Interim Joint Committee on Agriculture


Minutes of the<MeetNo1> 2nd Meeting

of the 2011 Interim


<MeetMDY1> July 13, 2011


Call to Order and Roll Call

The<MeetNo2> 2nd meeting of the Interim Joint Committee on Agriculture was held on<Day> Wednesday,<MeetMDY2> July 13, 2011, at<MeetTime> 10:00 AM, at Farmers Livestock Market in Glasgow, Ky<Room> . Senator David Givens, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator David Givens, Co-Chair; Representative Tom McKee, Co-Chair; Senators Joe Bowen, Carroll Gibson, Bob Leeper, Dennis Parrett, Joey Pendleton, Robin L. Webb, and Ken Winters; Representatives Royce W. Adams, John "Bam" Carney, Mike Cherry, James R. Comer Jr., Myron Dossett, C. B. Embry Jr, Sara Beth Gregory, Richard Henderson, Kim King, Michael Meredith, Terry Mills, Brad Montell, Fred Nesler, Ryan Quarles, Wilson Stone, and Tommy Turner.


Guests: Dr. Robert Stout, State Veterinarian; Steve Coleman, Director, Division of Conservation; Steve Webb, DVMD; Brad Bailey, PVA; Judge Greer; Mayor Troutman; Mayor Rob Cline, Scottsville; Robert Siddens, President, Barren County Cattlemen’s Association; David Beck, Executive Vice President, and Fritz Giesecke, 2nd Vice President, Kentucky Farm Bureau; and Gary Bell, cattle producer.


LRC Staff:  Biff Baker, Lowell Atchley, Stewart Willis and Susan Spoonamore, Committee Assistant.


The June 8, 2011 minutes were approved without objection upon motion made by Representative Henderson and seconded by Representative Dossett.


Update on the Eastern Livestock Bankruptcy

Dr. Stout, State Veterinarian, informed the members that he is in frequent contact with the different agencies involved in the Eastern Livestock bankruptcy, but he does not have any new information to report. He emphasized the complexity of the legal process, as the Eastern case involves possible civil and criminal acts in addition to the bankruptcy.


Dr. Stout stated that there are 48 licensed stockyards in Kentucky (including 5 buying stations) and 180 licensed dealers. Since the bankruptcy, communications have improved significantly between the department and the Packer and Stockyard Administration (PSA), particularly regarding non-licensed dealers and stockyards.


Responding to questions, Dr. Stout clarified that the PSA determines the amount of bonding required of stockyard and buying stations. He also shared that Kentucky’s definition of stockyards includes buying stations, but PSA’s does not. Under PSA, buying stations are licensed and bonded as dealers. Dr. Stout commented that he could not respond to some of the questions because the issues are part of an on-going investigation by the United States Justice Department.


Dr. Stout stated that to his knowledge, no bond money has been distributed because of the bankruptcy process. Investigators have found other assets to add to the bankruptcy pool, but it is still too early in the process to determine which creditors will receive payments. It is important to understand that the bond will only cover a fraction of the losses.


When asked about 2011 RS Senate Bill 92, Dr. Stout said that the bill could help clarify what a buying station is, and would put Kentucky’s definitions more in line with PSA.


Dr. Stout was asked by members to contact the Attorney General and ask him to investigate whether the federal government was lax in its oversight of the bonding of dealers and agents here in Kentucky.


Responding to questions from Robert Siddens, President, Barren County Cattlemen’s Association, Dr. Stout stated that in his opinion, bankruptcy laws would have to be changed in order to allow bonds to go to farmers. If, through legislation, buying stations were defined and bonds required of them separately, then Kentucky might be able to direct to whom a bond would be payable. The dealer bond is designed to protect livestock markets and the producer who trades cattle. The stockyard bond is to protect the producer so that the producer gets paid for cattle brought to the stockyard.


Gary Bell, producer, told the members that he sold cattle in Edmonton on the afternoon of November 2, 2010. In his situation, there was a direct exchange of goods for a check that was worthless, resulting in an act of theft by deception. He wondered how a bank could have a superior lien on cattle that were received through an act of theft by deception. He also stated that he talked to the bankruptcy trustee, and Mr. Bell was under the impression that the Judge had ruled that the bond would be paid outside of the bankruptcy. Mr. Bell felt that farmers who received bad checks in exchange for cattle are the victims in this case, and they should be entitled to the bankruptcy assets.


Sen. Givens explained that he filed a bill in the 2011 Session, Senate Bill 94, that tried to specifically protect the farmer’s ownership interest in the livestock until the farmer received cash proceeds for the livestock.


In conclusion, Mr. Bell asked the committee to look into the money seized by the FBI and to ask the Attorney General to see what information he can obtain.


