputy Director respectively of the Governorís Office of Agricultural Policy, to present their monthly report of state and county projects reviewed at the previous Agricultural Development Board (ABD) meeting.


The speakers reviewed several projects, some receiving funding under the 2006 Agritourism Competitive Awards Program.


Representative McKee asked if they planned to continue the competitive awards program. According to Mr. Rogers, GOAP staff had planned to recommend continuation of the market and promotion aspects of the program, but not the agribusiness portion.


Next, the speakers reviewed three information items included in membersí folders, a letter from the Kentucky Grocers Association lauding the Kentucky Proud program, a memorandum on wine grape production, and a response to an information request regarding forgivable loans. In a later response to a question about the forgivable loans, Mr. Rogers said the Kentucky Agricultural Finance Corporation does not enter into forgivable loans. According to Mr. Rogers, compliance had been a problem for some of the early forgivable loans. He said they were working on those.


During the discussion, Chairman McGaha asked department officials if they were able to respond to all requests regarding the Kentucky Proud program. Mr. Snell said they were, but were hard-pressed to keep up. The senator suggested that perhaps funds could be redirected from some other programs into the Kentucky Proud initiative.


Next, Mr. Rogers reported on the lease of the former West Kentucky Growers Cooperative facility in Owensboro. Mr. Rogers said West Lake, Ohio, company would be leasing the building.


In other discussion, Mr. Rogers responded to Representative Comer that the ADB had provided loans and grants to only one ethanol producer, a Hopkinsville company. The representative pointed out that the proliferation of ethanol plants was having a negative effect on cattle farmers by driving up corn prices.


Finally, Representative Arnold mentioned House Bill 611. According to him, they knew there would be risks involved in agricultural diversification efforts using tobacco settlement moneys. He complimented the ADB and indicated it was okay that some projects were not successful.