Call to Order and Roll Call
The 6th meeting of the Interim Joint Committee on Agriculture was held on Wednesday, November 8, 2017, at 10:00 AM, in Room 149 of the Capitol Annex. 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 C.B. Embry Jr., Stan Humphries, Dennis Parrett, Dorsey Ridley, Damon Thayer, Robin L. Webb, Stephen West, and Whitney Westerfield; Representatives Matt Castlen, Myron Dossett, Derrick Graham, David Hale, Mark Hart, Angie Hatton, James Kay, Kim King, Suzanne Miles, Sannie Overly, Jason Petrie, Phillip Pratt, Rick Rand, Brandon Reed, Steven Rudy, Dean Schamore, Wilson Stone, Walker Thomas, James Tipton, and Tommy Turner.
Guests: Warren Beeler, Governor’s Office of Agricultural Policy and Marielle Manning, Public Relations, Governor’s Office of Agricultural Policy; Mark Haney, Kentucky Farm Bureau, Eddie Melton, 1st Vice President, Kentucky Farm Bureau, Commissioner Ryan Quarles, Kentucky Department of Agriculture; Tamara Sandberg, Kentucky Association of Food Banks; Representative Melinda Gibbons Prunty; Chuck Courtney, Green River Loggers Council, and Bob Bauer, Kentucky Forest Industries Association.
LRC Staff: Stefan Kasacavage, CSA, Kelly Ludwig, Nathan Smith, and Susan Spoonamore, Committee Assistant.
The October 6, 2017 minutes were approved, without objection, upon motion made by Representative Reed and seconded by Representative Thomas.
Legislative Issues for 2018 Regular Session
Warren Beeler, Executive Director, Governor’s Office of Agricultural Policy stated that in 1998 there were 46,000 tobacco farmers in Kentucky and now there are only 4,600. He said that of the $87,000,000 General Assembly Budget, half went to Agriculture and the other half went to Healthcare and Childhood Development.
Mr. Beeler stated that from 1990 to 2015, agriculture had seen major changes. For instance, he said that the poultry market and production had increased from about 1 percent to approximately 33 percent. Mr. Beeler stated that in ten years, poultry could be the second biggest industry in agriculture.
Mr. Beeler said that the total KADF Project and Program Investments was approximately $542,513,602. He said that the direct investment into the Kentucky Agricultural Finance Corporation was $45,250,000 and the investments had been receiving a monthly return of approximately $500,000. He stated the KAFC had made over 800 loans totaling $108,000,000. Of the 800 loans, there were only five bad loans. Mr. Beeler said that based on an evaluation made by the University of Kentucky, over seventy-nine percent of lenders would not have funded a project without the participation of the KAFC.
Mr. Beeler said that one of the greatest projects ever funded by KAFC was the Hopkinsville Elevator Company (HEC). He noted that in 2001, the HEC project was approved for $6.5 million of state and county funds. In 2017, the co-op returned $39.5 million to 4,000 stockholders. He said that Chaney’s Dairy Barn was the best example of a farm utilizing KADF and KAFC programs. The Chaneys purchased robotic milkers, received grants for storefront construction and building expansion, acquired a cost-share grant for a compost barn, and through an On-Farm Energy program grant they purchased and installed energy efficient fans and lights. Another project investment that has a business success rate of eighty-six percent is the Kentucky Center for Agriculture and Rural Development. The Center provides technical assistance, business planning, and has assisted in the establishment of 104 farmer-owned LLC’s, 17 non-profit organizations, and 25 cooperatives.
Mr. Beeler said that state recipients of KADF are the Kentucky Dairy Development Council, Kentucky Beef Network LLC, Kentucky Horticulture Council, Kentucky Proud, the University of Kentucky (Research Foundation), and the Kentucky Agricultural Finance Corporation.
In response to Senator Hornback, Mr. Beeler stated that funds from tobacco companies, based on cigarette sales, flow in to the general fund and are then distributed – half is allocated to agriculture and half to healthcare and childhood development. Mr. Beeler stated that there was approximately $4 million in unused funds that had been set aside for water and sewer debt payments. Of that $4 million, 35 percent of the funds, approximately $1.5 million, are allocated to county funds and 65 percent of the funds, approximately $2.5 million, are allocated to the KADF as state funds. Mr. Beeler stated that the additional $4 million in unused funds for water and sewer debt payments has not yet been distributed by the Governor’s office, so counties and the KADF have not yet received the additional funding for projects.
