Lexington, KY - After a year and a half of work, a University of Kentucky College of Agriculture study has determined that the Kentucky Agricultural Development Fund (KADF) has benefited an estimated 50,000 farmers in the state and roughly doubled most of its investment through leveraged increases in farm income.
The study, contracted by the Agricultural Development Board (ADB) and its governing agency the Governor's Office of Agricultural Policy (GOAP), examined investments made from 2001 to 2007, at a total of $209 million. The ADB oversees the fund.
Faculty members Craig Infanger, agricultural economics professor; Richard Maurer, professor of community and leadership development; and Gary Palmer, assistant director of Cooperative Extension Agriculture and Natural Resources co-authored the report, which included many on-site visits.
The fund is the result of state legislation passed in the wake of the 1998 landmark Master Settlement Agreement (MSA) that sent $206 billion to 46 state attorneys general, five U.S. territories and the District of Columbia from the four largest tobacco companies at the time.
House Bill 611 allocated 25 percent of Kentucky's portion toward early childhood development programs and another 25 percent on tobacco cessation and research programs. The remainder was devoted to reinvestment back into the agriculture community. Of those funds going directly back to agriculture, 65 percent was set aside for statewide projects, while the remainder went to county projects coordinated by County Agricultural Development Councils. The study looked at both types of projects.
"All in all, I'd say the fund is doing what is was created to do," said Maurer. "We did a lot of site visits, which were very valuable, and we tried to be open and honest in our methodology. We tried to avoid value judgments and focused on the results."
Maurer also said that Kentucky is almost completely unique in the way it invests MSA funds. "On a broad basis, there really is nothing else like it," he said.
According to the study, the "evaluation was based on the board's overall investment philosophy: 'The Board will invest these funds in innovative proposals that increase net farm income and affect tobacco farmers, tobacco-impacted communities, and agriculture across the state by stimulating markets for Kentucky agricultural products, finding new ways to add value to Kentucky agricultural products, and exploring new opportunities for Kentucky farms and farm products.'"
The study found that "$86 million invested in the state non-model county projects has resulted in an estimated $161 million in additional farm income over a seven-year period, created or expanded markets for 148 products and impacted 50,000 tobacco farmers and more than 100,000 youth."
It also indicated that programs such as the Kentucky Department of Agriculture's Kentucky Proud marketing program had paid off in a big way. Specifically the report stated, "the Kentucky Proud state branding program Öis having a positive impact of generating new farm income, with an estimated $2.89 to $4.65 of farm income generated for each dollar spent on the program."
The report further noted that Kentucky Proud generates an additional $7.8 million in farm income per year and is one of the most successful programs of its kind in the nation.
Kevan Evans, owner of Evans Orchard and Cider Mill, has been on the receiving end of ag development funds, transforming a tobacco farm into a highly successful fruit and vegetable operation. It was an ADF matching grant, he said, that jump-started the transition. He also noted that the funds he's received have helped more than just his operation.
"At the time we received the matching grant funds, we were just starting the transition from tobacco and cattle. By getting the matching grant, it enabled the enterprise to jump two to three years in its long-range plans, Evans said. "We were able to remodel an old tobacco barn into a store and cider mill. Having the ability to flash-pasteurize the cider, we were able to partner with six different orchards to process their cider."
Today, the orchard processes cider for nine different orchards and four wholesale accounts. The operation has also become an educational stop for thousands of school children each year through organized field trips.
"By showcasing our cider mill and orchard, we have been able to educate students about the farm experience. This year we have been visited by over 6,000 children," Evans said.
The facility also contains a certified kitchen to produce value-added products such as fried apple pies, jams, apple butter and breads.
The business has grown steadily with over 12 acres in apples, peaches, and pears, two acres in small fruit, plus 30 acres of vegetables, not to mention the 10 to 12 acres of pumpkin. This year's crop yielded about $2,500 per acre.
Evan's Orchard is a prime example of what ag development funds can do to diversify a farming operation, and while full of good news, the study came with recommendations as well. The report suggested more careful tracking and monitoring of award recipients by way of site visits and a clear policy on possible conflicts of interest with recipients as well. The study also suggested the GOAP commission a major impact evaluation every three years.
To see the complete document visit the GOAP Web site at www.agpolicy.ky.gov/index.shtml.