THE KENTUCKY AGRICULTURAL DEVELOPMENT FUND recently celebrated 25 years at an event at the Kentucky History Center in Frankfort. From left, Bill McCloskey, deputy director of the Kentucky Office of Agricultural Policy (KOAP), Wayne Hunt, a founding member of KOAP, Sen. Robin Webb, R-Grayson, and Brandon Reed, director of KOAP. (Photo by Lynn Pruett)
By Lynn Pruett
Guest reporter
When the Tobacco Master Settlement Agreement was signed in 1998, Kentucky agriculture was at a crossroads. The tobacco industry had been upended. Kentucky needed a new direction. Kentucky leadership made a unique decision: they awarded 50 percent of the payout to healthcare and 50 percent to farmers.
The result, combined with the cooperation and compromise of visionary leaders in government and agriculture, created the outstanding Kentucky Agricultural Development Fund (KADF), the envy of other states, now celebrating 25 years of existence.
Many Woodford County farmers have benefitted from this program since its creation.
In 2025, veterinarian Ben Stivers received $80,000 to purchase a mobile veterinary van and ultrasound machine, and in 2026, Bull & Honey received $12,295 to construct an on-farm market. Annually, Woodford County receives close to $200,000 in funding from the County Agricultural Investment Program, and the School Board received $40,000 in 2025 to build a new livestock education barn.
On June 19, at the Kentucky History Center, Brandon Reed, executive director of the Kentucky Office of Agriculture Policy (KOAP), led a panel of people who helped develop and implement a successful policy using the funds to prioritize diversity and improve net farm income.
In 1999, Reed was the president of the Kentucky FFA, which gave him a seat as the youth representative on the committee. Under Kentucky Attorney General Ben Chandler and Agriculture Commissioner Billy Ray Smith, Gov. Paul Patton’s commission held hearings all around Kentucky with farmers to learn what they wanted. Many of the forums, like ones in Lexington and Horse Cave, were overflowing.
Chandler received the prestigious John Berry Award, created and named for their father by Wendell and John Jr., for Chandler’s work on securing Kentucky’s fair share of both the main tobacco settlement money, which funded the KADF, being instrumental in the creation of the KADF by strongly lobbying for farmer involvement in the decision-making process, and negotiating the settlement’s Phase 2 payments, which went directly to tobacco farmers and quota holders before ceasing with the tobacco allotment buyout in 2005.
The commission shared the ideas with the legislature, which passed House Bill 611 in 2000. Kentucky took care of the farmers who had depended on tobacco for well over a century. “It was a true blessing to the commonwealth,” Reed said.
Sen. Robin Webb of Grayson had just won her first legislative race and was not yet sworn in when Attorney General Ben Chandler asked her to begin serving on the committee.
“Tobacco got me through school and law school debt-free,” so she agreed. “The job of this committee was to understand the legislative intent of HB611.” She said there was much wrangling and regional sparring, but the committee came up with a policy document that has “stood the test of time. It included allocations, not based on the size of operations, but on the needs of farmers. It was not a subsidy. Farmers needed creative ideas about diversification because they lost a lot when they lost tobacco.”
The fund minimized the risk for new enterprises and gave farmers a chance to diversify. The fund attempted to create parity.
Bill McCloskey, deputy executive director of the KOAP and long-time staff member, said, “When we started, we had the bill, and we had a blank piece of paper. We had to create the policy. We wanted diversification to be a big part of it. With Roger Snell, the Kentucky Ag Leadership Program, Hoppy Henton, John Mark Hack and others, it was exciting and chaotic.”
“I’m proud of the process we established. We have an efficient operation now. Compromise was part of it. The decisions are board-driven. The policy is flexible enough to respond to sudden issues, like the meat-processing problem during COVID. We identified 40 plants to help. Dave Maples of the Kentucky Cattlemen suggested a cost-share program, which we implemented. The KADF has an impact every day.”
Wayne Hunt, the first board member appointed, held up the original document. “This Bible still stands.” He said, “As a businessman, I knew you begin by listing assets. So the KADB invited all the state organizations to make a presentation and tell us what they needed, the little ones, the big ones. Livestock and pawpaws all in there. We rated the assets: livestock was number 1, forages second, and grains third. We divided the money into percentages. We had the authority to make and implement the plan because we had the money to do it. On July 19, 2000, we said what we were going to do.”
“There’s no place in the state where we didn’t make an impact. We created a bank, the Kentucky Ag Finance Corporation, which generated interest for the fund. It started with $20 million from the Ag Development Board, and now it’s loaned out $200 million. These 25 years have been worth every minute of it. We made markets come to Kentucky. I love what I’ve done here.”
This is what the fund has accomplished:
Over $825,000,000 has been invested with 7,821 applications funded while reaching all 120 counties.
KAFC has six loan programs for farmers and agribusinesses and has approved 2,500 loans totaling $200,000,000.
The County Agricultural Improvement Program (CAIP) offers 11 incentive areas for cost-share assistance, has 120 county participation, and has invested over $250,000,000 in direct farm improvements.
An earlier version of this was published in Farmer’s Pride.