Tobacco Settlement Agreement Fund Oversight Committee




<MeetMDY1> May 2, 2012


Call to Order and Roll Call

The<MeetNo2> meeting of the Tobacco Settlement Agreement Fund Oversight Committee was held on<Day> Wednesday,<MeetMDY2> May 2, 2012, at<MeetTime> 10:00 AM, in<Room> Room 129 of the Capitol Annex. Senator Paul Hornback, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Paul Hornback, Co-Chair; Representative Wilson Stone, Co-Chair; Senators Carroll Gibson, Vernie McGaha, Dennis Parrett, and Joey Pendleton; Representatives Royce W. Adams, Tom McKee, Fred Nesler, Ryan Quarles, and Tommy Turner.


Guests: Roger Thomas, Joel Neaveill, Bill McCloskey, and Diane Fleming, Governor’s Office of Agricultural Policy; Sarah Fritschner and Teresa Zawacki, Louisville Farm to Table Program.


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


The March 5, 2012, minutes were approved, without objection, by voice vote, upon motion made by Senator Pendleton and second by Senator Parrett.


Governor’s Office of Agricultural Policy

The committee received the monthly report from 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), regarding project funding decisions made by the Agricultural Development Board (ADB) during its March and April meetings.


Mr. Neaveill summarized the funding allocations made under the County Agricultural Improvement, Deceased Farm Animal Disposal Assistance, and Shared-use programs from the previous months. He also recapped amendments approved for previously funded projects.


Both Mr. Neaveill and Mr. McCloskey reviewed the projects approved by the board at the previous meetings. Those included: Franklin County Public Schools, $45,000 in Franklin County tobacco settlement funds for a greenhouse project on Franklin County High School grounds; Louisville-Jefferson County Metro Government, combination of a state board grant and Kentucky Agricultural Finance Corporation (KAFC) loan totaling $370,000 for the Farm to Table Program and the Louisville Agribusiness Loan Program; Carroll County Agriculture Development Fund, $1,500 in Carroll County tobacco funds to administer a show hog initiative; Kentucky State University (KSU), $998,000 in state funds for two years to implement aspects of the Kentucky Center for Sustainability of Farms and Families Program; Scott B. Shackelford, $31,414 in Todd County funds to expand a multicounty produce receiving station; Jessamine County FFA Alumni Association, $10,000 in county funds to assist a Farmers Back to School Program, and $8,000 in county funds to support youth 4-H and FFA projects; Clark County Conservation District, $3,783 in Clark County tobacco settlement funds to purchase a facility to house shared-use equipment; Four Hills Farm, $54,000 in Mercer County and state funds to expand a lamb marketing enterprise; and Fayette County Rural Land Management Board, $25,000 in Fayette County funds to purchase development rights for rural farmland. The officials also reviewed two applications that were denied funding, Jackson Dairy Supply, based in Barren County, and Green Palace Meadery, also of Barren County.


The GOAP officials responded to questions and comments from committee members during their review of the Louisville-Jefferson County project. The agribusiness loans will be geared to help create and expand small businesses in the Louisville food and beverage sector. Businesses seeking the loans must document that a majority of ingredients in their products or processes be Kentucky-grown or processed. In response to a question about loan default from Senator Gibson, the officials said that KAFC will subordinate to the Louisville metro government in the awarding of the agribusiness loans. Mr. Thomas told the senator that the KAFC would review each loan in addition to Louisville metro government officials. Underwriting standards will be in place for the agribusiness loan funds, according to the GOAP officials, who pointed out that the tobacco settlement funds will be matched with contributions from the Metropolitan Business Development Corporation and federal Community Development Block Grant funds.


Responding to Senator McGaha’s questions about the Farm to Table Program, the GOAP officials said a “coordinator” will work with Louisville’s large institutions such as schools, hospitals, and restaurants, to identify the types of locally and regionally produced foods they need, and also work with farm producers in supplying marketable commodities.


During the discussion, Co-chair Hornback noted he is familiar with the undertaking and mentioned it will impact producers in neighboring counties.


The GOAP officials responded to Senator McGaha that the agribusiness loan funds would be used for working capital, processing equipment, and other purchases. Mr. Rogers reiterated that the KAFC will conduct its own review of the loan applications.


Asked about the use of Kentucky-based raw materials in loan recipients’ products, Mr. Neaveill gave an example of an ice cream manufacturer that would use milk produced in the state.


The KSU Center for Sustainability project also prompted questions and discussion. The mission of the center, according to testimony, will be accomplished by the development of training materials, training assistance, demonstration project mini-grants, and development of marketing plans and materials. A focus will be put on three areas – organic production, value-added production, and aquaculture.


Responding to Senator Parrett, who had asked how the KSU Cooperative Extension Service will use the funds, Mr. Neaveill said the university will fund personnel salaries related to extension work. The ADB funds will be used for other aspects of extension outreach. Mr. Neaveill indicated that most of the grant funds will be devoted to mini-grants for farmers.


Senator Parrett expressed reservations about putting additional funds into fostering aquaculture production. While aquaculture production has had its ups and downs, Mr. Rogers said, the industry is surviving in Western Kentucky and in Eastern Kentucky. In terms of assisting value-added production, Mr. Rogers indicated the ADB has granted funds for food processing facilities throughout the state. In addition, he noted that KSU assists smaller farmers and producers.


Mr. Rogers responded to Co-chair Stone that KSU will review the mini-grant applications. At one point in the meeting, Co-chair Hornback said he hopes KSU uses the same standards as the board uses in approving the grants.


Representative Nesler discussed the history of aquaculture production in Kentucky, the General Assembly’s involvement in advancing the industry, and the market forces that have affected fish production.


Senator Pendleton pointed out a need to make Kentucky-grown fish available in Kentucky parks and other facilities, as opposed to imported fish.


Regarding the Jessamine County FFA Alumni Association education project, Co-chair Stone indicated he hoped the tobacco settlement funds would be used to help people better equip themselves through vocational training.


GOAP staff indicated to Senator Parrett that certain standards will in place for those desiring to obtain financial assistance for educational purposes.


As the project reviews continued, Representative Quarles requested additional information regarding the farm conservation easements purchased by the Fayette County Rural Land Management Board. Representative McKee commented that a problem growth of the state Purchase of Conservation Easement (PACE) is a current lack of funding.


Louisville-Jefferson County Metro Government Farm to Table and Agribusiness Loan Programs

The committee heard a presentation by Ms. Sarah Fritschner, Coordinator of the Louisville-Jefferson County Farm to Table Program, and Ms. Teresa Sawacki, the metro government’s Food Policy Coordinator. The programs were discussed earlier in the meeting.


Ms. Fritschner reviewed the work that she is doing in the Louisville metro area, which, she said, is a $3 billion market area. She detailed her work a food coordinator who gauges the needs to food buyers and also educates farmers and distributors. In addition to some of the food buyers mentioned earlier in the meeting, she indicated their hope is gain a foothold in Louisville area grocery stores.


She responded to Representative McKee that, while communicates with food banks in the state, she has not been asked to help acquire food for the facilities.


Ms. Fritschner responded to Senator Hornback that maintaining a consistent supply of foods for the Louisville-Jefferson County market involves linking producers with suppliers who deliver the foodstuffs to buyers.


Documents distributed during the committee meeting are available with meeting materials in the LRC Library. There being no further business, the meeting was adjourned.