Update on 2011 Senate Bill 94 (Agricultural Livestock Lien)

Senator Givens stated that Senate Bill 94, which did not pass, attempted to give livestock producers a better security interest in livestock that are sold to stockyards or buying stations. He said that Oklahoma recently passed legislation specifically in response to the Eastern Livestock bankruptcy with the purpose of protecting the rights of Oklahoma livestock owners by granting a statutory lien on any livestock sold. The lien is attached to the livestock, and if the livestock are sold to another party, the lien is attached to the proceeds. The lien is in force until the original livestock owner receives payment for the livestock. Sen. Givens stated that in the 2012 legislative session he would like to reintroduce the bill after any concerns about the bill have been addressed.


Discussion on Dead Animal Disposal

Mr. Steven Coleman, Director, Division of Conservation, explained the division’s role regarding dead animal disposal. Mr. Coleman stated that tobacco settlement funds have been utilized in the soil erosion water quality cost share program to assist landowners with dead animal disposal. Fifty-seven counties were approved (approximately $500,000) for some type of community-wide pickup and disposal of fallen animals in their communities. In addition, the division provides a specific cost-share practice to landowners to compost fallen animals on their property. Mr. Coleman said that 37 of 97 requests for on-farm composting have been approved.


Responding to questions, Mr. Coleman stated that farmers interested in dead animal disposal options can contact his office, the local Natural Resources Conservation Service, the local district conservation board, or the Kentucky Department of Agriculture. Mr. Coleman mentioned that much of the funding from the Environmental Stewardship Program comes from tobacco settlement funds and the Department of Agriculture. Without the state cost-share program established by the General Assembly, his agency would not have been able to leverage other federal dollars. The Conservation Districts are pursuing more federal funds dedicated to helping with regional demonstrations of composting technology for the disposal of fallen animals.


Mr. Coleman explained that there are 121 conservations districts throughout the state which are governed by seven locally-elected members in each district. The members administer the programs in their districts and receive and rank applications based on criteria developed by the General Assembly, with water quality ranking high on the criteria list. Mr. Coleman stated that local communities should work together to decide the best approach to dealing with fallen animals and disposal, and that regional efforts could be the most efficient manner to deal with the issue.


Next, Dr. Stout explained the laws and administrative regulations relating to dead animal disposal. It is the owner’s responsibility to dispose of a dead animal within 48 hours of the owner’s knowledge of the death by burying, incinerating, rendering, composting, or other approved method of disposal. He informed the members that the University of Kentucky Cooperative Extension Service recently did a Fallen Animal survey of all 120 Kentucky counties. The survey gives an overview of the costs of pick up services, on-farm composting, and other options being considered for fallen animals.


Dr. Stout stated that there are 35 licensed renderers in Kentucky offering a variety of services, including pickup and processing, though not all offer the same services. He said that Kentucky Farm Bureau has appointed a task force to look at the issue of dead animal disposal. Dr. Stout feels that composting has a lot of potential and has generated a lot of interest from farmers.


Responding to questions, Dr. Stout said that his employees have encountered very few problems when inspecting renderers. Most of the complaints his office receives involves dead animal removal. Very few violations have been written because the department tries to work with the producer to remedy the situation by getting the producer into compliance rather than penalizing.


The license application for composting involves an inspection and education process and a fee of $25 per year for the license. The process also involves the verification of a water quality plan. Dr. Stout stated that several farmers are composting, especially in the poultry industry.


Dr. Steve Webb, local veterinarian, asked if it was better to spend money for individual farms to have a composting site or to spend money on regional or county-wide composting sites. Dr. Stout responded that for dead animal disposal to be successful, two things were necessary: it had to be inexpensive and convenient. Currently, the regulations regarding composting are the same for everyone, whether it is an individual farm or multiple farms taking all their animals to one place. He said that is one of the issues that the Farm Bureau Task Force is looking at.

Dr. Webb stated that producers in the Glasgow region are concerned about water quality due to the region being prone to caverns and sinkholes. Mr. Coleman stated that they are aware of the various soils in the state and that best management practices are always taken into consideration.


Dr. Stout stated that his office does have concerns about its ability to monitor a large number of producers who might decide to compost on their individual farms. He also said that the $25 yearly licensing fee was being looked at.


David Beck, Executive Vice President, and Fritz Giesecke, 2nd Vice President, Kentucky Farm Bureau, gave a brief overview of the purpose of the dead animal disposal task force that was formed. They told the members that they would be reporting back to the committee with recommendations.


Proposed Congressional Action on Tobacco

Representative Ryan Quarles discussed the actions of United States Representative Linda Sanchez. Representative Sanchez has proposed to exclude tobacco from the Trans-Pacific Partnership free trade negotiations. If that were to happen, Kentucky farm families would suffer and so would the state’s economy. He recommended that a letter from the IJC on Agriculture be sent to Kentucky’s Congressional Delegation, opposing Representative Sanchez’s proposal.


A letter to Kentucky’s Congressional Delegates from the IJC on Agriculture, opposing Representative Linda Sanchez’s proposal, was approved without objection upon a motion made by Representative Cherry and seconded by Representative Henderson.


There being no further business, the meeting was adjourned, followed by a short tour of the stockyard facility.