Governor’s Office of Agricultural Policy

Governor’s Office of Agricultural Policy

USDA Technical Committee

February 14, 2013

Overview• Governor’s Office of Agricultural

Policy (GOAP)

• GOAP Programs

• Pressures on the Agricultural Development Fund

GOAPAdvise the Governor on agriculture-

related issues at the state and federal level

Develop programs to assist in the growth of the agricultural economy

Administer grant and loan programs

GOAPPrimary Ag Development Fund

ContactsProgram Coordinator: Tammy

BrookshierProject Manager: Biff BakerEnergy Program Coordinator: Angie

JusticeArea Contacts: Bill McCloskey,

Angela Blank, Sandra Gardner, Bryan Thomas, Joel Neaveill

Area Contacts

GOAPPrimary Ag Finance Corporation

ContactsDirector of Financial Services: Bill McCloskeyLoan Programs Manager: Cyndi Hall

GOAP Investment Opportunities Kentucky Agricultural Finance

Corporation low-interest loans On-Farm Energy Incentives KADF project grants, loans Farmers’ Market Competitive

Program Deceased Farm Animal Removal

Program (DAR) Shared-use Equipment program County Agricultural Investment

Program (CAIP)

Award Type: loan (participation, direct)

Programs: Agricultural Infrastructure (AILP)Beginning Farmer (BFLP)Diversification through Entrepreneurship in

Agribusiness (DEAL) Large/Food Animal Veterinarian (VET)New Agricultural Enterprise (NEW) - pending

Agricultural Processing Coordinated Value-added

*Complete guidelines and loan applications are available at http://kafc.ky.gov/kafc_programs.shtml

KAFC Programs

Purpose: to provide low-interest access to capital for agricultural diversification and infrastructure projects

Kentucky Agricultural Finance Corporation (KAFC)

Building the future of Kentucky agriculture. Tim Turney,

Woodford Co.

KAFC Programs

Agricultural Infrastructure Loans (AILP) 2% interest, requires bank participation $100,000 / $150,000 max. award, based on

tobacco dependency Variety of commodity facilities, equipment

storage, fencing, etc. Up to 15-year term 20% of gross income must come from farming

KAFC Programs

Helping beginning farmers achieve their dreams.

Beginning Farmer Loans (BFLP) 2% interest, requires bank participation $250,000 maximum award / no more than 50% of

project* Livestock, equipment, agricultural facilities,

working capital, real estate, farm business buy-in Three-year business plan required Mentor

*Additionally, not to exceed 50% of the outstanding debt held by the participating lender for the applicant at loan closing

Caleb Ragland, LaRue Co.

KAFC Programs

Diversification through Entrepreneurship in Agribusiness Loans (DEAL)

to assist entry level agri-entrepreneurs with the establishment or purchase into a business that provides agricultural products or services to other producers 2% interest, requires bank participation $100,000 maximum award / up to 50% of project* Start up ventures may require feasibility study Three-year business plan required Mentor Refinancing of existing debt ineligible*Additionally, not to exceed 50% of the outstanding debt held by the participating lender

for the applicant at loan closing

KAFC Programs

New Agriculture Enterprise Loans (NEW) - pending

to provide loans for Kentucky farming operations as they enter into a new enterprise to supply market opportunity created by an Agribusiness expansion 2% interest, requires bank participation $250,000 maximum award / up to 50% of project* 20% of gross income must come from farming Submit documentation from expanding business

showing the plans for growth & the need for Kentucky product

Refinancing of existing debt ineligible

On-Farm Energy Efficiency & Production Program

KADF Investments

Purpose: to provide incentives to increase energy efficiency or renewable energy production on Kentucky farms

Award Type: grant

Guidelines: 50% of project, up to $15,000Complete an “On-Farm Energy Application”For energy efficiency upgrades and renewable energy productionThird-party energy audit or assessment requiredEligible investments included in guidelines Quarterly deadlines (next deadline: April 26)

Contact: Angie Justice, (502) 782-1765 Bill McCloskey, (502) 782-1766

*Complete guidelines and program application are available at http://ag-energy.ky.gov/.

