Call to Order and Roll Call
The 2nd meeting of the Interim Joint Committee on Agriculture was held on Wednesday, July 12, 2017, at<MeetTime> 10:00 AM, at Kentucky State University. Representative Richard Heath, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Paul Hornback, Co-Chair; Representative Richard Heath, Co-Chair; Senators Jared Carpenter, C.B. Embry Jr., Stan Humphries, Dennis Parrett, Stephen West, and Whitney Westerfield; Representatives Myron Dossett, Derrick Graham, David Hale, Mark Hart, James Kay, Kim King, Sannie Overly, Jason Petrie, Phillip Pratt, Brandon Reed, Rob Rothenburger, Dean Schamore, Wilson Stone, Walker Thomas, James Tipton, and Tommy Turner.
Guests: Representative Chad McCoy, Dr. Debbie Thomas, Provost, Kentucky State University, Tyler Madison, Kentucky Department of Agriculture, Grape and Wine Program, Bruce Kunze, Kentucky Grape and Wine Council Representative, Logan Leet, Chair, Kentucky Grape and Wine Council, Dr. Kirk Pomper, Kentucky State University, Director of Land Grant Programs and Dr. James Tidwell, Kentucky State University, Chair of the Division of Aquaculture.
LRC Staff: Tanya Monsanto, Lowell Atchley, Kelly Ludwig, and Susan Spoonamore, Committee Assistant.
The June 14, 2017 minutes were approved, by voice vote, without objection, upon motion made by Representative Graham and second by Representative Thomas.
Chairman Heath asked Representative Thomas to update the committee on NNN levels for dark-fired tobacco. Representative Thomas explained that HCR 48 was passed urging the United States Food and Drug Administration to withdraw its proposed standard for nitrosonornictine (NNN) levels on ingredients and constituents in smokeless tobacco products. The restrictions are so tight that the NNN level is unachievable for growers. By regulation, the USFDA is trying to put the smokeless tobacco industry out of business. The comment period had been extended due to the responses. Representative Thomas encouraged members to take advantage of the comment period to urge the USDA to repeal the restriction.
Senator Humphries stated that dark-fired tobacco in western Kentucky has an economic impact of approximately $180 million. The proposed restriction is almost impossible to achieve.
Welcome
Dr. Debbie Thomas, Provost, welcomed members to the Kentucky State University. She explained that the College of Agriculture, Food Science and Sustainable Systems is known for excellent agricultural research and extension programs that influence students and impact farmers across the state. KSU is home to a world-renown Aquaculture Program of Distinction, ranked Top 5 in the United States.
Representative Graham noted that Dr. James Tidwell, Chairman of the Division of Aquaculture was recruited several years ago by the Republic of Ireland to develop their aquaculture program.
Update on Meetings Related to Agriculture Tax Reform
Senator Hornback and Representative Heath discussed agriculture tax reform. Representative Heath said he and Senator Hornback have conducted meetings to address tax reform with the agriculture commodities groups. Senator Hornback stated that everyone agreed that the top priority was HB 44, which pertains to a 4 percent growth in revenue for property taxes. It is important for everyone to know that the investments made with HB 611 has paid more dividends in this state than anything else. HB 611 should not be a part of the discussion in tax reform. Senator Hornback said that another issue of interest is the highway tax through the gas tax. It is important that rural roads and bridges be maintained for transporting products to the markets. There is a problem with waterways, which need to be maintained. Senator Hornback said that he and Senator Thayer are working on language with the equine industry pertaining to auctions where horses are sold out of state and no sales tax is charged. There is interest in the Georgia Agricultural Tax Exemption Program, which is a certification for farmers to be tax exempt for farm supplies. This would eliminate the need for retailers to hire auditors and extra employees to do audits. He and Representative Heath had met with John Chilton, State Budget Director, explaining the issues regarding agriculture.
Representative Heath said that Mr. Chilton was glad to join a meeting with representatives from the commodity groups. He has a better understanding of the tax exemptions for farmers.
In response to Representative Tipton, Representative Heath stated that the issue of agricultural property tax assessments was discussed but no plan of action was presented. Senator Hornback said it was discussed, but in talking to PVAs it was his opinion that it was not a huge problem. Because of zoning regulations, Lexington experienced some problems with its agricultural property tax assessments regarding large tracts. The statute defines agricultural use and agricultural potential and therefore the property can be assessed as agricultural.
Representative Stone said he attended a rural electric meeting recently and they were in the process of rallying the troops against the homeowners’ sales tax on electric bills. Representative Heath said he experienced the same thing at his rural electric meeting.
