Interim Joint Committee on Agriculture


Minutes of the<MeetNo1> 4th Meeting

of the 2015 Interim


<MeetMDY1> September 9, 2015


Call to Order and Roll Call

The<MeetNo2> 4th meeting of the Interim Joint Committee on Agriculture was held on<Day> Wednesday,<MeetMDY2> September 9, 2015, at<MeetTime> 10:00 AM, in<Room> Room 149 of the Capitol Annex. Representative Tom McKee, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Paul Hornback, Co-Chair; Representative Tom McKee, Co-Chair; Senators C.B. Embry Jr., Chris Girdler, Dennis Parrett, Dorsey Ridley, Damon Thayer, Stephen West, and Whitney Westerfield; Representatives Lynn Bechler, Johnny Bell, Will Coursey, Mike Denham, Kelly Flood, Derrick Graham, David Hale, Richard Heath, James Kay, Kim King, Michael Meredith, Suzanne Miles, Terry Mills, David Osborne, Sannie Overly, Ryan Quarles, Bart Rowland, Steven Rudy, Dean Schamore, Rita Smart, Wilson Stone, James Tipton, and Tommy Turner.


Guests: Aidan Connolly, Alltech Chief Innovation Officer and Vice President, Corporate Accounts; Gene Lanham and Joe Livers, farmers, Marion County, Kentucky, and Marion County Judge Executive, David Daugherty.


LRC Staff: Lowell Atchley, Kelly Ludwig, Stefan Kasacavage, and Susan Spoonamore, Committee Assistant.


The August 27, 2015 minutes were approved, by voice vote, upon motion made by Representative Rudy and second by Representative Graham.


Alltech and Alltech’s Kentucky Agricultural Outreach

Aidan Connolly, Alltech Chief Innovation Officer and Vice President of Corporate Accounts, testified about Alltech and Alltech’s Kentucky agricultural outreach. Alltech’s major part of business is looking for natural ways to improve animal health. Some parts of the technology have been moved into the area of crops to improve immune system, productivity of crops such as corn, beans, flowers, and fruits. The “Alltech Way” is to discover, innovate, and deliver. The business model is to see what the world needs, look for innovative solutions, and bring them to the marketplace. Alltech looks for people who are good innovators and have a great curiosity in learning more. Alltech trades in 128 countries and has manufacturing facilities in 77 locations, employing 4,200 people.


Mr. Connolly said by 2050, the estimated world population will be 10 billion. Producing enough food will be a challenge. The food production system will require more animals and a more efficient way to produce meat, milk and eggs. The food industry is the driving force for innovation. As an example, the industry is requiring that certain foods be antibiotic-free and poultry cage free. People want food that helps make them healthy, smarter, and live longer. The largest algae factory is in Winchester, Kentucky, which can manufacture DHA (omega 3 fatty acids). Algae is a valuable source of protein, pigments, vitamins, and fatty acids. The three most valuable commodities in agriculture are land, water, and sunshine.


Mr. Connolly said that Alltech is also involved in life sciences. Alzheimer’s is a debilitating disease that has no cure. Mineral-enriched yeast may fight against human dementia and diabetes. Research shows a 50 percent reduction in plaques and tangles found in dementia patients. This could potentially help thousands of people around the world.


Mr. Connolly said that Kentucky is an entrepreneur’s dream. Alltech reaches around the world and is an ambassador for the Commonwealth. Alltech was started 35 years ago by Dr. Pearce Lyons with $10,000. Today, Alltech has 700 employees in Kentucky and nine manufacturing facilities. Alltech also supports education. Alltech has constructed 11 primary school labs and awarded $500,000 in annual scholarships and $100,000 annually to Kentucky philanthropic initiatives. Alltech’s investments in Kentucky have totaled $117 million along with a $32 million state payroll.


Alltech has an interest in bridging the gap between understanding nutrition and genetics, otherwise called nutrigenomics. It is what happens when one eats the food and its effect on the genes. In addition to a person’s genes, the food a person eats, whether the person smokes, and the environment the person lives in affect longevity and the lives of the future generation. Alltech has invested $10 million in the Nutrigenomics center in Nicholasville. Other interests for Alltech in Kentucky have been the purchase of Connemara Golf Course and the Town Branch Distillery, which is part of the Kentucky Bourbon Trail. A new brewery will be built on the same property as Town Branch, making it the only place in the United States that has a brewery and distillery in the same location. Alltech is committed to investing in eastern Kentucky by creating more jobs at the Dueling Barrels Distillery.


Mr. Connolly said that the 2010 World Equestrian Games put Alltech and Kentucky on the map. The economic impact to the community was approximately $375 million. There were over 500,000 visitors, 900 horses, and 800 athletes. Alltech is hopes that Kentucky will host another World Equestrian Games.


Mr. Connolly stated that Alltech feels a social responsibility to help countries like Haiti and other areas dealing with earthquakes and tsunamis by helping rebuild schools and other essential services.


Mr. Connolly said that, if he were asked what to suggest to young people what they could do to further their education, he would tell them to buy a passport and travel the world. Young people will need to embrace technology. For young people in Kentucky it is important to realize that Alltech is a global business. Agriculture is about feeding the world, and to feed the world a person must understand the world. For people who cannot travel, Alltech has an annual conference that has grown each year. In 2015, there were 3,000 attendees from 120 countries. The economic impact to the surrounding area was $7.2 million. Alltech invited and encouraged committee members and staff to attend the May 22-25, 2016 conference in Lexington.


