Call to Order and Roll Call
The 3rd meeting of the Tobacco Settlement Agreement Fund Oversight Committee was held on Wednesday, May 3, 2017, at 10:00 AM, in Room 129 of the Capitol Annex. Senator C.B. Embry Jr., Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator C.B. Embry Jr., Co-Chair; Representative Myron Dossett, Co-Chair; Senators Paul Hornback, Stephen Meredith, Dennis Parrett, and Robin L. Webb; Representatives Kim King, Brandon Reed, and Dean Schamore.
Guests: Warren Beeler, Executive Director, Governor’s Office of Agricultural Policy; Bill McCloskey, Deputy Executive Director, Governor’s Office of Agricultural Policy; Andrew Graves, Chairman, Atalo Holdings, Inc.; Bill Hilliard, Chief Executive Officer, Atalo Holdings, Inc.; Tom Hutchens, Chief Research Officer, Atalo Holdings, Inc.; Dr. Trey Riddle, Chief Executive Officer, Sunstrand, LLC; Representative Wilson Stone; and Representative Richard Heath.
LRC Staff: Lowell Atchley, Kelly Ludwig, and Marielle Manning
Upon motion made by Senator Parrett and seconded by Representative Reed, the April 12, 2017 minutes were approved by voice vote and without objection.
Governor’s Office of Agricultural Policy
Warren Beeler, Executive Director, and Bill McCloskey, Deputy Executive Director, Governor’s Office of Agricultural Policy, discussed seven regional projects approved by the Agricultural Development Board at its April 2017 meeting:
(1) Louisville/Jefferson County Metro Government, approved by the board for $100,000 in state funds to continue its Farm to Table program for two years;
(2) Crowley’s Mill, LLC, approved by the board for $245,000 in multiple county and state funds as a grant and loan to relocate an operating fiber mill to process hemp, wool and other natural fibers;
(3) Taylor County Board of Education, approved by the board for $15,000 in county funds to construct a greenhouse at the Taylor County High School;
(4) Nicholasville Farmers’ Market, Inc., approved by the board for $3,000 in Jessamine County funds for marketing and vendor development of the newly formed farmers market in Jessamine County;
(5) American Black Hereford Association, approved by the board for up to $100,000 in various county and state funds to establish its official headquarters in Lexington, Ky.;
(6) Russell County Conservation District, approved by the board for $4,250 in county funds to purchase grain bin rescue equipment;
(7) Hopkins County Board of Education, approved by the board for $4,000 in county funds to make improvements to the Madisonville North Hopkins High School greenhouse.
GOAP officials responded to a question from Representative Schamore regarding the use of excess funds in the Master Settlement Agreement (MSA) budget. Representative Schamore stated he would like to see money go towards water projects in the future.
Responding to a question from Senator Parrett regarding the Louisville/Jefferson County Metro Government project, GOAP officials explained that the terms and conditions are decided and valued based on farm impact. The project will facilitate sales for at least 60 farmers and will provide educational opportunities for at least 300 farmers.
In response to a question from Senator Webb regarding the American Black Hereford Association project, GOAP officials said funding for the association will be used to establish an office space and should not be a reoccurring expense.
Responding to Senator Hornback, GOAP officials stated that the project should hopefully produce a long term benefit by bringing national shows to Kentucky.
In response to a question from Senator Webb, GOAP officials said the American Black Hereford Association should share an office space with the Kentucky Cattleman’s Association.
Responding to Representative King, GOAP officials stated a few local staff members will be hired from the Somerset area.
Discussion of Hemp Processing and Marketing
Andy Graves, Chairman, Bill Hilliard, Chief Executive Officer, and Tom Hutchens Chief Research Officer, Atalo Holdings, Inc., and Dr. Trey Riddle, Chief Executive Officer, Sunstrand LLC provided a discussion of hemp processing and marketing.
Andy Graves provided a report on Atalo Holdings, Inc. and described their focus of operations. Atalo Holdings, Inc. representatives discussed the current hemp industry issues and farmer challenges, such as lack of conventional farming tools like pesticides and herbicides, as well as a lack of crop insurance. An unstable, fragmented market and a restrictive legal framework are other challenged that hemp producers face. Bill Hilliard explained Atalo Holdings, Inc. use of MSA funds.
Dr. Trey Riddle provided a presentation on Sunstrand, LLC and the producer and market impact of the hemp industry as a fiber producer. Dr. Riddle explained there is competition between kenaf and plastics. At the producer level, Sunstrand LLC does specialty crop contracts. Further explaining some of the challenges, Dr. Riddle said that harvesting of hemp for fiber is similar to harvesting hay, however, hemp plants are taller than 8 feet and require a specialty mower. There are also issues with supply chain management of hemp seed.
Responding to a question from Representative King, Andrew Graves explained that THC levels get higher in Kentucky’s climate and the hemp that was destroyed was a California strand. It is a regulated industry with the constraint of federal law stating hemp is an illegal crop, but under federal mandate of the farm bill, people are able to grow the crop.
In response to Representative Reed, Dr. Riddle explained that weeds can be mitigated by agronomic methodologies. By planting a variety of hemp plant that is much taller, denser and heavier, weeds are not so much of an issue.
Responding to Senator Webb, Bill Hilliard stated 20 acres is an average plot size for a grain variety. Dr. Riddle said his average plot size is around 25 acres, but the goal is to have more hemp farmers in general, rather than more acreage per farmer. Andy Graves stated the quicker people in D.C. are to separate marijuana from hemp, the better to continue support for hemp production. Both public and private support is important to the hemp industry.
In response to Senator Parrett, Andrew Graves stated that South Carolina, North Carolina, Colorado, Pennsylvania, and the Pacific Northwest are other states and areas that are involved in hemp processing. Dr. Riddle said Sunstrand, LLC processes year round.
Responding to Senator Hornback, Andrew Graves explained there is a need for medical CDB THC levels to be higher than 0.3 percent, so that it is easier for growers to be more efficient in the extraction process. Tom Hutchens explained that for breeding purposes, it would be beneficial to go to one percent. The ratio of CBD to THC is the important key, not just the level of THC.
Documents distributed during the meeting are available with meeting material in the LRC Library. There being no further business, the meeting was adjourned.