The 4th meeting of the Interim Joint Committee on Agriculture and Natural Resources was held on Friday, September 12, 2008, at 10:00 AM, in the E.S. Good Barn at the University of Kentucky. Representative Tom McKee, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Representatives Jim Gooch Jr., Co-Chair, and Tom McKee, Co-Chair; Senators Ernie Harris, Joey Pendleton, Brandon Smith, and Damon Thayer; Representatives Royce W. Adams, Dwight D. Butler, Mike Cherry, Hubert Collins, James R. Comer Jr., Tim Couch, Mike Denham, C. B. Embry Jr., Jeff Greer, Richard Henderson, Jimmy Higdon, Charlie Hoffman, Brad Montell, Fred Nesler, Sannie Overly, Don Pasley, Tanya Pullin, Rick Rand, Tom Riner, Jim Stewart III, Greg Stumbo, Tommy Turner, Ken Upchurch, and Susan Westrom.
Legislative Guests: Representatives Jody Richards, Rocky Adkins, and John Will Stacy.
Guests: Dr. Scott Smith, Drew Graham, Dr. Nancy Cox, Dr. Mike Mullin, Dr. Jimmy Henning, Dr. Will Snell, and Dr. Greg Halich, University of Kentucky; Commissioner Richie Farmer, Mark Farrow, and Dale Dobson, Kentucky Department of Agriculture; Joyce Kinder, Kinder Caviar, Inc; Jan Gould, Kentucky Retail Federation; Darren Moore, Benjy Kinman, and Darren Moore, Kentucky Department for Fish and Wildlife Resources; and James “Jitter” Allen, Altria.
LRC Staff: Lowell Atchley, Stefan Kasacavage, Susan Spoonamore, Emily Harkenrider, Donna Little, and Kelly Blevins.
Representative McKee recognized Senator Harris who updated the committee on the condition of Representative David Osborne’s mother who was in very grave condition. Representative McKee asked the committee to take a moment of silence to remember the Osborne family.
Representative McKee asked for motion on approval of the August 21, 2008 minutes. Representative Pasley moved that they be adopted. Representative Collins seconded the motion. The motion carried by voice vote.
Next, Representative McKee recognized Mr. Drew Graham, who welcomed the committee to the UK College of Agriculture Ag Roundup and thanked the committee for participating for the last five years. Mr. Graham invited the committee to a farm safety demonstration following the meeting. He also invited the members to a ground-breaking ceremony for the Livestock Disease Diagnostic Center. Dean Scott Smith extended his appreciation to all the participants of the Ag Roundup noting the great amount of teamwork and partnership this year’s event had required. Dean Smith then introduced Dr. Mike Mullen, Associate Dean for Academic Programs, Dr. Jimmy Henning, Associate Dean for Cooperative Extension System, and Dr. Nancy Cox Associate Dean for Agriculture Experiment Station, for an update.
Dr. Mullen commented that they were enjoying a wonderful turnout for the Ag Roundup with 1200 students, faculty, and staff participating in Thursday night’s events and noted that it is indicative of the community the college is. He went on to share information that enrollment is moving upwards showing a 43% increase in the number of freshmen for the College of Agriculture. The College of Agriculture currently has 2100 students enrolled, not including 400 graduate students, which makes it the third largest college at the University of Kentucky.
Dr. Henning said the “career ladder”, or County Agent Initiative, has been implemented over the last two years. Agents are rewarded for service, excellence, and programming. He also expressed his appreciation to the Agricultural Development Board for their help in obtaining $2 million to renovate the 4-H camps across the state. He noted that agents make some of the best role models and shared that through 4-H they were able to reach approximately 180,000 students. He shared his appreciation for the support of the Agricultural Development Fund as well as the KARE program. In addition, the College of Agriculture is including “go-green,” sustainability, and local food effort in academics, as well as focusing on health education with programs such as Second Sunday, which encourages outdoor activity and fund raising efforts for ovarian cancer research through the Homemakers Clubs.
Dr. Cox thanked the General Assembly for their support of the Livestock Disease Diagnostic Center. She stated that the College of Agriculture is unique in that they have diagnostic lab and regulatory services. She noted that their research is ranked in the top ten nationally. She mentioned that the College has received several grants totaling $31 million. She expressed concern that their grant funds for facilities do not totally fund facilities, farms, and animals. Dr. Cox shared that they are currently investigating technology for protecting animal health, production of food, and biofuel.
Representative McKee introduced several Agricultural Development Board members who were in attendance in additions to Dr. Smith, Mr. Dennis Griffin, Mr. Sam Lawson, Mr. Wayne Hunt, Troy Rankin, and Mr. Rodney Dick.
Next, Dr. Will Snell encouraged the committee that it has been a banner year for United States agriculture with producers setting an all time record, and net farm income 60% is above average over the past ten years. Over the past twenty years, food prices had increased two percent but for 2008 they have increased six percent. He stated no one can deny the fact that including the price of grain has affect on food prices. Even more of a concern over a sustained period of high grain prices is the effect on long term livestock supplies and effect in meat producers. As for a short term, food price increases have been related to high packaging and fuel prices, non-agricultural factors.
Dr. Snell went on to cite rising labor costs. He said the major concern is the cost of shipping and cost of fuel. The low value of dollar has made exports grow. Weather issues overseas have had an impact, and some world governments have limited or banned world exports. He said the bottom line is that the increase in food prices has been affected by a lot of factors. Transportation costs and international events have had a greater impact, and for 2009, food prices will continue to rise but at a slightly slower rate, he said.
