Interim Joint Committee on Agriculture


Minutes of the<MeetNo1> 4th Meeting

of the 2016 Interim


<MeetMDY1> September 14, 2016


Call to Order and Roll Call

The<MeetNo2> 4th meeting of the Interim Joint Committee on Agriculture was held on<Day> Wednesday,<MeetMDY2> September 14, 2016, at<MeetTime> 10:00 AM, in<Room> Room 171 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, David P. Givens, Dennis Parrett, Dorsey Ridley (via video conference), Damon Thayer, Robin L. Webb, Stephen West, and Whitney Westerfield; Representatives Mike Denham, Myron Dossett, Kelly Flood, Derrick Graham, David Hale, Richard Heath, James Kay, Kim King, Martha Jane King, Michael Meredith, Suzanne Miles, Sannie Overly, Tom Riner, Bart Rowland, Steven Rudy, Rita Smart, Wilson Stone, Chuck Tackett, James Tipton, Tommy Turner, and Susan Westrom.


Guests: Frank Burdzy, President and CEO, Chris Milan, Ingredient Source and Development Leader, Champion Petfoods, Doug Price, Harrison County, Hon. Bobby Foree, Henry County, Sharon Bird, Public Policy Director, Community Ventures, Sandra Canon, Community Ventures, Sydney Gardner, Community Ventures, and Tamara Sandberg, Executive Director, Kentucky Association of Food Banks.


LRC Staff: Lowell Atchley, Kelly Ludwig, Marielle Manning and Susan Spoonamore, Committee Assistants.


Champion Petfoods Operation in Logan County

Frank Burdzy, President and CEO, and Chris Milam, Ingredient Source and Development Leader, Champion Petfoods spoke about the company and the new Logan County production facility, DogStar® Kitchens. Champion Petfoods is very proud to be located in Kentucky. Its number one focus is to be a good corporate citizen and an active participant in the community. DogStar® represents long life and enduring life. It is anticipated that the two brands of petfoods, Origen and Acana, will endure future challenges. Champion Petfoods represents the best of the best. Champion Petfoods built the world’s best kitchen in Auburn, Kentucky.


The Food and Drug Administration (FDA) has reviewed and studied the kitchen and recommended that all new recruits from the food industry tour the kitchen. It is called a “kitchen” because Champion Petfoods makes food. The kitchen has 370,000 square feet, half dedicated to production and half for distribution and use as a warehouse. Every day, the kitchen receives between 10 to 25 semi-load containers of fresh ingredients that produce 10 to 15 semi-loads of finished products, which are shipped to customers. Mr. Burdzy said the vision for Champion Petfoods is for petfoods to be trusted by pet lovers around the world. The mission statement for Champion Petfoods is referred to as “Biologically Appropriate Fresh Regional Ingredients Never Outsourced” (BAFRINO). Fresh meat is used daily. There are no corn-based products in Champion’s food portfolio. Occasionally the chef prepares a meal for people to “eat like your dog dinner,” using all the ingredients that are in the dog food. It is fit for human consumption.


 Mr. Burdzy said that the company has been growing 25 to 30 percent annually. One part of the company’s mission is to never outsource production. The values of Champion Petfoods include teamwork, responsibility, authenticity, innovation, and leadership. Within three to five years, Champion hopes to be one of the top 100 employers in the United States and Canada. Champion sells and markets its pet food products in over 80 countries. Orijen and Acana petfoods are becoming iconic brands in the marketplace. Champion has divided its marketplace into three segments: Canada, the United States, and the rest of the world. Champion is allocating its product to Europe, the Middle East, and Asia.


Mr. Burdzy said that the home office of Champion Petfoods is in Alberta, Canada, where it employs approximately 200 people. The investment in the new facility in Auburn, Kentucky, was over $120 million with 147 skilled regional workers. A portion of the kitchen was redesigned and is now regulated under the federal category for baby food. Champion is in the process of expanding and, by the end of 2017, there should be over 200 employees with a projected economic impact of $280 million. The most attractive asset of Kentucky is its agriculture footprint. He said that $25 million worth of ingredients have already been purchased from Kentucky producers and processors. Champion hopes to continue growing and expanding ingredient development for the petfoods.