Project Applications

Purpose: to provide access to state and county funds for statewide, regional and county projects that fit outside the established programs.

Award Types: grants, loans

Guidelines: Complete a Project ApplicationCounty fund requests - must be prioritized by all counties from where funds have been requestedRequests for state funds are encouraged to seek county contributionsReporting, as outlined in legal agreement

*Complete guidelines and project application are available at http://agpolicy.ky.gov/application.

KADF Investments

Project Applications

Kentucky ProudMore than $13 million invested

AgritourismMore than $2.5 million in state and local investments

KADF Investments

KADF ProgramsProject Applications

4-H: $2.2 million FFA: $2.2 million

Ky. Agriculture Leadership

Program: $1 million

Leadership DevelopmentMore than $5.4 million invested

Farmers’ Market DevelopmentMore than $2.4 million invested

Kentucky Center for Agriculture & Rural DevelopmentMore than $2.6 million for technical assistance, since 2001

KADF Programs

Kentucky Wool Societypatented felting machine development

Project Applications

Beef CattleNearly $60 million state and county invested

Kentucky Wine/Grape IndustryMore than $2.4 million invested in state & local projects

KADF Investments

Award Type: grant Guidelines: Complete a “2013

Farmers’ Market Competitive Grant Program” form Deadlines – in hand by May 31 & Oct. 25

Competitive – all applications will be scored

KADF (state & county) cannot be more than 50% of the project

Approved projects must be completed & documentation for reimbursement submitted by Dec. 15, 2014

*Complete guidelines and program application is available at http://agpolicy.ky.gov/funds/award_programs_farmersmarkets.shtml

Purpose: to provide an opportunity for local farmers’ markets to access state ADF for the construction of permanent facilities for their markets or the expansion of existing markets, as well as market resources

Farmers’ Market Competitive Grant Program

KADF Investments

Award Type: grant

Guidelines: Complete a “DAR Guidelines & Application” form Local government agency or the like, serves as

administrator Only one request per county considered Maximum award - $7,500 Producer contribution encouraged Regional programs of two or more counties

encouraged

*Complete guidelines and program application are available at http://agpolicy.ky.gov/funds/removal.shtml.

Purpose: to serve as a measure that facilitates the coordination of environmentally sound and cost effective disposal of deceased livestock for Kentucky producers

Deceased Farm Animal Removal Program (DAR)

KADF Investments

Purpose: to impact a high number of producers who cannot justify ownership expenses associated with certain equipment by helping them access technology necessary to improve their operations economically. Award Type: grant

Guidelines: Local agency or organization serves as administratorComplete a “Shared-Use Equipment Application”50/50 match or 75/25 match (KADF/Applicant)Rental fees for maintenance, repair and future

replacementEquipment must be maintained for five (5) yearsEligible equipment included in guidelines Semi-annual reporting required

*Complete guidelines and program application are available at

http://agpolicy.ky.gov/funds/shared_use.shtml.

Shared-use Equipment Program

Award Type: cost-share Guidelines: Complete a 2013 CAIP Application

Local agency or organization serves as administrator

50/50 match or 75/25 match (CAIP funds/Producer) 10 Investment Areas to choose fromCounty Council sets primary, secondary areasMaximum cost-share $5,000 Producer universal application, producer reportSemi-annual reporting required by administrator

*Complete guidelines and program application are available at http://agpolicy.ky.gov/funds/caip.shtml.

KADF Programs

Purpose: to provide farmers with incentives to allow them to improve and diversify their current production practices.

