Legislature(1997 - 1998)
10/24/1997 01:35 PM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
JOINT MEETING HOUSE STATE AFFAIRS STANDING COMMITTEE SENATE STATE AFFAIRS STANDING COMMITTEE October 24, 1997 1:35 p.m. Fairbanks, Alaska HOUSE MEMBERS PRESENT Representative Jeannette James, Chair Representative Ethan Berkowitz (via teleconference) Representative Kim Elton (via teleconference) Representative Ivan Ivan (via teleconference) HOUSE MEMBERS ABSENT Representative Fred Dyson Representative Mark Hodgins Representative Al Vezey SENATE MEMBERS PRESENT Senator Jerry Ward, Vice Chairman SENATE MEMBERS ABSENT Senator Lyda Green, Chair Senator Jerry Mackie Senator Mike Miller Senator Jim Duncan COMMITTEE CALENDAR HOUSE BILL NO. 228 "An Act relating to the Board of Agriculture, to the Agriculture Development Corporation, to the Agricultural Revolving Loan Fund Board, and to the disposal of state agricultural land; and providing for an effective date." - HEARD AND HELD (* First public hearing) PREVIOUS ACTION BILL: HB 228 SHORT TITLE: BD OF AGRIC./AGRICL.DEVELOP. CORP SPONSOR(S): REPRESENTATIVES(S) JAMES Jrn-Date Jrn-Page Action 04/03/97 923 (H) READ THE FIRST TIME - REFERRAL(S) 04/03/97 923 (H) STATE AFFAIRS, RESOURCES 04/12/97 (H) STA AT 10:00 AM CAPITOL 102 04/12/97 (H) MINUTE(STA) 10/24/97 (H) STA AT 1:30 PM FAIRBANKS LIO WITNESS REGISTER BARBARA COTTING, Legislative Assistant to Representative Jeannette James Alaska State Legislature Capitol Building, Room 102 Juneau, Alaska 99701 Telephone: (907) 465-6822 POSITION STATEMENT: Presented sponsor statement for HB 228. ROBERT WELLS, Director Division of Agriculture Department of Natural Resources 1800 Glenn Highway, Suite 12 Palmer, Alaska 99645-0949 Telephone: (907) 745-7200 POSITION STATEMENT: Introduced himself to the committee members. LEW REECE Reece Homesteading 3074 Riverview Drive Fairbanks, Alaska 99709 Telephone: (907) 474-0936 POSITION STATEMENT: Testified on HB 228. LARRY PETTY Salcha P.O. Box 56114 North Pole, Alaska 99705 Telephone: (907) 488-2770 POSITION STATEMENT: Testified on HB 228. BOB FRANKLIN, President Alaska Farm Bureau P.O. Box 75184 Fairbanks, Alaska 99707 Telephone: (907) 488-7738 POSITION STATEMENT: Testified on HB 228. KELLY LADERE Susitna Ranch P.O. Box 13304 Trapper Creek, Alaska 99683 Telephone: (907) 733-1450 POSITION STATEMENT: Testified on HB 228. CRAIG TRYTTEN Trytten Farms P.O. Box 871628 Wasilla, Alaska 99687 Telephone: (907) 373-0340 POSITION STATEMENT: Testified on HB 228. BILL WARD Ward Farms P.O. Box 350 Soldotna, Alaska 99669 Telephone: (907) 262-5135 POSITION STATEMENT: Testified on HB 228. JIM ELLISON Farm Alaska P.O. Box 55590 North Pole, Alaska 99705 Telephone: (907) 488-1970 POSITION STATEMENT: Testified on HB 228. HOLLIS HALL, Director Alaska Cooperative Extension University of Alaska Fairbanks P.O. Box 756180 Fairbanks, Alaska 99775 Telephone: (907) 474-7246 POSITION STATEMENT: Testified on HB 228. WENDY REDMAN, Vice President of University Relations University of Alaska Statewide System 910 Yukon Drive Fairbanks, Alaska 99779 Telephone: (907) 474-7582 POSITION STATEMENT: Testified on HB 228. ED AROBIO, Acting Director Division of Agriculture Department of Natural Resources P.O. Box 949 Palmer, Alaska 99645-0949 Telephone: (907) 745-7200 POSITION STATEMENT: Testified on HB 228. ALLEN MITCHELL, Acting Director and Associate Dean Palmer Research Center University of Alaska Fairbanks 533 East Fireweed Avenue Palmer, Alaska 99645 Telephone: (907) 746-9450 POSITION STATEMENT: Testified on HB 228. HERB SIMON HC1 Box 2292 Glennallen, Alaska 99688 Telephone: (907) 822-3059 POSITION STATEMENT: Testified on HB 228. FRED HUSBY, Acting Dean College of Natural Resource Development and Management University of Alaska Fairbanks P.O. Box 757140 Fairbanks, Alaska 99775 Telephone: (907) 474-7083 POSITION STATEMENT: Testified on HB 228. ACTION NARRATIVE TAPE 98-60, SIDE A Number 0001 CHAIR JEANNETTE JAMES called the joint meeting between the House State Affairs Standing Committee and Senate State Affairs Standing Committee to order at 1:35 p.m. HB 228 - BD OF AGRIC./AGRICL.DEVELOP. CORP CHAIR JAMES indicated the committee would address HB 228, "An Act relating to the Board of Agriculture, to the Agriculture Development Corporation, to the Agricultural Revolving Loan Fund Board, and to the disposal of state agricultural land; and providing for an effective date." CHAIR JAMES said she believes HB 228 needs to be worked on. She said the committee would take testimony. Chair James informed the committee members that the University Cooperative Extension Service is hosting the teleconference in Delta Junction. CHAIR JAMES explained the purpose of the meeting is to discuss agriculture and what can be done to help that industry grow, prosper and be of help to the state. Number 0304 BARBARA COTTING, Legislative Assistant to Representative Jeannette James, Alaska State Legislature, came before the committee and read the following sponsor statement into the record: "Please be aware this bill is just a starting point submitted in response to numerous requests from members of the agricultural industry in Alaska. It restructures the way state agricultural services will function in our state making them more responsive to the industries needs and more in touch with the grassroots operations of our producing