Kentucky Agricultural Finance Corporation reaches $100 million in assets milestone
Planning for future projects now on the agenda
FRANKFORT (July 28, 2021) – The Kentucky Agricultural Finance Corporation achieved a financial milestone this spring when it reached more than $100 million in total assets.
The Kentucky Agricultural Finance Corporation (KAFC) is the lending arm of the Kentucky Agricultural Development Board (KADB). Together, under the Kentucky Office of Agricultural Policy, the two work in concert to distribute funds from the Tobacco Master Settlement Agreement. The 1998 agreement, requires tobacco companies to pay settling states, including Kentucky, annual installments.
The financial milestone came after KADB committed $5 million to KAFC during its May 2021 meeting. Since 2003, the KADB has invested $80 million in KAFC for loans. The additional $20 million in assets includes loans approved by KADB and then transferred to KAFC and interest payments made on all loans over the years.
“Investing in Kentucky’s agriculture community is investing in Kentucky’s future,” said Kentucky Commissioner of Agriculture Dr. Ryan Quarles, who serves as chairman of the board for KAFC and KADB. “This milestone means that the KAFC has reached the size of a community bank, which is an amazing achievement from where we began 20 years ago. With all the lending pieces now in place, our focus shifts to retaining this opportunity for future agriculture endeavors.”
During a joint public meeting of the two boards in mid-July in Bowling Green, KADB approved more than $2.3 million in grants for agricultural diversification and rural development projects across the state, while KAFC approved more than $1.9 million in loans. In addition to the regular monthly board meetings, the members of each board began strategic planning for the future.
“Over the last two decades Kentucky has invested in diversifying our agriculture economy away from tobacco production with great success,” said Brian Lacefield, Kentucky Office of Agricultural Policy Executive Director, the office that provides staff support for both KADB and KAFC. “Now we need to plan for the next 20 years as we continue to be good stewards of the Kentucky Tobacco Settlement Funds.”
KAFC addresses the unique financing needs of agriculture in the Commonwealth. Its mission 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 obtain the necessary capital to establish, maintain, or expand their agricultural operation.
KADB administers the Kentucky Agricultural Development Fund (KADF). Its mission is to invest 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. This includes new ways to add value to Kentucky agricultural products and exploring new opportunities that will benefit Kentucky farms now and in the future.
The boards have funded more than $800 million in support of agriculture and rural projects in loans and grants over the last 20 years. From helping farmers get started and expand existing operations to providing capital for start-up kitchens, farmers markets and purchases for equipment to expand agricultural opportunities across the state.
During the height of the coronavirus pandemic last year, agriculture was a key focus as consumers struggled to find the food products they needed on the grocery store shelves. One of those products was meat. KADB approved a new program, Meat Processing Investment Program (MPIP) to help Kentucky processors and farmers meet consumer demands. To date more than $6 million has been invested in 30 local processing facilities across the commonwealth, this successful investment in infrastructure will have positive effects lasting for decades.
The two boards believe future funding should focus on investments with a long-term impact. The joint meeting in July allowed each board to brainstorm ideas and projects. In the coming months, the boards will seek public input from Kentucky agricultural organizations and other stakeholders as they plan for the next 20 years.
To learn more about the boards and the programs they finance, visit https://www.kyagr.com/agpolicy/.