Call to Order and Roll Call
The 1st meeting of the Interim Joint Committee on Agriculture was held on Wednesday, June 8, 2016, at 10:30 AM, at the Scott County Extension Office, Georgetown, Kentucky. Senator Paul Hornback, Co-Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Paul Hornback, Co-Chair; Representative Tom McKee, Co-Chair; Senators C.B. Embry Jr., Chris Girdler, David P. Givens, Dennis Parrett, Damon Thayer, Robin L. Webb, Stephen West, and Whitney Westerfield; Representatives Lynn Bechler, Mike Denham, Derrick Graham, David Hale, Richard Heath, James Kay, Kim King, Martha Jane King, Michael Meredith, Suzanne Miles, Terry Mills, David Osborne, Sannie Overly, Tom Riner, Bart Rowland, Steven Rudy, Rita Smart, Wilson Stone, Chuck Tackett, Jeff Taylor, Tommy Thompson, James Tipton, and Tommy Turner.
Guests: Michelle Simon, Scott County Extension Agent; Mac Stone, Executive Director, Kentucky Horticulture Council; Catherine Parke, Valkyre Stud, Allen Greathouse, Glencrest Farm; Dr. Jim Weber, Kentucky Veterinary Medical Association, Legislative Committee, and Dr. Clark Cleveland, Scott County veterinarian; County Judge Executive George Lusby; Georgetown Mayor Tom Prather and Sadieville Mayor Claude Christenson.
LRC Staff: Lowell Atchley, Kelly Ludwig, Marielle Manning and Susan Spoonamore, Committee Assistants.
Welcome and Introductions
Michelle Simon, Scott County Extension Agent, welcomed the committee and Dr. Nancy Cox, Dean, University of Kentucky, College of Agriculture, Food and Environment also welcomed the committee and introduced Clair Waggoner an intern for Extension Office. Dr. Cox said the extension system is integral to the agri-business community and families.
In response to Senator Hornback, Dr. Cox explained that the university will host a Farm Foundation meeting that includes a people from around the country who represent agribusiness.
Senator Hornback announced that Mary Courtney, Courtney Farms, Shelbyville, was nominated and won the national Farm Mom of the Year award.
In response to Representative Smart, Dr. Cox stated that the budget reductions at the university caused two colleges to be targeted for budget reductions, Medicine and Agriculture. The total cut to Agriculture was $3.1 million, $500,000 reduction to the College of Agriculture, Food and Environment in general and $2.6 million to the county extension programs. The college had already increased charges to counties for $1.1 million, so the net amount needed for the loss to the county extension programs is $1.5 million. Dr. Cox said that no counties should feel the brunt of the cuts for the next fiscal year. The college is absorbing some of the cuts through other funds.
In response to Representative Smart’s concerns regarding the counties that have limited resources, Dr. Cox stated that the budgets of some counties are variable. Some counties in great shape and others are not. The university wants to study extension offices and their staffing, communication, information technologies, and other areas. It is not the intent of the university to let poor counties suffer. There is still $14 million in the university’s account for state funds for the counties.
Representative Smart stated that Cooperative Extension reaches over 40,000 thousand miles and serves approximately 1.4 million people.
In response to Senator Hornback, Dr. Jimmy Henning, University of Kentucky, said that 108 counties have a local tax.
Horticulture Production and Marketing in Kentucky
Mac Stone, Executive Director, Kentucky Horticulture Council, discussed production and marketing in Kentucky. The council is a coalition of fruit, vegetable, and nut growers, and landscape industry representatives. The smaller groups of commodities in Kentucky do not have tax check-off programs. Funding for the Horticulture Council is provided through the Agriculture Development Board. The council is looking at recruiting regional field persons who can reach out to their areas. There are thousands of vegetable or fruit growers in the state. Mr. Stone said that selling locally is about relationships with local grocers, farmers’ markets, and restaurants. Along with the Kentucky Proud Program, Kentucky is seeing 70 year old farmers planting trees. Farmers still need a lot of support in transitioning from growing tobacco.
The council is addressing needs are affecting the industry. A big issue is the federal Food Safety Modernization Act and its regulations. If a grower sells to a third party such as a restaurant or wholesaler, then the grower is required to have a third party audit. The process is tedious, and only about eight growers in the state have met the requirements. The council has partnered with The Food Connection, which is affiliated with the University of Kentucky. No local producer can sell goods to the University of Kentucky if there is no third party Good Agricultural Practices (GAP) audit. The council is going to hire an employee who will advise growers about regulations so they can meet the requirements of the audit. It is important to increase vegetable production, and the council is looking to hire individuals who can help take vegetable growers to the next level. Mr. Stone said that the demand for organic production is off the charts. The council is partnering with other organizations to help meet regulations. Preliminary data shows that consumers are joining organic Community Supported Agricultural (CSA). The average person goes to the doctor 7.48 times per year, and the average CSA shareholder only goes 2.3 times a year. The average monthly pharmaceutical expenditure is $34 per month and the average consumers of CSAs spend $17.23 per month. The council is working to help protect agriculture specifically in eastern Kentucky.