farmers. Alaska needs to encourage agricultural development. We need to remove roadblocks and allow the industry to grow and prosper for the benefit of our state and all its citizens. "Again, this is just a starting point. We plan to expand the duties and authorities of the Agriculture Development Corporation once we agree upon its formation. We welcome all input and suggestions." Number 0633 ROBERT WELLS, Director, Division of Agriculture, Department of Natural Resources, came before the committee members and introduced himself. He stated he doesn't intend to take a position on HB 228. Mr. Wells said he was glad to hear the word "grassroots" mentioned in the sponsor statement. He said he intends to acquaint himself with the Alaskan producers and will listen very carefully to what they perceive the needs are of the agricultural community. He thanked Chair James for having the hearings as they will help him understand the needs and desires of the agricultural community. Mr. Wells stated, "We're all aware that the agricultural industry is growing and I think we are on a nice steady course and I think we want to continue that. We need to examine the assistance and programs we have in place and always see where we can do the job better." Mr. Wells thanked Chair James for holding the hearings. Number 0754 SENATOR JERRY WARD wished Mr. Wells luck with his new job. He said it has to be one of the most challenging positions in the state. He said, "As long as you listen to the people that are producing the product maybe instead of the ones that are producing regulations, I think it'll work out great." Number 0828 CHAIR JAMES noted Representatives Elton and Ivan are listening via teleconference in Anchorage and asked if they had any comments. Number 0844 REPRESENTATIVE KIM ELTON said, "I don't know if you could hear me, but just add my good wishes to Senator Ward." Number 0858 REPRESENTATIVE IVAN IVAN congratulated Mr. Wells on his new position and wished him well. He noted he is from the village of Akiak. Number 0953 LEW REECE, Reece Homesteading, came before the committee to testify. He said over the past 13 or 14 years, his family developed an agricultural homestead in Delta Junction. He said, "We first obtained the property under the Richardson Homestead Development State Act in 19 - I believe in 1983 - 1984. We've gone through the entire process as far as staking the land, developing the land, clearing it, and have reached the place now where we're producing on 11 acres. So we have a total of 240 acres, but on 11 acres we're producing commercial cared crop and we sell to the paramedics market and then through the military sales we've expanded into Emendorf, Fort Richardson and to Kodiak this last year. We processed approximately 130,000 pounds of carrots. We own and operate, in addition to the farm, a packing facility with about a 14,000 cubic foot cold storage to maintain the quality of the crop." MR. REECE said he appreciates the opportunity to discuss the future of agriculture in this state with the committee. He complimented the legislators who were involved in drafting HB 228. In reference to his own farm, he said HB 228 made them look at agriculture from a different perspective in the sense that they were more narrowly focused on their own activities and they weren't looking at what was happening within state government and in other communities. He said the introduction of HB 228 has made them examine exactly what they think the role of agriculture and the Division of Agriculture should be in the state, what marketing opportunities exist and where the state can assist and where the state has no function in the private sector. Mr. Reece referred to his agricultural history and said it goes back at least 14 years in Alaska. He stated there were some difficulties with the Delta project two decades ago, and because of that he has a great deal of concern with HB 228. It establishes an agricultural farming board. Mr. Reece said he thinks the Division of Agriculture has made significant gains in the last decade and believes there is momentum within agriculture that can be built upon existing framework modification changes. He stated they are extremely concerned that the momentum may be lost with the development of another new bureaucracy from (indisc.). He said they would rather see a cooperative effort between the legislature, the agriculture community and other aspects of the system in developing and making a stronger contribution. He pointed out there are some specific areas that need to be worked on such as crop inspection and verification. Without inspection and certification of the crops, they can't be sold. It is a service; it is protection for the general public and it protects the grower. MR. REECE informed the committee members that another positive aspect he has experienced with the Division of Agriculture was the Alaskan grown sales and promotion. He said he found it to be extremely beneficial for new growers coming into the market. Mr. Reece said they have incorporated the state logo "Alaskan Grown Local" on all of their packaging. They found it as a means to ensure that it is an Alaskan product on the market, it's good quality control as well as a very positive and helpful thing that the division can do. MR. REECE said he looks forward to further dialogue