The 1st meeting of the Interim Joint Committee on Agriculture and Natural Resources was held on Wednesday, June 8, 2005, at 1:30 PM, in the Business, Education, and Psychology Building at Northern Kentucky University. Representative Thomas M McKee, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Tom Jensen, Co-Chair; Representatives Jim Gooch Jr, Co-Chair, and Thomas M McKee, Co-Chair; Senators David E Boswell, Ernie Harris, Dan Kelly, Robert J (Bob) Leeper, Joey Pendleton, and Damon Thayer; Representatives Royce W Adams, Dwight D Butler, James Carr, Mike Cherry, Hubert Collins, James R Comer Jr, Tim Couch, C B Embry Jr, Charlie Hoffman, Charles E Meade, Brad Montell, Marie L Rader, Rick W Rand, Terry Shelton, Brandon D Smith, Jim Stewart III, Tommy Turner, and Ken Upchurch.
Guests: Keith Rogers and Brian Furnish, Governor's Office of Agricultural Policy; Mac Stone, Kentucky Department of Agriculture; Larry Leap and Dennis Walters, Northern Kentucky Grape Growers Association; Tim Turney, Kentucky Department of Agriculture Office of the State Veterinarian; Eric Gregory, East Kentucky Power; Kim Nelson and Sarah Sutherland, Kentucky Coal Association; and Jeff Harper, Kentucky Farm Bureau.
LRC Staff: Tanya Monsanto, Hank Marks, Lowell Atchley, Carl Frazier, and Kelly Blevins.
Dr. James Vortuba, President of Northern Kentucky University, welcomed the members of the Interim Joint Committee on Agriculture and Natural Resources to Northern Kentucky University. Then, Rep. McKee described the importance of viticulture to the agricultural economy of Kentucky. Rep. McKee asked Mr. Leap and Mr. Walters to discuss the grape industry in Kentucky.
Mr. Leap introduced the members of the Northern Kentucky Grape Growers Association (NKGGA) that were present in the audience. Mr. Leap then discussed the membership of the NKGGA. There are approximately 120 members who are "growers" in 10 counties plus Louisville and Maysville, and then there are associate members.
Mr. Leap then discussed the Kentucky Grape and Wine Council (hereafter referred to as Council) indicating that the Council is not representative of the grape growing regions of the state. According to Mr. Leap, the Council should be representative of different geographic regions of the state, and he proposed dividing the state into "appellations" and then revising the Council's membership based on those appellations.
Then, Mr. Leap discussed the budget for the Council. He stated that the funds should be used to promote, advertise and educate Kentucky on viticulture and eneology. Mr. Leap then described viticulture promotion in Indiana and how taxation of wine could be used to generate additional funds for promotion of the industry. A surcharge can be place on all wines to fund the Council.
Mr. Leap also promoted the idea of grape and wine cooperatives. Many other crops are grown, marketed and sold through cooperatives. Grape growers want to create cooperatives too. This approach would help defray equipment and facility costs. It also is necessary to amend the alcoholic beverage control (ABC) laws to allow for the cooperative winery.
Mr. Leap also discussed wholesaler and retailer incentives including tax breaks to wine producers, the development of a Grape Council Quality Seal Program, the revival of the Vineyard Assistance Program, and the development of programs to educate agricultural extension agents.
He also stressed that organically grown grapes should not receive funding because organics have not proven viable in Kentucky. There should also be requisite education before producers receive funding to ensure the money is given to those who know how to grow grapes.
Then Mr. Leap described various tables included in a packet of materials that were given to the members of the committee. Those tables described the return to farmers from grape production. On 5 to 7 acres, grapes can return as much as $1,500 to $1,600 per ton. All that is needed to grow grapes is good aeration in the soil and drainage.
Rep. McKee asked about the membership of the NKGGA. What is the size of your total membership? Mr. Leap stated there are about 120 members total and they come from several counties. The NKGGA serves as a resources to farmers. We combine our resources like a cooperative.
Sen. Boswell thanked the presenters. He asked whether the Council is a creature of statue. Mr. Leap stated that the Council is created in statute. Sen. Boswell then asked for clarification about whether NKGAA wants the committee to examine the structure of the Council. Mr. Leap stated yes. For close to 8 or 9 years, the Council was the sole organization representing grape growers, but Kentucky now has new regions and unique obstacles in those regions. Because of the change in the regions, those underrepresented groups left the Council. I think it is necessary for the Council to be representative of all the grape producing regions.
Rep. Cherry asked how many wineries there are in Kentucky. Mr. Leep replied approximately 30. Rep. Cherry asked what determines the successful establishment of a winery. Mr. Leep replied that the market and the opportunity to increase production, but it is necessary to start a program to promote distribution of the wine made from the grapes.