In response to Chairman McKee, Mr. Stone stated that the future for horticulture looks promising. There are producers who cannot grow enough apples or pumpkins. There is an increasing demand for locally grown products.
In response to Senator Hornback, Mr. Stone agreed that the lack of a labor force, federal regulations, and the complexities of the H2A program to get migrant workers are stifling the growth of produce. A lot of producers worry from year to year if there will be enough migrant workers allowed to work in Kentucky.
In response to Representative Kay, Mr. Stone said that, through the Farm Service Agency (FSA), there is a noninsured crop assistance program. If one can provide a history of the crops grown, then he or she could be eligible for the assistance. That fund is not being utilized, but participation may increase.
In response to Chairman McKee, Mr. Stone said Scott County has seen a growth in the production of vegetables.
In response to Representative Stone, Mr. Stone said that livestock can be an integral part of raising horticulture crops. The money generated from livestock helps with extra revenue to buy equipment for vegetable production.
Thoroughbred Industry Issues
Catherine Parke, Valkyre Stud, discussed the Kentucky Thoroughbred industry’s strengths (nationally and internationally) and the issues faced while operating Valkyre Stud. Ms. Parke said that internationally, the overall Thoroughbred industry is healthy. Auction sales and racing have been showing steady increases in Australia, England, Ireland, and France. In the United States, the Thoroughbred breeding and racing industries are separate businesses. With regard to breeding, Kentucky is the leader in Thoroughbred breeding and resulting auction sales. The 2016 Kentucky Fact Book, published by the Jockey Club, listed 10,793 Kentucky sired foals, of which 7,500 were born in Kentucky, and 3,200 were born in other states. This represents 48.8 percent of the entire foal crop. Kentucky has the best stallions and the best auctions sales in weanlings and yearlings. Customers are from the U.S. and all over the world.
The racing industry in Kentucky is struggling due to its small purse sizes. The state is not competitive with New York. As an example, Ms. Parke said that the purse for maiden races at Belmont Park are $85,000 plus $15,300 if the horse is New York bred. The maiden races at Keeneland are $50,000 plus $10,000 if Kentucky bred. Maiden races at Churchill are $32,000 plus $8,400 if Kentucky bred. Historical racing machines are critical for the survival of small tracks such as Ellis Park, Kentucky Downs, Turfway, and The Red Mile. One race horse equals one employee, not taking into account other businesses involved. Kentucky could create thousands of jobs if a racing circuit could have stables stay in Kentucky from April until the end of November. The top trainers will have 50 or 60 horses in training, and there is no reason for them to stay here. Instead, trainers go to New York. Valkyre consists of 200 acres with 49 mares, 23 yearlings, and two Quarter Horses. It employs 11 fulltime employees and provides housing, health insurance, and other benefits.
Ms. Parke said the three greatest challenges running Valkyre Stud are the lack of non-skilled labor, the cost of purchasing hay and straw, and the challenge of not worrying about the industry. Several years ago, there were 5,000 Standardbred mares in Kentucky, and now there are approximately 100. New York is aggressively attacking Kentucky with false advertising and would love to see the successful breeding industry in Kentucky go to New York.
Allen Greathouse, Glencrest Farm, stated that, since the early 1940s, Glencrest has been a family-owned partnership and has 850 acres. The farm has approximately 70 mares, 50 fouls, 50 yearlings, one-fourth of which are boarders owned by out-of-state people. Compared to five years ago, the numbers are down by about 25 percent. Kentucky is under attack from other states such as Pennsylvania, Louisiana, and especially New York. The Breeder’s Incentive Fund and the Kentucky Agriculture Development Fund have been a big help in keeping the horses here in Kentucky. Glencrest has 25 employees, and most are provided housing and health insurance.
In response to Chairman McKee, Mr. Greathouse said that Ellis Park has been able to grow because of historical racing. Several years ago, a maiden race at Ellis paid $18,000 and now it is $38,000. Ms. Parke noted that Kentucky Downs committed $1 million from its instant racing to help Ellis Park.