regarding HB 228. He also noted he has reviewed the Department of Natural Resources' budget for the previous year. He said he thinks the three special assistants in the Office of the Commissioner had little or no budget. He suggested that within the Department of Natural Resources there should be a review of the allocation of resources and the development of renewable resources. Mr. Reece noted agriculture is certainly a renewable resource. Number 1528 CHAIR JAMES informed Mr. Reece that she has spent five legislative sessions in Juneau and has fought for agriculture money every year. And every year she was less successful than the previous one. She noted she has seen the farming community come to Juneau en masse and go from office to office and fight for enough funds to keep things going. She said she has fought the issue over inspection for not only the crops, but for inspection of crops and plants that are coming into the state to see whether they are bringing any diseases into Alaska's pristine growing conditions. Chair James said, "We are seeing the university's budget being slashed constantly and the School of Agricultural Forestry, which is now put into a resource management school, we have seen the Cooperative Extension Service being reduced in funds and like, they don't care if it goes away. We've also, in the soils conservation area, we've found absolutely no real support in Juneau amongst the legislators around the state for these issues. And by putting all of this emphasis together - having these hearings and so forth, maybe we can figure out that we have strength enough amongst ourselves to be absolutely sure that we have a program that continues. Those things that you mentioned are extremely important and we need to do more research and more planning to get more crops that we can do better than anyone else. And so I appreciate your testimony very much and I just wanted to let you know, since we haven't had the chance to talk, where I'm coming from on this issue. It has nothing to do with discrediting the Division of Agriculture." Number 1734 MR. REECE said, "Madam Chair, if I came across that way, it certainly was not my intent. Originally, when I began my statement I indicated that I appreciated the fact that the legislation was introduced because it made me and I think a lot of other people do some serious thinking over the past six or eight months. And I think that bill, whatever may happen to it, I think that's most significant right now at this particular time." Mr. Reece said he recognized revenues are shrinking and he realizes the difficulty Representative James has had in securing funding for the division. He said his own belief is, based on his experiences, that sometimes within a department that has a division that may or may not have quite as high of a profile as other divisions or activities in that division, sometimes that division is not always appropriately taken care of. He said he didn't have the figures for the Division of Agriculture's budget for last year, but it was significantly lower than the $11 million budget he saw identified in the commissioner's office. Number 1836 CHAIR JAMES said she thinks there is an analogy to agriculture and the subsistence issue. She referred to the subsistence issue and said she personally has been trying really hard to negotiate a settlement between the interested parties on both sides so Alaskans can have continuing subsistence without fighting. She said she wants to have continuing agriculture without fighting. Number 1928 MR. REECE referred to Chair James' comment regarding products brought into the state, and stated whether it's chemicals used in the fields or whether it's the products that are in the stores or market, it is extremely important. He referred to his property and said he knows every mineral that has been put in the soil and the water quality. He has a history of the soil and wants to maintain its pristine condition which would be an appropriate role for the Division of Agriculture. Number 2033 LARRY PETTY, Salcha, was next to come before the committee. Mr. Petty stated he disagrees with the previous speaker. He said he has been in the agriculture business in Alaska for quite awhile. He stated, "I first tried to get in the first time they put Point MacKenzie up in Anchorage. But the Division of Ag. [Agriculture] started going downhill, I think, when Sheffield was in there and we had -- the problems with the mental health came up and so over night, he was for agriculture and then he was against it. They closed the mill, the storage and everything - shipping stuff at Seward. And I don't know whatever happened to that, but from then it went downhill until you got Mr. Kerttula in there and he thought there couldn't be anything raised in the Mat valley. And so it continued to slide and it has slid and I hope the new director can turn that around that we do have agriculture in Fairbanks and the Delta area. They've tried to run people off of the land is what they've tried to do so they wouldn't have to transfer some from other lands that they wanted to keep to give to mental health for the lands that we were trying to farm. And I know that for a fact because of the people that's been run off out in the Eielson and ag. area. And the Division of Agriculture were state employees that had no interest