Mark Haney, Kentucky Farm Bureau, stated that no other state has been able to provide sustainability for farm families like Kentucky. He said that Kentucky agriculture sectors had reached record cash receipt levels at a time when the nation suffered through a recession. He stated that farmers are now beginning to see lower net farm income because of the commodities market and price swings. He explained that farmers are repeatedly asked to do more with less and farmers are continuing to meet that challenge with the help of the Governor’s Office of Agricultural Policy and its programs.
Mr. Haney said that the Resolutions Committee of Kentucky Farm Bureau would be recommending and reaffirming prior legislative issues. He pointed out that investments always need to be made, even in the hardest of times, in order to get back a significant return as it relates to the budget of the Commonwealth of Kentucky. He said that funding for soil erosion and water cost share programs and conservation are important issues for agriculture. Mr. Haney stated that it was also important to fund the Kentucky Department of Agriculture. He said that if tax reform is taken up for discussion during the 2018 Regular Session, Kentucky Farm Bureau stands ready to work with the General on this issue. Kentucky Farm Bureau supports the long-standing issue of maintaining a tax exempt status for agriculture. Kentucky Farm Bureau also supports maintaining the current provisions of HB 44, which limits the amount of property tax revenue to 4 percent plus new growth. Mr. Haney said the rural, secondary, and county road fund is important. He said that rural communications, broadband, and high speed internet, are imperative for rural farmers to be able to advertise and conduct business. Wildlife population management continues to be an issue in farming communities.
Commissioner of Agriculture, Ryan Quarles, stated that the United States recently resumed trade with China for U.S. horses. The trade agreement will allow Kentucky to once again benefit from trade with China. Commissioner Quarles said that discussions were also held regarding the export opportunity for U.S. beef; particularly Kentucky beef, and Kentucky hardwood. He said that Kentucky was still looking at signing similar protocols concerning feed and feed additives, as well as soybean exports.
Commissioner Quarles stated that there is a lot more momentum with alternative crops. There are approximately a dozen kenaf growers and 200 industrial hemp growers. He said that some Kentucky-grown kenaf and hemp was sent to Tesla for experimentation in automotive parts. He said that the amount of Kentucky corn going into Kentucky bourbon had increased by 65 percent. Commissioner Quarles stated that the Kentucky Department of Agriculture’s inspections are current across the state. Kentucky Proud continues to grow with over 6,000 members. He said that very soon Kentucky Proud beef products will be sold in Kroger grocery stores.
Commissioner Quarles noted that the KDA would be instituting another budget cut. The KDA will continue to do with less and remain efficient and transparent. He said that KDA would be implementing a reorganization process to help streamline the Department. He said that the KDA is looking to file a modernization bill which will reflect the reorganization process, and also a cleanup bill that will either fix or eliminate old language concerning the KDA’s Consumer and Environmental Protection division and the Office of the State Veterinarian. Commissioner Quarles pointed out that the KDA would like to see a law passed allowing the KDA to issue certificates of free sale. Another issue the KDA would like to see addressed related to the electronic logging devices on semi-trucks. The federal law allows 150 air radius miles but Kentucky only recognizes 100 air radius miles. He said that KDA would support a Grape and Wine Council bill that would reflect modern operations within the wine communities across the state. He said that KDA would also support a resolution allowing the KDA to take a deeper look at food service and food waste through self-assessments within the state agencies, and would support a rural jobs bill to provide a streamline tax and credit incentives for rural counties. Commissioner Quarles also mentioned that the veterinarian school partnership agreements with Auburn and Tuskegess universities need to be preserved.
Commissioner Quarles stated that there are still 1 in 6 adults and 1 in 5 children suffering from food insecurity. The food immunity bill has helped grocery stores in donating food without fear of a lawsuit. Some corporate entities have stepped up by donating 156 chest freezers, with one to be placed in each county food pantry.
In response to Senator Humphries, Commissioner Quarles stated that he had talked with federal officials concerning the proposed nicotine reduction regulation in dark-fired tobacco and is waiting for an official statement.
Tamara Sandberg, Executive Director, Kentucky Association of Food Banks, explained that the Association is made up of the seven Regional Feeding America affiliated food banks that serve all of Kentucky’s 120 counties in partnership with 800 local food pantries. She stated that the Farms to Food Banks program fed one in seven Kentuckians last year; 63 million meals which included 21 million pounds of produce. The goal of the Farms to Food Banks program is to increase access to healthy food, to pay fair prices that help farmers recoup losses, and to reduce the amount of wasted food.
