.Interim Joint Committee on Agriculture and Natural Resources


Minutes of the<MeetNo1> Second Meeting

of the 2000-01 Interim


<MeetMDY1> January 10, 2001


The<MeetNo2> second meeting of the Interim Joint Committee on Agriculture and Natural Resources was held on<Day> Wednesday,<MeetMDY2> January 10, 2001, at<MeetTime> 10:00 AM, in<Room> Room 149 of the Capitol Annex. Senator Ernie Harris, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Ernie Harris, Co-Chair; Representatives James Gooch, Co-Chair, and Roger Thomas, Co-Chair; Senators Paul Herron Jr, Daniel Kelly, Vernie McGaha, Virgil Moore, Joey Pendleton, Ernesto Scorsone, Tim Shaughnessy, and Elizabeth Tori; Representatives Royce Adams, Rocky Adkins, Scott Brinkman, James Bruce, Dwight Butler, Mike Cherry, Phillip Childers, Jack Coleman, Hubert Collins, James Comer, Howard Cornett, Keith Hall, Charlie Hoffman, Jeffrey Hoover, Thomas McKee, Fred Nesler, R. J. Palmer, Tanya Pullin, Marie Rader, William Scott, Dottie Sims, Jim Stewart, Mark Treesh, Johnnie Turner, Tommy Turner, Ken Upchurch, and Robin L. Webb.


Guests:  Eric Gregory, Mark Farrow, James Jitter Allen, Rusty Cress, Carl Breeding, L. D. Cobb, James Patterson, Van Needham, Ronny Pryor, Steve Harp, Geoffrey Young, Russ Cave, Wade Helm, Roy Conyea, Gay Dwyer, Matthew London, Patrick Jennings, Sam Crawford, Rebeckah Freeman, Beth Wisman, Jeff Harper, Bert May, Chris Nolan, Jim Carloss, Bill Donn, Greg Cokee, and Karen Armstrong-Cummings.


LRC Staff:  Dan Risch, Biff Baker, Brad Wellons, Tanya Monsanto, D. Todd Littlefield, Nancy Osborne, Jerry Bailey, and Wanda Gay.


Senator Ernie Harris, presiding chairperson, asked for and received approval of the minutes of the August 24, 2000 meeting.


Next, he asked the new members on the committee to introduce themselves.  The new members included: Senators Ernesto Scorsone and Elizabeth Tori and Representatives Scott Brinkman, James Comer, Keith Hall, Tanya Pullin, and Marie Rader.


Senator Verne McGaha, as chairperson of the Tobacco Task Force, reported on the work of the task force to study contract buying of tobacco.


Chairperson McGaha said that although at the moment it looks like tobacco contracting and the federal tobacco auction system can coexist, concerns remain about the long term viability of the federal program.  He said that the task force will continue to watch developments,  particularly to see if tobacco quotas stabilize, how small tobacco growers are treated by contract buyers, the effects on the grading system, and what impact general agriculture contracting may have on tobacco contracting issues.


Many members expressed concerns that the continuing use of tobacco contracts will lead to the end of the price support program as more tobacco is sold through private contacts and less is sold through warehouse auctions.  In particular, it was strongly suggested that tobacco sold through contracts and tobacco sold through the federal auction system both need to use the federal grading system.


Next Mr. Mark Farrow, General Counsel and Chief Executive Officer of the Department of Agriculture, spoke to the committee.  He provided insights on the use of contracts in agriculture. 


Mr. Farrow said that contracts between farmers and buyers are becoming more common.  He cited poultry production as an example.


He said that one concern of the department is that small farm operators be treated the same as larger operators.  He also said that the Department has had no complaints about contracts.


Mr. Farrow summed up by suggesting that all contracts should be understandable, allow for review by an attorney, and contain a three-day right to rescind the contract.


Representative Bruce pointed out that the methods of contracting for and marketing west Kentucky grain would be seriously hampered if the state should require a three-day waiting period for all agricultural contracts.


Some members of the committee commented that the subject of contracting for agricultural purposes should be looked at even though problems have not developed as yet and that farmers who use contracts should be heard.


Representative Jim Gooch, co-chair of the committee, introduced Mr. Tom Dorman, the Executive Director of the Public Service Commission. Representative Gooch expressed concern over consumers being surprised by rising energy costs.  He said part of the reason energy costs are rising is that natural gas is being used to replace coal.


Mr. Dorman said the PSC recognized that gas prices were rising this past summer.  As a result, the Commission began a public awareness campaign and opened a formal proceeding to gather information on the price increases.


He said the primary reason for the price increases included a strong demand for natural gas, increased use of natural gas for electricity generation, little development of new gas supplies, inadequate gas supplies in storage, and higher prices for other fuels.


Mr. Dorman went on to say that the increasing use of natural gas for energy generation is expected to continue for at least twenty years.  He said the Commission makes every effort to determine that utilities' requests for gas cost adjustments are fair, just, and reasonable.


Representative Rocky Adkins said part of the problem is a lack of a balanced federal energy policy.  He said it is very important for coal to continue to play a role in the nation's energy requirements.


In response to a question from Representative Cherry, Mr. Dorman said Ms. Jenny Smith at the PSC helps consumers meet rising energy costs by telling them of assistance programs.


Senator Harris asked staff to prepare a resolution asking the new White House administration to develop a balanced national energy policy.


Finally, he said the committee may request approval to meet on January 31.


The meeting adjourned at approximately noon.