Senator Thayer stated that racing and breeding are two separate businesses. Racing is entirely dependent on breeding. Racetracks are dealing with smaller foal crops, and tracks across the country will be dealing with fewer horses in races. Racing is driven by betting. Handicappers like to bet on fields with at least eight horses. Anything less will not survive in the marketplace. The year-round racing circuit is showing signs of progress. Ellis Park recently announced a purse increase, Kentucky Downs is sending money to Ellis Park to help subsidize purse increases, Churchill Downs recently announced a large purse increase after a record Derby week, and Keeneland has ongoing success. Senator Thayer said that, compared to the other tracks, Turfway does not perform as well and is considering installing historical racing machines. New York racing is subsidized by a successful casino operation. Kentucky is number one when it comes to breeding. The Standardbred business has struggled due to the fact that it has artificial insemination, but Kentucky is now seeing an increase in the number of Standardbred mares.
In response to Representative Tipton, Mr. Greathouse said that the fiscal impact of allowing a sales tax exemption on horse supplies would save enough in earnings to hire extra employees, or a new pickup truck, or a stud fee. Ms. Parke said that she would be more inclined to buy a new tractor or another mower with the tax break. She does not know if other states had tax exemptions for horse supplies. Mr. Greathouse said that Ohio used to have a sales tax exemption but not sure if it still existed.
In response to Senator Webb, Ms. Parker said she recently bought alfalfa hay from her neighbor and paid $4 a bale. Throughout the year, she buys hay from Ohio for $7.50 a bale. There is a large market for hay and straw.
Discussion of Veterinary Education Concerns
Dr. Jim Weber, Chair, Kentucky Veterinary Medical Association Legislative Committee, and Dr. Clark Cleveland, Scott County veterinarian, discussed veterinary education concerns. Dr. Weber discussed the veterinary school contract space program for Kentucky residents. The relationship with Auburn University’s Veterinarian School and the University of Kentucky has been ongoing since 1951. Kentucky has 38 spaces in each class at Auburn and three in each class at Tuskegee University’s School of Veterinarian Medicine. There are 164 students going to school under Kentucky contract at the Alabama universities. The cost for a Kentucky student to attend a non-Alabama veterinary school is between $43,000 and $55,000 per year for tuition alone. Kentucky pays Auburn and Tuskegee $29,100 per student. A student can attend Auburn at an in-state rate of approximately $18,000. At one time, Kentucky considered building a veterinary school for $300 to $400 million. The contract spaces cost Kentucky about $5 million a year, which is much less than building a new school.
Dr. Weber said that the results of a study conducted by Auburn showed that over 50 percent of Kentucky residents had returned to Kentucky (five years out of veterinarian school). If not for this program, many students would not be able to afford veterinarian school. The comparable cost for a four-year program at Auburn is $159,000 versus Ohio State’s out-of-state rate of $375,000.
Dr. Clark Cleveland has been a veterinarian for 49 years. He said that most students, historically, were accepted into veterinary school based upon their farm background. Today, the criteria is based solely upon grades. At the time he started his veterinarian business, 70 percent of the business was for large animals and 30 percent was for small animals. That has reversed. Kentucky is the number one producer east of the Mississippi River for food animal cattle. It is hard to find large animal veterinarians because the business is not as lucrative as small animal. A compounding problem is that most of the older veterinarians are retiring. Graduating students are facing large debt, make it hard to find the money to start a private practice.
Dr. Cleveland said that veterinarians soon will be able to write prescriptions for antibiotics that go into feeds. It is a good idea, but feed companies will have their own veterinarians write their own prescriptions.
In response to Chairman McKee, Dr. Weber stated that, with the increased costs at Auburn and Tuskegee for next year, full-funding could be a problem for students.
Representative Stone said that Auburn is important to Kentucky. Auburn educates large animal veterinarians who come back to Kentucky to practice.
Representative Denham stated that, as a bank employee, he knows that student face overwhelming student loan debt.
Senator Parrott said that, in the next few years, it will be hard to find large animal veterinarians. The few who will treat large animals will not go to the farm.
In response to Representative Riner, Dr. Weber said that most new graduates make approximately $70,000 with benefit packages. This does not include internships and residencies. The salary for large animal veterinarians is approximately $5,000 less.
Chairman McKee said that Auburn Veterinarian School has a great reputation for graduating food animal veterinarians. It is very important to keep and fund the slots available at Auburn.
Michelle Simmon, Extension Agent for Scott County, said that 67 percent of the jobs in Scott County are in the agriculture field. One of the main challenges is finding the largest needs in the county and addressing those needs.
There being no further business, the meeting was adjourned.