Ms. Sandberg stated that their 2017 budget consisted of public-private partnership donations, including a state appropriation of $600,000 to the Farms to Food Banks Trust Fund. Other donations are from individuals; tax refund checkoff and in-kind contribution for distribution of $361,000. The impact on hungry Kentuckians consisted of 3,610,000 million pounds of Kentucky grown produce, which was enough fruits and vegetables for 6 million meals. She said the produce was distributed by the seven regional food banks who work with 491 food pantries and 66 mobile pantries. Ms. Sandberg stated that all 120 counties received produce through this program.
Ms. Sandberg stated that in 2017 the Kentucky Association of Food Banks (KAFB) worked with 390 Kentucky producers in 66 counties. Each producer was paid an average of $1,700, however the larger scale operations received more money. As an example, she said that one farm family who provided the most produce received $32,000 and nine other farm families received $10,000 or more. Ms. Sandberg stated that the KAFB had expanded beyond produce to eggs and had been able to distribute 100 dozen Kentucky produced eggs. She said it was important to note that KAFB could get more food per pound for $1.00 with produce. There was a problem with meeting the egg producers need in order to cover their bottom line. She said that purchasing eggs had been a pilot project and KAFB is working to expand that program. KAFB would love to expand to other agriculture products such as poultry and beef.
Ms. Sandberg encouraged legislators to continue the $600,000 funding to the KAFB in order to help struggling farmers and to feed the hungry.
In response to Senator Webb, Ms. Sandberg said that the KAFB had spent money on shipping produce from central Kentucky to the northeast part of Kentucky. She said that county extension offices had agreed to work with KAFB to get the information out to the farmers who have produce to sell. It would help to save money on shipping.
In response to Representative Miles, Ms. Sandberg stated that they are continually looking for ways to increase funding. One initiative called the Commonwealth of Kentucky Bowl through the Secretary of State’s Office partnered with the Area Development District to raise food that would all stay within Kentucky. Those results should be available soon. The Kentucky Attorney General partnered with the Kentucky Bar Association and raised approximately $50,000 worth of food. Local donations often stay local, but is also distributed across the state to needy food banks.
In response to Representative Stone, Ms. Sandberg stated that the Allen County Produce Auction is fortunate in that it has a contract with a truck driver who schedules pick-up and delivery. It should be noted that the KAFB pays for those transportation costs. The Food Bank does have a large fleet of refrigerated trucks but they are scheduled down to the minute. The Food Bank has had to use other sources of transportation for picking up produce.
In closing, Ms. Sandberg stated that in January, KAFB would have an individual report for each county as to the farmers and food banks that are in each legislative district.
Representative Melinda Gibbons Prunty, Chuck Courtney, President, Green River Loggers Council and Bob Bauer, Kentucky Forest Industries Association discussed issues facing the logging industry. Mr. Bauer stated that logging is the backbone of the wood industry. He said that logging has a $9 billion direct economic impact and $14 billion in total economic contribution. He said that there are over 28,000 direct jobs in the forest industry and over 60,000 jobs in total. He said there were approximately 7,000 jobs in the logging industry. Mr. Bauer said that Kentucky was the third largest hardwood lumber producer in the nation at 746 million board feet each year. He explained that under the Forest Conservation Act, all logging jobs require a KY Master Logger on site. He said that logging inspections are performed by the KY Division of Forestry and all jobs require using best management practices to protect water quality. Mr. Bauer stated that getting the products to the market can be difficult when using county roads. The logging industry is not opposed to regulations to protect the roads but would like to be treated fairly. Another issue facing the logging industry is the future workforce. He said that logging is a tough and dangerous job. The industry is trying to find ways to offer training to younger people. He noted that technology and mechanized logging is becoming more prevalent. Mr. Bauer explained that workers’ compensation for loggers is a problem. The rates force companies to insure fewer employees. He stated that the logging industry is changing and is a key to the economy of Kentucky. Mr. Bauer stated that the logging industry recommends continued funding for county roads and the Kentucky Division of Forestry.
Mr. Courtney agreed that one of the biggest issues for logging is getting the timber to the market using the county road system. Farmers call all the time to have their land logged, but the industry cannot give them fair market value due to problems using county roads.
In response to Senator Parrett, Mr. Bauer said that there is still a good supply of white oak for the next ten to twenty years. If the areas are not harvested correctly, then the supply of white oak will diminish.
Senator Webb said it was important that better management and education concerning the harvest of white oak be a continued area of focus. She requested information on the management of white oak; now and in the future.
The meeting was adjourned at 11:35 p.m.