1. Governor’s Office of Agricultural Policy USDA Technical Committee February 14, 2013 USDA Technical Committee February 14, 2013

2. Overview Governor’s Office of Agricultural Policy (GOAP) GOAP Programs Pressures on the Agricultural Development Fund

3. GOAP Advise 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

4. GOAP Primary Ag Development Fund Contacts Program Coordinator: Tammy Brookshier Project Manager: Biff Baker Energy Program Coordinator: Angie Justice Area Contacts: Bill McCloskey, Angela Blank, Sandra Gardner, Bryan Thomas, Joel Neaveill

5. Area Contacts

6. GOAP Primary Ag Finance Corporation Contacts Director of Financial Services: Bill McCloskey Loan Programs Manager: Cyndi Hall

7. 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)

8. 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 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)

9. 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

10. 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.

11. 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

12. 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

13. 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 $15,000 Complete an “On-Farm Energy Application” For energy efficiency upgrades and renewable energy production Third-party energy audit or assessment required Eligible 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/. http://ag-energy.ky.gov/

14. 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 Application County fund requests - must be prioritized by all counties from where funds have been requested Requests for state funds are encouraged to seek county contributions Reporting, as outlined in legal agreement *Complete guidelines and project application are available at http://agpolicy.ky.gov/application. http://agpolicy.ky.gov/application KADF Investments

15. Project Applications Kentucky Proud More than $13 million invested Agritourism More than $2.5 million in state and local investments KADF Investments

16. KADF Programs Project Applications 4-H: $2.2 million FFA: $2.2 million Ky. Agriculture Leadership Program: $1 million Leadership Development More than $5.4 million invested Farmers’ Market Development More than $2.4 million invested Kentucky Center for Agriculture & Rural Development More than $2.6 million for technical assistance, since 2001

17. KADF Programs Kentucky Wool Society patented felting machine development Project Applications Beef Cattle Nearly $60 million state and county invested Kentucky Wine/Grape Industry More than $2.4 million invested in state & local projects

18. 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 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

19. 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. 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)

20. KADF Investments Purpose: t o 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 administrator Complete a “Shared-Use Equipment Application” 50/50 match or 75/25 match (KADF/Applicant) Rental fees for maintenance, repair and future replacement Equipment must be maintained for five (5) years Eligible equipment included in guidelines Semi-annual reporting required *Complete guidelines and program application are available at http://agpolicy.ky.gov/funds/shared_use.shtml. http://agpolicy.ky.gov/funds/shared_use.shtml Shared-use Equipment Program

21. 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 from County Council sets primary, secondary areas Maximum cost-share $5,000 Producer universal application, producer report Semi-annual reporting required by administrator *Complete guidelines and program application are available at http://agpolicy.ky.gov/funds/caip.shtml. 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)

22. 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

23. 2013 Program Changes Additional Information added to Introduction KY Agriculture Water Quality Act CAIP – 2013 Producer Application

24. $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

25. 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

26. Tobacco Master Settlement Agreement (MSA) States vary greatly in the allocation of MSA revenue  Securitization  Economic Development  Health initiatives  General Fund Budget Shortfalls

27. Kentucky’s MSA Distribution MSA Revenue Ky Ag Development FundState Fund Direct Appropriations County Fund 118 County accounts Early Childhood Fund Healthcare Fund

28. Kentucky’s MSA Distribution State Fund Remaining for Regional & State Project Investment Special Projects Debt Service Cost share

29. 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

30. Kentucky’s MSA Debt Service Debt Service Farmland Preservation 2000 Water and Sewer 2000, 2004, 2008 UK Diagnostic Center 2008 Breathitt Vet Center 2008 4-H Camp Renovations 2008 FFA Leadership Center Renovations 2008

31. Kentucky’s MSA Debt Service Debt Service Farmland Preservation 2000 Farmland Preservation 2000 Water and Sewer 2000, 2004, 2008 Water and Sewer 2000, 2004, 2008 UK Diagnostic Center 2008 UK Diagnostic Center 2008 Breathitt Vet Center 2008 Breathitt Vet Center 2008 4-H Camp Renovations 2008 4-H Camp Renovations 2008 FFA Leadership Center Renovations 2008 FFA Leadership Center Renovations 2008 $28.4 Million each year to support $379,000,000 in Bonds

32. Agricultural Development Fund Appropriations (FY 2001-2014)

34. Fiscal Year 2013 Total: $94.1 Million

35. Fiscal Year 2014

36. Pressures on the Ag Development Fund What 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?

37. 404 Ann Street Frankfort, KY 40601 (502) 564-4627 agpolicy.ky.gov govkyapolicy@ky.gov Governor’s Office of Agricultural Policy Roger Thomas Executive Director Visit our Flickr site for recent event photos: www.flickr.com/photos/agpolicy.www.flickr.com/photos/agpolicy