Tobacco Settlement Agreement Fund Oversight Committee




<MeetMDY1> December 1, 2010


Call to Order and Roll Call

The<MeetNo2> Tobacco Settlement Agreement Fund Oversight Committee was held on<Day> Wednesday,<MeetMDY2> December 1, 2010, at<MeetTime> 10:00 AM, in<Room> Room 129 of the Capitol Annex. Senator Carroll Gibson, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Carroll Gibson, Co-Chair; Representative Dottie Sims, Co-Chair; Senator Damon Thayer; Representatives Royce W. Adams, James R. Comer Jr., Charlie Hoffman, Tom McKee, and Tommy Turner.


Guests: Roger Thomas, Joel Neaveill, Bill McCloskey, Tim Hughes, Michael Tobin, Jennifer Hudnall, Angela Blank, and Christi Marksbury, Governor’s Office of Agricultural Policy.


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


Once a quorum was established during the meeting, minutes of the November 5, 2010, meeting were approved by voice vote and without objection on a motion by Representative McKee and second by Senator Thayer.


Governor’s Office of Agricultural Policy Report

Mr. Roger Thomas, Executive Director, Mr. Joel Neaveill, Chief of Staff, and Mr. Bill McCloskey, Director of Financial Services, Governor’s Office of Agricultural Policy (GOAP), reported on the actions by the Agricultural Development Board (ADB) at its November meeting.


Mr. Neaveill summarized funding approvals in three categories – the County Agricultural Improvement (CAIP), Deceased Farm Animal Disposal Assistance, and the Shared-use Equipment programs. The speaker also brought to the attention of the committee various amendments approved for programs that were funded earlier.


During the review of the University of Kentucky Research Foundation project to buy and retrofit a high clearance sprayer and build a greenhouse at the Princeton research facility, Mr. Thomas indicated the project represented a good example of commodity groups partnering with the Agricultural Development Fund. Both the Kentucky Soybean and the Kentucky Corn Growers associations agreed to contribute $125,667 in matching funds for the UK Research Foundation project.


They responded to Co-chair Gibson and Representative Comer’s questions about the Kentucky Dairy Development Council (KDDC) funding, which totals over $1.6 million over a two-year span. Mr. Thomas described a KDDC Milk Incentive Leadership for Kentucky (MILK) initiative that also involves milk processors in the state. The processors match KDDC funds used in an awards program aimed at increasing milk production, dairy promotion, and fostering growth in the industry. He said 200 dairies in the state participate.


Mr. Thomas responded to Representative Comer that 48 percent of the funding awarded to KDDC for 2011 and 2012 will be used as a part of the MILK initiative. Responding to another question, he indicated that the KDDC does not receive the direct financial benefits from dairy producer check-offs as do some commodity associations. Farmers benefit from the overall dairy promotion efforts.


During the discussion of the Kentucky Horticulture Council (KHC) project, which received over $1.4 million in Agricultural Development Fund moneys, Mr. Thomas noted that the KHC, as well as the other entities, would be required to meet certain benchmarks in 2011 and 2012 and periodically report back to the board. The board will determine if the benchmarks have been achieved in 2011 prior to granting funds in 2012.


Another project discussed also will have benchmarks, that of the Kentucky Department of Agriculture’s Kentucky Proud marketing program, which received grant funds totaling over $2.8 million for 2011 and 2012.


Regarding the Kentucky Beef Network LLC project, funded at over $1.9 million, Mr. Thomas explained to Representative McKee that the Kentucky Beef Network is a subsidiary of the Kentucky Cattlemen’s Association. In addition, the association has other segments under its umbrella. According to Representative McKee, the Kentucky Cattlemen’s Association/Kentucky Beef Network’s programs are beneficial to the beef cattle industry.


In other discussion, Co-chair Gibson mentioned the “Commonwealth Grows” newsletter published by the GOAP and asked about the timeframe for the projects listed in the publication. Mr. Thomas indicated the listing included all projects funded this year. GOAP will soon be distributing to legislators a list of all projects funded for the fiscal year.


Mr. Thomas also highlighted for the committee some of the issues discussed during the board’s recent planning and policy sessions, and business meeting. The board discussed a need to continue focusing on the Kentucky Agricultural Finance Corporation’s revolving loan programs because the loan funds will remain even as the Master Settlement Agreement funds decline. The board also is looking favorably at: putting more focus on regional projects, particularly in areas that have received little funding; emphasizing unique types of projects, such as farmer’s markets, continuing investments in marketing Kentucky products, such as for Kentucky Proud; and creating a logo that can be used to denote that agriculture development funds were contributed to a particular project. The board is interested in the sustainability of certain agricultural entities once they no longer receive MSA funds.


During the on-going discussion, the speakers responded to Co-chair Sims that the interest in funding for horticulture endeavors has been increasing.


Asked about ways to allay confusion that sometimes occurs regarding where farmers should go to request agriculture development funds, Mr. Thomas indicated that local agricultural extension agents are the best point of contact.


In addition, Mr. Thomas described some CAIP policy changes or additions that would be approved during the board’s December meeting.


One of the program additions suggested was the creation of a separate CAIP cost-share program for on-farm dead livestock disposal. In particular, he mentioned on-farm composting. Commenting on the plan, Co-chair Gibson cautioned that such composting should be monitored to make sure it is done correctly. Representative McKee later discussed the viability of farm composting and suggested that counties investigate regional composting efforts.


On another issue, the speakers responded to Co-chair Sims’ questions about a University of Kentucky-based entrepreneurial training program that had received agricultural development funds on two occasions. The speakers explained the status of the current program, which had recently won an award for its accomplishments. According to Mr. Thomas, there is no indication that those in charge of the program would be seeking funds for a third training program.


Energy Development Report

The committee heard a report by Mr. Tim Hughes, GOAP Senior Policy Analyst. Mr. Hughes discussed the several regional and local energy projects funded to date with agricultural development funds and federal American Recovery and Reinvestment Act (ARRA) funds. Regional projects assisted have ranged from the Commonwealth Agri-Energy corn ethanol production plant in Hopkinsville to the Eastern Kentucky University algae energy production research endeavor. County funds have been awarded for several on-farm energy efficiency and production investments. The ARRA funds have supplemented agricultural development funds for on-farm projects, according to Mr. Hughes.


Responding to Representative McKee, Mr. Hughes indicated that East Kentucky Power has a continuing interest in the project in the northeastern part of the state to raise switchgrass and use it as a supplemental energy production commodity. He indicated to the committee that the power company has committed funding for the project by buying the switchgrass and has dedicated personnel to the effort.


At the conclusion of the presentation, Mr. Thomas noted the ARRA funds have benefitted energy projects throughout the state.


Documents distributed during the committee meeting are available with meeting materials in the LRC Library.


The meeting adjourned at approximately 11:45 a.m.