In response to Representative McKee, Mr. Connolly stated that Alltech was continuing its work researching the strains of algae that can produce very large amounts of oil. The oil rich algae can be a part of biofuels.


In response to Representative Kay, Mr. Connolly said that the people of the Commonwealth have a wonderful opportunity to learn more about Alltech and its global offices. Alltech is a company that is here to help Kentucky. Representative Kay encouraged all members to attend the 2016 Alltech Conference.


In response to Senator Hornback, Mr. Connolly stated that Alltech is involved in biotechnology but has not been involved in genetically modified organisms (GMO). Alltech does not take a position on GMO technology. However, GMOs will be a very important component of helping to feed to the world. Alltech is working to make a plant’s immune system stronger by naturally fighting fungal and bacterial infections that are related to insects.


Representative Denham congratulated Alltech for its purchase of the Ridley plant in Maysville.


In response to Representative Bechler, Mr. Connolly stated that the number of Alltech employees was based on all companies. He was hesitant to say exactly how many employees Alltech had in Kentucky.


Representative Kim King stated that it was a pleasure to have Alltech in Jessamine County. Mr. Connolly said that if a new company were interested in locating in Kentucky that Alltech would be happy for it to visit.


Representative Tipton said that he had the opportunity to attend the 2015 Alltech Conference. He found it to be inspirational and encouraged members to attend next year. In response to Representative Tipton, Mr. Connolly stated that Alltech partners with the University of Kentucky, especially with Coldstream poultry facility. Alltech is familiar with businesses like Land O’Lakes and Cargill, but not their customers. Alltech is in the process of becoming more familiar with producers and farmers.


Representative Schamore complimented the 2015 Alltech Conference. He said he met and spoke with several people from other countries.


In response to Representative Hale, Mr. Connolly said that shrimp farming is beginning to grow. Shrimp are highly susceptible to disease. It will be extremely important to shrimp farmers that the immune system of shrimp is strong. Alltech is looking at natural ways to resist viruses, bacteria, and other issues that might occur.


Potential Agricultural Impacts of the Proposed Tennessee Gas Pipeline Product Conversion Transport Plan

Representative Terry Mills, Gene Lanham and Joe Livers, Marion County farmers and David Daugherty, Marion County Judge Executive, discussed issues and the impact of the proposed Tennessee Gas Pipeline conversion transport plan. Representative Mills explained that the Kinder-Morgan project is about gas lines in Kentucky carrying natural gas products. The proposal from Kinder-Morgan is to abandon one of those lines and restructure the pipeline so they will carry natural gas liquids in a different direction. It will involve 256 miles in Kentucky and 18 counties, including Marion County. There are major concerns with pipeline safety. Representative Mills said that before the project can proceed, the Federal Energy Regulatory Commission must approve the abandonment of the pipeline, which is still pending. Three fiscal courts have filed resolutions opposing the Kinder-Morgan project. Kinder-Morgan was invited to attend the meeting but declined.


Representative Mills introduced Mr. Lanham and Mr. Livers, who are farmers with a long history of pipelines crossing through their property. Mr. Lanham explained that the first pipelines were laid in the early 1940s. Landowners were not particularly concerned with the pipeline then but signed leases to help in the war effort. Most of the lines have been underground for at least 70 years creating safety issues due to corrosion. Those lines could explode at any time. If any line leaks or explodes it could affect all property within one mile of the line, causing serious issues for the landowner and contaminate drinking water. As time passed and other lines were installed it became apparent that no one would take responsibility for destruction of the land, loss of cattle due to open gates, or the inconvenience.


Mr. Lanham said that most easements included language that any damage to the property would be repaired. The gas company would do it, but at its price, schedule and way. Mr. Lanham said he personally experienced destruction on his property, and even though the gas company fixed the problem, it was not done correctly and still causes problems. He refused to take money from the gas company and ended up suing. Representatives from the gas company came to his house and told him to either take the money or the company would see him in court with its high-priced attorneys. Mr. Lanham said he filed suit but after two years he ended up taking the money offered. There have been other issues with easements throughout the years and it has not gotten better. He suggested that the laws be changed regarding easements and rights of the landowners.


Mr. Livers said that Kinder-Morgan is skirting around the Bluegrass Pipeline to make things happen with repurposing the gas lines. There are a tremendous number of hazards associated with repurposing and reversing the flow. He recently talked with a retired employee from Kinder-Morgan who specifically told him that if there was ever an explosion in the line, it would happen next to his parents’ house. His farm and his parents’ farm have all five gas lines crossing through. He said that “pipeline 1” was laid in the 1940s. If the line is repurposed from carrying natural gas to natural gas liquid, it would increase the weight at some of the joints to over 300,000 pounds. In addition, pipeline 1 would not pass today’s inspection standards. Mr. Livers expressed concern with the use of eminent domain and the unjust compensation contained in the leases. Landowners are upset over the use of large equipment that is destroying some of their property and crops. Landowners should be notified prior to any construction.


In response to Representative Smart, Mr. Livers said that there will be environmental impacts. If someone does not hold the company accountable, it will do what it wants to do.


Representative Kay expressed concerns over the future value of the land being used for the gas project. Some of his constituents had already been told to either take the money that the Bluegrass Pipeline was offering or it would use eminent domain to acquire access to the property.


Representative Bell said counties in his district also have pipeline concerns. Some of the pipelines are not underground, therefore bringing up the issue of whether they can bear the weight of extra tonnage. If these companies are going to repurpose 75-year-old lines, then the state needs to be prepared for explosions.


There being no further business, the meeting was adjourned.