Discussion on Potential Legislation for the 2018 Regular Session
Representative Chad McCoy said that the presenters would be discussing a problem that was more than likely a problem all over the state. He said that the solution would be pro-economic development and pro-vertical integration. Most importantly, the Kentucky Grape and Wine Council was not asking for any money.
Bruce Kunze, Kentucky Grape and Wine Council, Logan Leet, Chair, Kentucky Grape and Wine Council and Tyler Madison, Kentucky Department of Agriculture, Grape and Wine Program discussed a proposal for a Vineyard Expansion Grant Program. Mr. Leet explained that the Grape and Wine Council was formed in 2002 for the purpose of promoting growth within the industry. In 2007, the Council first received funding from the legislature in the amount of $400,000 yearly. Until 2014, the industry had been steadily growing but extremely cold temperatures in 2014-2015 and 2015-2016 resulted in widespread vine mortality. Other reasons for the decline is that most vineyards are less than 5 acres, making it not profitable for the grower and the winery wanting to purchase in bulk. Mr. Leet noted that 80 percent of the wine made in Kentucky in 2016 was produced with grapes from out-of-state. The Grape and Wine Council wants to create a vineyard expansion grant program within the existing statute by removing specified funding requirements for existing programs in order to allow the KGWC flexibility to set annual distributions. The KGWC would also like to offer the program to existing vineyards. Mr. Leet reiterated that the KGWC does not need more funding.
In response to Representative Thomas, Mr. Madison stated that any money left over at the end of each year rolls over. KGWC proposes taking some money from other grants to fund the proposal for a Vineyard Expansion Grant Program.
In response to Senator Hornback, Mr. Leet said that in past years the KGWC has been able to obtain grant money from Agriculture Development Funds. Mr. Madison said that vineyards do fall under the county agriculture investment program. There are 118 counties eligible for funds. He stated that it would be great if a vineyard could get money from the Agricultural Development Board. It would also be good to have a supplemental fund for vineyards.
In response to Representative Heath, Representative McCoy stated that at this time there are no specific ideas as to how to spend the $400,000. The proposal includes giving KGWC the flexibility to set annual distributions based upon need.
In response to Representative Tipton, Mr. Kunze said the cost to produce wine could be between $3,000 and $5,000 per acre. He said that generally it is possible to get a partial harvest by the third growing season. It is a long-term investment, but the vines can produce anywhere from 15 to 40 years. Mr. Leet stated that there is a demand for grapes.
Overview of Kentucky State University Programs and Tour of Aquaculture Facility
Dr. Kirk Pomper, Kentucky State University, Director of Land Grant Programs said that the Land Grant Program was established in the 1890s to resolve agricultural, educational, economic, and social problems of the people of the Commonwealth of Kentucky, especially limited-resource persons and families. KSU partners with the University of Kentucky even though the missions may be slightly different. The Land Grant Program included three main areas: aquaculture, organic and sustainable agriculture and human health, nutrition and food safety, family and consumer sciences. Aquaculture is a program of distinction and ranks in the Top 5 in the United States. The organic program is ranked among the Top 20 in the United States Land Grant Programs. The sustainable projects, to name a few, include vegetable and grain production, fruit and nut crops, and a large meat goat production program. The Human Health, Nutrition and Food Safety, Family and Consumer Sciences is researching obesity and health issues, DNA technologies for assessing food safety, youth leadership, and community development. KSU has an undergraduate degree in Agriculture and Master of Science degrees in Aquaculture Studies and Environmental Studies. KSU Extension has an award winning small farm program and Third Thursday Workshop series. KSU Extension and Research personnel have collaborations with over 1,850 farmers and stakeholders. Through the efforts of the legislature, a 100 percent state match to USDA Federal Funds has helped tremendously.
Dr. James H. Tidwell, Professor and Chair, Division of Aquaculture, explained that the aquaculture program has just reached the point at which half of its research is from wild culture and the other half from aquaculture. Worldwide, aquaculture is the fastest growing animal food production activity and is projected to actively grow for approximately 20 years. Five years ago, aquaculture surpassed beef production worldwide in producing protein and dollars as an agricultural product. The United States is the world’s largest importer of seafood. Over 91 percent of the seafood consumed in the United States is imported. Food safety is a concern in importing seafood. Roughly 2 percent is examined by the FDA and approximately 90 percent comes from Asia. China is the biggest producer and exporter of fish products. As of now, China cannot export fresh seafood. It is important to be able to produce shrimp that only travels 6 miles instead of 6,000 miles to market. Aquaponics is a system that combines production of fish in tanks, in a recirculating type system. This system is one of the most water efficient and nutrient efficient systems that has been developed. The program has worked with the West Sixth Brewing Company by taking the brewers grain and making it into fish feed.
There being no further business, the meeting was adjourned.