25 years of redefining the state's agriculture industry

Over the last 25 years, Kentucky agriculture has gone through an extraordinary transforma­tion moving from a tobacco-dominant ag economy into one of the most diversified ag industries in the country.

A major part of the change comes due to the Kentucky Agricultural Development Fund (KADF), created to disburse billions of dollars from the landmark Master Set­tlement Agreement (MSA) reached in 1998 between 46 states and five territories and tobacco companies to help cover current and future smoking-related health costs.

As part of the MSA, tobacco companies would provide annual funds to each of the states in perpetuity. Thanks to state leadership in Kentucky, the decision was made to reinvest half of those dollars into the state’s agriculture industry, a move that has transformed Kentucky’s ag sec­tor.

Brandon Reed has been a part of the process that brought about the forma­tion of the Kentucky Office of Agricultural Policy (KOAP) since its inception. He now serves as the office’s executive director.

“When the MSA took place, Kentucky had every other year sessions, which ba­sically meant that the legislature could not act upon the settlement until 2000,” he said. “Then-Governor Paul Patton and Agriculture Commissioner Billy Ray Smith travelled throughout the state to get input from farmers and other citizens as to what to do with these funds.”

Those conversations led to the estab­lishment of the Governor's Commission on Family Farms, comprised of 20 to 25 representatives, commodity groups and Farm Bureau, with one of the seats going to the state FFA president. Reed was serv­ing in that capacity at the time.

“I had an opportunity to sit on that seat and did so for the next eight years, from 1999 to 2007,” he said. “The early days of that commission were spent to ba­sically establish feedback from the perspective of the farmers as to what that money should be used for and how it could be invested in Kentucky.”

Based on the information gathered by the commis­sion, a report was presented to then-Governor Patton. From there, the state legislature passed House Bill 611, a historic piece of legislation that set up the KADF and created what was then known as the Governor’s Office of Agricultural Policy (GOAP). This office, originally overseen by the Governor’s office, transitioned to KOAP under the guidance of the Kentucky Department of Ag­riculture and through Senate Bill 3, which was passed by the state legislature in 2021.

“In the beginning, it took about a year and a half to set up everything, from the legislation including the Kentucky Agricultural Development Board (KADB), consisting of ag leaders and active farmers from across the state. But during that time, the MSA dollars were coming in,” Reed said. “So, when that board was es­tablished, they had almost $300 million to distribute.”

Board members began to examine the best way to distribute the funds. Once those guidelines were es­tablished, including setting up county councils to be overseen by University of Kentucky Martin-Gatton College of Agriculture, Food and Environment exten­sion agents, this new office and board were ready to change the face of Kentucky agriculture. Since its be­ginnings, the state has set a leading example as to how the funds are overseen and distributed.

“There aren’t too many other states that do any­thing close to what we do,” Reed said. “Basically, all that money goes into their general fund, it's lost, and they never see it again, but Kentucky had the fortitude and the resolve to set that fund up like it did, and now, close to $800 million in investments have been made throughout the Commonwealth of Kentucky.”

Reed has had the good fortune to have seen the KOAP evolve from its very beginnings, wearing many hats that have given him valuable experience in the agricul­ture industry, including being a lifelong farmer himself and also an ordained minister.

Reed most recently served as a Kentucky State Rep­resentative for 24th House District serving Hart, LaRue, and Green counties. As a member of the House, Reed served on various committees, including vice chair of House Appropriations and Revenue Committee, and House Committees on Agriculture; Local Government; and Tourism and Outdoor Recreation. He also served on the Tobacco Settlement Agreement Fund Oversight Committee.

A QUARTER CENTURY OF AG INVESTMENTS

While the dollars received from the MSA have been game-changers for many Kentucky producers, the original agreement noted that annual funds to states would be based on cigarette sales, which have dimin­ished in the past 25 years. Again, the Kentucky Agricul­tural Development Board (KADB) had the foresight to create lasting opportunities for farm families.

One such program came by way of the Kentucky Ag­riculture Finance Corporation (KAFC). According to in­formation from the Kentucky Department of Agricul­ture, KAFC was created by statute in 1984 and, in 2002, the KADB, as part of the Long-term Plan for Agriculture Development, recommended that KAFC be restructured to provide capital access for agricultural diversification and infrastructure projects. The mission of [its] board is to strengthen Kentucky agricul­ture by providing access to low-in­terest loan programs through joint partnerships with local lending institutions. KAFC assists beginning farmers, farm families, and agri­businesses in obtaining the neces­sary capital to establish, maintain, or expand their agricultural oper­ation.

THE 25TH ANNIVERSARY YEAR

Now, 25 years after HB 611 passed, it’s only fitting that KOAP begin a time of celebrating its past while keenly focusing on the fu­ture. The celebration began at the June KADB meeting, which fea­tured several displays from people showcasing their achievements thanks to the help of ag develop­ment funds. The Kentucky Proud program, which is funded by the KADF, was also front and cen­ter during the meeting. Reed said there will be other similar events throughout the year.

“We're launching the celebration this year and have another celebra­tion at the end of next year to bring it all together, but we'll do some regional events to partner with our extension agents through the county councils,” he said. “We're just excited to put a spotlight on this with the partners that we've had over the years and to showcase what the fund has done.”

Reed emphasized that there have been so many people who have served in the position he has today, on the board, and as commissioners who have gone above and be­yond to ensure the success of the office and the fund. From assisting new ventures to helping young and beginning farmers get a good start, he said what Kentucky has done is second to none.

“I think we're at a really good point right now for our silver an­niversary to see where we've been, where we are, where we need to go, and I think that's what this next year is all about,” Reed said.