The Kentucky Agricultural Development Board pledged yesterday to do a better job of overseeing the spending of grants it awards from the state's share of the national tobacco settlement. But board members "also said they cannot micromanage or guarantee the success of every project," and should continue to take some risks, reports Greg Hall of The Courier-Journal.
The comments came in the board's discussion of a University of Kentucky study of $209 million in spending from the 1998 settlement, from 2001 through 2006. In 2000, the state legislature allocated half the state's share of the settlement to improvement of the state's agricultural economy. It placed priority on helping tobacco farmers find other sources of income, anticipating the end of the federal tobacco program of quotas and price supports, which was repealed in 2004.
The study concluded that the money has helped about 50,000 current and former tobacco growers. "It is clear that these investments have led to broad market improvements," the researchers wrote. Markets for 148 products were created or expanded, "primarily through investments in livestock and horticulture projects plus marketing promotion." The most common investment was in beef-cattle farming; Kentucky is the leading Eastern cattle state. But entrepreneurs have created more than 500 new products, from salsa to industrial glue, with the program's help.
The study wasn't all good news. Researchers found that the transition from tobacco to something else was far easier in the large and medium-scale farms in Western and Central Kentucky than in the smaller farms in hilly Eastern Kentucky, one of the nation's poorest areas.
Some major investments, such as a Western Kentucky fish-farming cooperative, failed. But the researchers said the board "should continue to fund ‘risky’ new ventures which stimulate new markets, expand the value chain, and encourage value-added processing." They said some failures "still resulted in advancements in new enterprises, new on-farm technology, production of new crops, and contract marketing." Hall reports, "Board member Sam Lawson said he hoped the report wouldn't result in the panel being so conservative that it never funded an ultimately unsuccessful program." (Read more)
The researchers said the Governor's Office of Agricultural Policy, which acts as staff to the board, "appears to lack the staff necessary to fully utilize information" from reports filed by grant recipients or to oversee all projects. "Relatively too much staff time was involved in feasibility analysis versus project monitoring." For a 4.8mb PDF of the study, click here.
The other state to earmark half its tobacco-settlement money for rural-related purposes was North Carolina, the state that produces the most tobacco and had the second largest number of tobacco farmers, after Kentucky. The Tar Heel State created a foundation to invest the money and spend the earnings on grants to help the economies of tobacco-growing counties. The Golden LEAF foundation "has increasingly dangled big bait for corporate prizes," reports Emery Dalesio of The Associated Press. "This year, it opened its vault by committing $100 million to build an aircraft parts plant." The acronym stands for Long-term Economic Advancement Foundation. "We'll continue to do more high-quality manufacturing," foundation President Dan Gerlach told AP. "We're going to do more on health care." (Read more)
The other state that is using tobacco-settlement money to help the economies of tobacco-growing areas is Virginia. The state uses 40 percent of its share for health programs; the remainder "is overseen by a commission that awards grants for education and economic development projects in tobacco-dependent communities. The commission also makes payments to farmers to compensate for a decline in tobacco quotas," reports The Associated Press and Michael Sluss of The Roanoke Times. In 2005, the Commonwealth "sold nearly $450 million in bonds backed by a 25 percent share of the state's overall settlement payments. Proceeds from the bond sale fund an endowment that is used primarily for technology and economic development projects." The major expenditure has been $80 million to bring broadband service to Southwest and Southside Virginia and other rural areas of the state. (Read more)
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