Tobacco settlement oversight committee hears Ag Development Board report as receipts are forecast to fall

LEXINGTON, Ky. — The Tobacco Settlement Agreement Fund Oversight Committee on Thursday received a broad update from the Kentucky Office of Ag Policy and the Kentucky Agricultural Finance Corporation covering December 2025 through May 2026, including examples of county-level grants and loans, a milestone of more than 1,000 active loans and a warning that tobacco-settlement receipts will decline over the next several years.

Brandon Reed, who presented on behalf of the Kentucky Office of Ag Policy, highlighted new outreach tools and staffing updates and said the office recently launched a Kentucky Office of Ag Policy Facebook page to “make aware of all the good decisions that our board is making.” He also noted the program recently passed 1,000 active loans in the Ag Finance portfolio and that the Ag Finance Corporation’s loan repayments generate roughly $2 million a month that can be re-lent.

The report listed monthly approvals and examples of funded projects: Farmers’ Choice, a feed and grain facility in Kirksey (Calloway County), was supported with county funds and a $250,000 participation loan; Gatekeeper Cattle Company (Union County) was approved for $20,000 in county funds matched by a $20,000 state grant and an Ag Finance loan of $192,224; and the board reported continued support for school greenhouse projects, farmers markets and veterinary-clinic upgrades.

“Programs like the veterinary grant program are aimed at addressing the shortage of large-animal veterinarians,” Bill McCloskey of the Kentucky Agricultural Finance Corporation said. He told the committee the program — now in its third year — has approved 41 applications totaling about $2.7 million, offering grants that cover up to 75% of project costs (not to exceed $100,000) to expand clinical capacity in underserved regions.

The Ag Development Board used county and state tobacco-settlement allocations in many projects. Reed reminded members that counties receive 35% of tobacco-settlement funds and 65% flows to the state pot used for board-funded projects, and described the spring months as the season when county councils make many recommendations.

Committee members pressed staff for fiscal context. Representative McPherson asked whether receipts were up for the year; Reed said forecasting is conservative and that while annual results sometimes exceed the conservative estimates used for budgeting, the long-term trend is downward. “The tobacco money is always is coming in less and less every single year,” Reed said, and staff provided a working estimate that receipts could fall to about $80 million in roughly four years absent changes in underlying market dynamics. Reed emphasized that vaping and cigarette tax revenue are separate from the Master Settlement Agreement receipts that fund the tobacco program.

Senator Webb requested regional data on the veterinary program, including a breakdown of funding for mobile clinics versus brick-and-mortar facilities and information on where services are concentrated. Reed and McCloskey said they would provide a map and monthly reports that show projects, locations and program criteria. The board also plans to expand mentorship tied to Ag Finance loans and encouraged technical-assistance providers such as the K Card program to shift toward fee-for-service or USDA-supported funding where possible.

Representative Rourke said she will travel to the Netherlands in July and asked for updates on Jefferson County projects; McCloskey said one applicant, Alvios Cuban Meats, received a $150,000 forgivable loan, while a proposed grocery project was denied for insufficient working capital. He added that a K Card feasibility study for a Farmington project is expected by fall.

Representative Dawson publicly thanked the board for a $40,000 grant to local fire departments for grain-rescue equipment; Reed described several recent grain-bin emergencies and said the equipment and training have helped save lives.

Procedural business concluded the meeting. Once a quorum was present, the committee approved the minutes of the March meeting by voice vote. Reed and McCloskey invited members to upcoming joint Ag Finance and Ag Development board meetings and a 25th-anniversary event for the program.

The committee asked staff for follow-ups including a geographic map and monthly reporting on veterinary grants and a list of current county- and state-funded projects; staff said they will deliver those materials to members.