County Agricultural Investment Program (CAIP)

2013 Program Changes

Added the following eligible cost-share items:

A. Forage, Pasture and Grain Improvement

7. Rental of land clearing equipment or custom land clearing services.Note: Participants intending to use this cost-share item who also participate in USDA programs should contact FSA to ensure compliance with Highly Erodible Land and Wetland Conservation Compliance, which is required for USDA program compliance.

CAIP – within Forage & Grain Improvement

2013 Program Changes

• Additional Information added to Introduction

• KY Agriculture Water Quality Act

CAIP – 2013 Producer Application

$400,000,000

Ky. Agricultural Development Fund

*Total as of Jan. 18, 2013

Invested in state, regional and county projects across

the Commonwealth

Totaling more than

More than 4,500 projects

Tobacco Master Settlement Agreement (MSA)

1998 agreement between 46 states Attorneys General that compensated states for the costs associated with the treatment of smoking-related illnesses

Written for the first 25 years, but agreement is in perpetuity

States were left to decided how they wanted to allocate this new source of revenue

Tobacco Master Settlement Agreement (MSA)

States vary greatly in the allocation of MSA revenue

Securitization Economic Development Health initiatives General Fund Budget Shortfalls

Kentucky’s MSA Distribution

MSA RevenueKy Ag Development

FundState FundDirect Appropriations

County Fund118 County accounts

Early Childhood

FundHealthcare Fund

Kentucky’s MSA DistributionState Fund

Remaining for Regional & State

Project Investment

Special

Projects

Debt Servic

e

Cost shar

e

What is Debt Service?

Bonds issued backed by full faith

and credit of the Commonwealth

Cash now for projects in

exchange for repayment of debt

over time

Debt Service - Cash needed to pay interest and

principal on a loan / debt

Kentucky’s MSA Debt Service

Debt Service

Farmland Preservation

2000

Water and Sewer

2000, 2004, 2008

UK Diagnostic

Center2008

Breathitt Vet Center

20084-H Camp

Renovations2008FFA Leadership

Center Renovations

2008

Kentucky’s MSA Debt Service

Debt Servic

e

Farmland Preservation

2000

Water and Sewer

2000, 2004, 2008

UK Diagnostic

Center2008

Breathitt Vet Center2008

4-H Camp Renovations

2008

FFA Leadership

Center Renovations

2008

$28.4 Million each year to

support $379,000,000 in

Bonds

Agricultural Development Fund Appropriations(FY 2001-2014)

FY 20

01

FY 20

02

FY 20

03

FY 20

04

FY20

05

FY20

06

FY20

07

FY20

08

FY20

09

FY20

10

FY20

11

FY20

12

FY20

13

FY20

14 -

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

45,000,000

County Allocations ConservationState Projects & Admin Debt Service

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 $-

$20

$40

$60

$80

$100

$120

$140

MSA Actual and Estimated Payments(in Millions)

Actual Payments Estimated Payments

Fiscal Year 2013

$28,320,300

$2,622,000

$3,000,000

$14,278,000

$22,963,400

$22,963,300

Debt Service KADB State projects & administrationConservation State Cost Share County Ag Development FundsHealthcare Initiatives Early Childhood Development Initiatives

Total: $94.1 Million

$295,700

$2,500,000

Debt Service KADB State projects & administrationConservation State Cost Share County Ag Development FundsHealthcare Initiatives Early Childhood Development Initiatives

Total: $92.8 Million

Fiscal Year 2014

Pressures on the Ag Development FundWhat will be the impact on Kentucky’s

farm families of reduced support from the federal government?

Are farmers aware that Tobacco buyout payments end in 2014?

Will the recession slow and GF revenue increase enough to maintain services and obligations?

Will the tobacco companies continue to challenge MSA payments?

Will the political support for programs continue?

404 Ann StreetFrankfort, KY 40601

(502) 564-4627agpolicy.ky.gov

govkyapolicy@ky.gov

Governor’s Office of Agricultural PolicyRoger ThomasExecutive Director

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