As for the farm economy, Dr. Snell mentioned a Lane Report article, noting that it indicated a $4 billion agriculture economy, and that we have potential to reach $5 billion in receipts. He said the article, written in the summer, said cash receipts for 2008 will be very strong in the state. The bad news, however, is that input costs are increasing and net farm income may be down but will be above levels we saw prior to the tobacco buyout.
Dr. Snell mentioned the 2008 Farm Bill, passed by Congress. He noted it primarily offered producers a revenue insurance program called “Acre.” He said that a large part of the bill will encourage conservation programs. He closed by mentioning that the College of Agriculture Leadership Group visited California for a conference this year. He noted the same trip was taken three years ago and how concern grown there. But this year he returned feeling very optimistic due to the water issue in the west. He said there are a lot of market opportunities for Kentucky agriculture.
Representative Stumbo asked if there are any programs that look at feasibility of other types of crops to convert to fuel.
Dr. Snell responded the Farm Bill looks at funding more projects in terms of research. Dean Smith said that yes, the University of Kentucky has done work and is looking at lots of possibilities, for example switch grass, canola, and sorghum.
Dr. Cox expanded that they are researching partial refineries for on-farm manufacturing of sorghum.
Dr. Halich mentioned pilot projects to grow switch grass in central and northern Kentucky. The grass would be burned to generate electricity.
Representative Stumbo mentioned that our climate is conducive to forage growth. He also mentioned that if they are able to develop grass for fuel, that may help with reduction of carbon dioxide. He noted planting specific grasses that can be used for fuel should be planted along interstates. Dr. Halich responded that North and South Dakota and Montana do that.
Representative McKee then asked Dr. Halich to continue with his portion of the agenda. Dr. Halich began by saying that ethanol has an effect on commodity prices and impacts Kentucky. He mentioned news stories reporting on the amounts of grain going into the production of ethanol. He said that if the current projections hold on pace to use one third of corn crop fuel for ethanol production, it will have major implications. He noted that in 2005-2006, the use of corn for ethanol increased dramatically. He projected a 33% increase for 2008. Dr. Halich said that total revenue has increased beyond input costs from grain growers, creating a net positive. From livestock standpoint, cow and calf producers are hurting. Stock operators, those who take weaned calves to the point where they are selling them to feed lots, are doing well right now. As for pork and poultry, obviously the price of grain is hurting those two sectors. Dr. Halich noted that if we continue to see historical highs we will see a shift in land use from hay production and pastures to corn and soybeans.
Representative McKee asked about implications worldwide as it pertains to ethanol and corn. Dr. Halich responded that the United States is the primary producer of corn-based ethanol by far and the foremost corn producer in the world. The impact that we have here will have a major spillover in the rest of the world as far as the market price for corn.
Representative McKee asked about the status of ethanol facilities. Dr. Halich responded that they do have the capacity to go onboard in the next couple years. He said that corn once purchased at $7.80 a bushel under farm contracts has come down to $5.40. He said that they have seen a number of ethanol plants shutting down or projects that were in the process of construction had been put on hold. The price of ethanol is directly tied to the price of barrel oil, as they have exceeded the mandate in terms of ethanol that is used to go into the mix of gasoline.
Dr. Snell mentioned that there is a ten billion gallon capacity, and corn prices and the price of oil affects the profitability. The renewable fuel standards have a mandated level of nine billion gallons.
Representative McKee inquired if there was any unexpected news in the grain report. Dr. Snell replied that yields were down nationally, that in Kentucky estimated yield for corn was down from 141 bushels per acre to 137 bushels per acre and soy, 39 bushels per acre to 36 bushels per acre.
Senator Pendleton mentioned the price of gas and the devaluation of the dollar and other factors. Dr. Snell responded that the export market has been phenomenal and all of a sudden the dollar is beginning to strengthen. Senator Pendleton then mentioned that distiller’s grain can be used by livestock. Copies of Dr. Snell’s and Dr. Halich’s handouts are on file with the LRC Library.
Finally, Representative McKee noted that Ms. Joyce Kinder, of Kinder Caviar, Inc.; had signed up to speak to the committee to address concerns regarding some paddlefish administrative regulations. Ms. Kinder agreed that regulations are necessary but would like to see some provisions amended. She specifically noted the revocation of a fisherman’s license or permit could occur even though water boundaries were inaccurate because of GPS positioning. She stated they feel that license revocation is extremely harsh. She also noted that they could not agree upon snagging methods. She said that under the current regulation all snagging methods must stop. Finally, Ms. Kinder noted disagreement with the size limit, noting that they do not want to hold up the process but would like the committee to take a further look at the regulation.
Representative McKee noted that nothing can be changed in committee without the agency’s agreement.
Senator Harris mentioned the Aquaculture Task Force, and asked if the committee can place a letter on the regulation that would put the regulation in affect only until the beginning of the next legislative session.
Representative McKee noted that the committee will review this issue at a later committee meeting.
Representative Riner thanked the Governor’s Office of Agricultural Policy, Congressman Hal Rogers, and Ms. Kinder for acknowledging the great benefit Kentucky fishing is to the state.
Representative Collins requested that future agendas have a description of each administrative regulation that had been referred to the committee. Representative McKee agreed and that future agendas will contain a description.
Next, Representative McKee welcomed Dale Dobson and Commissioner Richie Farmer of the Kentucky Department of Agriculture to the table to share with the committee about their farm safety demonstrations. Commissioner Farmer noted that their most important focus is the safety of Kentucky’s farmers. Mr. Dobson explained to the committee about the farm safety program and thanked Dean Smith for their cooperation as they set the demonstration up. He noted that it takes a collection of individuals and agencies to bring this program to the public. Commissioner Farmer added that this program is one of their most popular requests for schools and farm communities. He noted they feel they are beginning to make a great deal of headway in farm safety.
There being no further the business was adjourned.