In response to Chairman McKee, Mr. Burdzy stated that staff of the Cabinet for Economic Development and the state’s agricultural production were critical components in selecting Kentucky. The key to Champion’s success is developing new products in partnership with Kentucky agriculture.


In response to Representative Meredith, Mr. Burdzy stated that Champion will have between 200 and 220 employees after expansion is completed.


In response to Senator Parrett, Mr. Milan said that the products are primarily meat based with some carbohydrates, fruits, and vegetables that are locally grown. The interest in Kentucky to be a supplier for Champion Petfoods is tremendous. There are about 10 growers for greens, pumpkins, and squash. Apples are locally grown, but pear production in Kentucky is minimal. There are some red meats and poultry that are sourced locally.


In response to Senator Westerfield, Mr. Burdzy said that the kitchen in Auburn was the first location outside Canada that was built in the United States.


In response to Representative Rudy, Mr. Burdzy stated that Champion Petfoods started as a family business and deals with other commercial sales entities that are family owned and not part of a global organization. In the distribution network, Champion gives an overseas distributer exclusivity for that country. There are approximately a dozen product distributors in the United States, mostly family owned.


Kentucky’s Fencing Law

Doug Price, Harrison County landowner, asked that the committee consider updating some of Kentucky’s fencing laws. He said most of the laws have been in effect since 1942 with very few changes. He owns approximately 13 acres and does not farm. He had no plans to fence the land around his property. An adjoining landowner approached him about splitting the costs of building a fence along the joint boundaries, amounting to 2,400 feet. He said that Kentucky’s fencing laws require him to split the costs with his neighbor who farms. He said that the law is unjust and should be changed since he does not have an agricultural operation. He would not be eligible for all the tax benefits afforded to an agricultural operation. He said that real estate agents should disclose fencing laws to purchasers of real estate adjoining a working agricultural operation.


Bobby Foree, a Henry County attorney and farmer, said that Kentucky’s fencing law became effective in 1942. Since 1988, the fencing laws have not been changed whatsoever. There are very few published cases involving the fencing statutes. In his opinion, he said the statutes have served the Commonwealth well for many years. Agricultural operations need the laws that are currently in place that call for sharing equal fencing costs with adjoining landowners. Mr. Foree said that a PowerPoint, included in the committee folders for review, discussed Kentucky’s Boundary Line Fence Act. The definition of “lawful fence” means that one does not have to build an expensive fence but the fence must be such that cattle cannot creep through. He said that there are several other related sections in the statutes regarding fencing law.


In response to Senator Hornback, Mr. Price said his property taxes were assessed at agriculture value since he had more than 10 acres. He said that if the law was changed he would be willing to pay the non-agriculture assessment.


In response to Representative Denham, Mr. Foree said it could cost around $10,000 or more to litigate a fence line lawsuit.


In response to Representative Westrom, Mr. Foree explained that the District Court would allow a landowner to build the fence even if the other adjoining landowner could not afford to pay. A lien would be placed on the adjoining landowner’s property until the lien was paid off.


In response to Senator Parrett, Mr. Foree said if a landowner built a fence two or three feet from the property line, then the adjoining landowner could be charged with trespassing if he were running cattle. The adjoining landowner would need to build his or her own fence.


In response to Representative Tackett, Mr. Foree stated that, in some cases when an adjoining farm is split into tracts, the landowner who built a fence may lose out on that fence. As a fence ages, the fencing law may become a factor, especially on newly deeded tracts.


Bluegrass Harvest, an initiative of the Community Ventures organization, Lexington

Sharon Bird, Public Policy Director, Community Ventures, explained that Community Ventures has existed for 30 years. Its mission is to strengthen communities by helping people achieve their dreams of greater economic opportunity. Community Ventures is a small certified Small Business Association (SBA) lender that has helped 4,700 entrepreneurs start businesses, helped to retain 10,600 jobs, and has educated and/or counselled over 100,000 people. Community Ventures loans money to people who have low credit scores and cannot finance through traditional institutions. It counsels consumers on home buying and how to keep their houses and manage their finances. For people who get into financial difficulty, there is a program that can help with a mortgage payment up to $30,000. Ms. Bird stated that there is a community development on Cedar Street in Louisville that houses “Chef Space,” a home for food entrepreneurs that would like to test a recipe to be sold in the community. There are 30 entrepreneurs who are sharing the kitchen space, and two have already opened a store front. In addition, Community Ventures is building 25 new homes in that area. The other project is located on Midland Avenue in Lexington. Ms. Bird stated that it will be a mixed use development that will include retail housing, local food businesses, and aging services all within walking distance.


