Marketing Investments in Agriculture Provide Healthy Returns

FRANKFORT, Ky. - Marketing and promotion projects provided the best return on investment for ventures that received Kentucky tobacco settlement dollars between 2007 and 2014, according to a new report.

University of Kentucky agricultural economist Alison Davis told the General Assembly’s Tobacco Settlement Agreement Fund Oversight Committee today that the marketing and promotion sector—including the popular initiatives Kentucky Proud and the related Restaurant Rewards program—yielded a $3.07 return for every $1 invested, according to her agency’s evaluation of state Agricultural Development Board investments.

The Louisville Farm to Table project alone had about a $9 return for every dollar invested, said Davis. It “was our largest return on project we had,” Davis said.

Projects evaluated by the Community and Economic Development Initiative of Kentucky, or CEDIK, which Davis directs, reportedly produced $2.03 in farm income for every dollar invested. That investment led to 708 new or expanded jobs, Davis said.

Other projects evaluated were in livestock, horticulture, grain and forage, and education, leadership and technical assistance projects, Davis said. For the livestock sector, Davis said there was a $2.81 return for each $1 invested, with the Kentucky Beef Network being the largest recipient of investment dollars.

All large projects funded by the ADB were evaluated, as were 50 percent of medium-size projects and 25 percent of small projects.

“It was really quite a joy to go around and meet with project directors, to meet with our expert panels we brought in to help us evaluate what we received as impacts…and overwhelming support saying Kentucky would not be where it is today without the Kentucky Agricultural Development Fund,” Davis said.

Kentucky’s investment in agriculture through the ADB has made it somewhat enviable among other states where no such level of investment exists, Davis told lawmakers. She said Kentucky’s agriculture programs fare well in comparison to neighboring states.

“There’s a great deal of envy about what House Bill 611 [which established the ADB] did for agriculture, and there are a lot of conversations about Kentucky would have been about 15 to 20 years behind where they are now if these funds were not dispersed,” she said.

Although projects were the report’s focus, Davis said an analysis of funds used for county cost-share programs and Kentucky Agriculture Finance Corporation loans is also covered. County cost sharing reached “a lot of new counties, with the Kentucky Agricultural Relief Effort reaching 118 of Kentucky’s 120 counties and CAIP (the County Agricultural Investment Project) reaching 108 counties. Just under 62,000 awards were made to counties with the bulk of the awards going for large animal agriculture, barn infrastructure, forage and grain improvement, on-farm water, and agricultural diversification programs, Davis said.

Of the KAFC programs evaluated, the Beginning Farmer Loan Program has “by far” the most support by enabling new farmers to buy land and equipment and get started in agriculture, Davis said.

Committee Co-Chair Sen. Paul Hornback, R-Shelbyville, asked Davis what she thinks the impact of the federal Tobacco Transition Payment Program, also known as the tobacco buyout, has had on Kentucky over the past eight years. “Do you think because of the payments that farmers were better able to invest in diversification, and where does that put us in the future when those payments are no longer coming in?” he asked.

Sustainability of agricultural investments are important to the future, she said. “I think we found that still it’s important but that they put themselves in a situation where it’s a little bit less uncomfortable than it was before,” Davis said.

Sen. Robin Webb, D-Grayson, said the state still needs to keep watch over tobacco counties that continue to struggle. “We’ve still got a lot of tobacco-impacted individuals who need that leg up,” Sen. Webb said.

Source: Kentucky Legislative Research Commission