Sen. Thayer thanked the chair for including the grape production topic on the agenda and asked whether Kentucky, historically, had been a grape and wine producing state. Mr. Leep replied yes. At the beginning of this century Kentucky produced a large amount of grapes, but during the depression tobacco as a cash crop eventually displaced wines.
Sen. Thayer asked Mr. Leep about his concerns regarding the promotion of wines outside of Kentucky. Mr. Leep stated that he was enthusiastic about the opportunity. He explained that wine cannot be shipped to a buyer outside of the state that does not make the purchase at the vendor's location in state. You cannot purchase wines off the Internet or from a brochure. Kentucky should focus on increasing production and distribution rather than focusing on wine production as a form of tourism.
Sen. Boswell commented that another ingredient for success is the cohesion in the industry and the organization. It is necessary to receive comment from the Department of Agriculture regarding promotional opportunities and the direction the industry should proceed.
Mr. Dennis Walters, a member of NKGGA, spoke. Mr. Walters explained that his family has a grape farm in a county that has experienced rapid economic growth and development. The value of his farm has increased as a result of grape production and increasing the farm's value is the number one goal. Mr. Walters added that the expansion of the production and marketing is proceeding prudently. Regarding the Council, Mr. Walters stated that it is necessary to have representation. We need to get funding to those who are capable of growing their enterprise.
Rep. McKee thanked the speakers. Then, Mr. Keith Rogers and Mr. Mac Stone, with the Governor's Office of Agricultural Policy and the Kentucky Department of Agriculture, spoke next.
Mr. Rogers drew the committee members attention to a document that contained the projects that have received funding from the Agricultural Development Board (ADB) for expansion of grape production. There have been equally as many projects approved as disapproved. Mr. Rogers then noted that there is not funding available for grape production in 2005. The ADB studied the market and production of grapes and determined that to offer funding to the farmers, the funds must be spent on increasing local production. The ADB wanted to increase local production for the making of Kentucky wines but there has consistently been an imbalance between production and demand for grapes that needs to be remedied.
Mr. Mac Stone, Kentucky Department of Agriculture, described two new positions created at the University of Kentucky: viticulturalist and eneologist. These two people were hired to aid and support Kentucky's fledgling grape and wine industry. Then Mr. Stone described the Council and how the members on the Council are selected. There are several issues facing the Council at present such as the rotation of the chair and the appointing of new members. Mr. Stone explained that in the beginning the Council was not functioning properly, but with KDA leadership, the Council is functioning much better. Then, Mr. Stone described some of the Council's recommendations for amending the statutes establishing the Council. Those recommendations include: (1) establishing a rotation for the chairs, (2) increasing representation on the Council, and (3) revising the alcohol beverage control (ABC) guidelines.
Sen. Boswell asked if the Council would seek changes to the authorizing statutes. Mr. Stone indicated yes.
Sen. Kelly asked about the GOAP funding being used to fund two positions at the University of Kentucky. He stated that ADB funds were not envisioned to fund higher education and that the universities need to fund positions in their Department of Agriculture using their own funding base. If grape production is important, then UK should examine its hiring so that it continues to serve the agricultural needs of Kentucky.
Rep. Comer asked about the relationship between KDA and the Council. Mr. Stone explained that KDA offers personnel for administration of the Council. KDA also administers the Council's funds and the Commissioner of KDA is a member of the Council. Rep. Comer then stated that KDA needs to develop a strategic plan to identify products and their markets such a plan could be developed for grape and wine production.
Rep. McKee noted that several important questions have been asked and the Council should make a report to the committee in the future. Mr. Stone stated that KDA would be available when needed to answer any questions.
Sen. Boswell then returned to the discussion of the university's role in the development of grape and wine production. Concerning their role and the use of the ADB funds, how is accountability measured? Mr. Rogers stated the University of Kentucky will make reports to the ADB. There are compliance measures contained in the funding of those positions.
Then, Rep. McKee invited Mr. Tim Turney, Kentucky Department of Agriculture, Office of the State Veterinarian to provide an update on the animal identification and tracking program. This program continues to be a top priority of the Office of the State Veterinarian, Mr. Turney explained.
Then, Mr. Turney provided a description of the experiences in developing the animal identification and tracking program. The goal is a 24-hour trace back system so that KDA can identify a sick animal and all the places that animal has traveled. It is a way to identify the scope of contamination to prevent the spread of disease. It is particularly important given the international concerns with mad cow disease. Confidence and security in the system is important to protect the producers and the public. It is also a key component of the "homeland security."
Then, Mr. Turney explained that currently the program is voluntary, but there would be a need to make participation obligatory. In 2006, participation should be obligatory because the KDA required a 42% participation rate. The KDA may ask the General Assembly for assistance with this matter. If KDA does not achieve this participation rate in Phase I of the program, then the funds for continuing the program will terminate.
Rep. McKee invited members to ask questions. There were no questions and the meeting adjourned.