Sandra Canon, President, Bluegrass Harvest, stated that Bluegrass Harvest has been involved in farmers markets for 10 years and that it recently started supplying restaurants with vegetables and fresh herbs. The guiding principle is to improve the health of Kentuckians, lowering health care costs, and increasing the income of the farmers. Through Community Supported Agriculture (CSA), Bluegrass Harvest is able to help connect farmers with employers who self-insure their employees. Bluegrass Harvest is working with the University of Kentucky, Hospice of the Bluegrass, and Appalachian Regional Healthcare in Hazard. These employers provide a $200 incentive to their employees towards a purchase of a CSA, a weekly box of fresh vegetables and fruits for 20 to 25 weeks. The upfront payment helps farmers to plan their crops. The consumer can go to the web page of the farmer and select the farm and the CSA, and make payments using a voucher post. The University of Kentucky has done pre- and post-surveys of the behavioral health changes brought about by the consumption of fresh vegetables and fruits. The survey showed that participants are eating less fast food and less processed food, buying more local produce, and preparing dinner at home. Other results showed that, when a CSA user eats more vegetables and fruits on a daily basis, annual doctor visits and pharmacy use decrease. Bluegrass Harvest is a measured, scalable program with a significant financial impact on farmers. If CSAs were offered to state employees at the cost of $200 per employee, it could create $39 million in new annual revenue to Kentucky produce farmers.


Representative Flood said it would be a great program for state employees, making employees healthier and creating jobs.


In response to Representative Rita Smart, Ms. Canon stated that she did not know why state employees were not participating in the program. It would be an investment from the employer.


Representative Kim King pointed out that there is a program within Humana Vitality that provides a small discount at participating stores for vegetables and fruits.


Farms to Food Banks Surplus Agricultural Commodities Program

Tamara Sandberg, Executive Director, Kentucky Association of Food Banks explained that she was representing the Kentucky Department of Agriculture’s (KDA) Surplus Agricultural Commodities Advisory Committee. The Farms to Food Banks Trust Fund was created in the State Treasury as a restricted account to be administered by the KDA with advice from the Surplus Agricultural Commodities Advisory Committee. The July 1, 2015, through June 30, 2016, fiscal year report submitted to the Governor and the Legislative Research Commission showed that the program received $600,000 from the state in addition to $30,000 donated by taxpayers. As a result, over 3 million pounds of Kentucky produce was distributed in all 120 counties. About 400 farmers in 62 counties benefitted, with an average increase in cash flow of $1,500. Ms. Sandberg stated that $100,000 was set aside to provide for the Kentucky Hunters for the Hungry. Kentucky Hunters for the Hungry paid processor fees for venison that was donated to food banks. There were 21 game processors that requested approximately $37,000 in total for processing the donated venison. The balance of the unspent funds was used to purchase produce in May and June. The Farms to Food Banks program resulted in increased cash flow for farmers and helped farmers recover losses for produce that they could not otherwise sell. She stated that 3.2 million pounds of Kentucky-grown produce, including 25 different types of fruits and vegetables, were distributed to hungry Kentuckians.


In response to Chairman McKee, Ms. Sandberg said the increase in produce was due to the weather and the number of additional producers.


In response to Representative Martha Jane King, Ms. Sandberg said that every dollar donated to the Food Bank equals $8 of food through the Food Banks.


Representative Tipton stated that he is a member of the Hunger Task Force Committee that recently met in Louisville. One in six people in the Commonwealth are classified as food insecure, and one in five children are classified as food insecure.


In response to Representative Graham, Ms. Sandberg stated that the $100,000 was not in the current biennium budget. Through a contract with KDA, the Farms to Food Banks applied for the $100,000 grant.


In response to Representative Dossett, Chairman McKee said he would talk with John McCauley, Director, Farm Service Agency, about possible federal assistance for farmers in the western part of the state effected by weather.


There being no further business, the meeting was adjourned.