in agriculture - I mean the lower people, not the director, but the lower people and they should have been trying to build agriculture to make their self a better job. But they didn't, they run it down all the time and any kind of a stumbling block they put in your way -- anything that -- they wouldn't work with you on anything. And it was just a tremendous fight, I've made several trips down and talked to the director and the revolving loan fund board at that time and it was just a mess ever since I started with the state. I don't think that they've done agriculture any good from the time they got into it. Determining where the barns was going to be, what they were going to raise - if it's dairy or if it's going to be barley and that's all. And you know they kept changing the rules from day to day and when I was finally able to borrow some money from the revolving loan fund, they told me my loan was approved as read. Well, I went in and first off they said, 'Well it's not exactly approved as you read because you have to put up 25 percent of the money.' So I had to put up 25 percent. Well, they -- the rest of the loan -- I had a dozier leased for $3,500 a month and it's just on and on and on. And they lost the warrant. They brought it -- the loan - they brought it to Delta and they were supposed to have dropped it back by Fairbanks, but they didn't. They were running late so they, the director, flew back to Juneau and carried the warrant with him and it was about six months before I ever got the loan. Well, at $3,500 a month, you can imagine what kind of a bill I owed for the rent of a dozier that I wasn't able to hardly use." MR. PETTY continued, "But I'm saying this is that we do need to make a change. We do need to get somebody that is interested in agriculture and expanding it because I'm growing warm weather vegetables up here and I know it can be done. I've done it for about three years now and I think the technology is here now that we could raise vegetables that can feed some of the people in Alaska and save fuel and everything else, but we are going to have to have some freedom. We've been tied down and regulated and lied to and changed until nobody has the...." MR. PETTY said, "I would like to see a change in this bill here which I would like to see somebody from the university if they were into raising vegetables so that we could -- like the plants and material center or somebody could grow vegetables only they need to be grown up here on the north end. If we could raise them up here, we know we can raise them in Wasilla or somewhere so -- and I know we can up here, but we just need to get the type of vegetable that does the best, you know, the brand name of whatever type of vegetables it is. But I -- last year, I grew cucumbers outside - a little over a ton of them and I know it can be done. And I sold them to the stores, locally. I plan on expanding the operation next year. And all I would like to do is see us have somebody that's fair and not change the rules. Have it down, one rule is the same for other like I borrowed $30,000 to clear some land. I spent another $30,000 on it. The legislators gave us a moratorium. Well, I was two days late so they said the fourth year get my moratorium papers in there. I had to spend that much money on the land and I did every year. Well, they said 'you're two days late, we've cancelled your moratorium - everything - all your penalties, interest, payments are due now or get off the property.' Well, needless to say I didn't pay them and I did get off the property. It took them seven or eight years, but they finally took it. But the loan that I had, which was supposed to have been for $40,000, I got $30,000, cleared that land and they took the debt -- they took the land back, but took the debt and put it on my other property. So I still had to pay it. They sold that land for $600 or $700 an acre - a portion of it, but my clearing didn't help any of it. I paid $160 an acre for it." MR. PETTY stated he realized he was talking in the past, but it has been a sore spot with him because he knew the state of Alaska was trying to get him off of his property. Number 2919 CHAIR JAMES acknowledged that mistakes have been made and said, "We're having to live with them even though we didn't make them." She said when she first became a part of the legislature, there might have been five voices that she was able to get to support agriculture. It is about four times that many now. She said there needs to be 40 out of 60 voices to have real support. Chair James said, "Of course, everyone holds the Delta barley project against us because of all the money that was spent and nothing grown." She said no matter whether it's farming or anything else, it has to be market driven and they didn't allow an opportunity to grow naturally. Chair James said she doesn't believe it was a farming failure, it was a legislative failure. Number 3110 BOB FRANKLIN, President, Alaska Farm Bureau, was next to come before the committee to testify. He informed the committee members he lives about half way between Fairbanks and North Pole and he runs a meat processing operation of Alaskan grown products. Mr. Franklin said he believes HB 228 has a lot of merit and it is a very good discussion point to start from. He said presently, the director of the Division of Agriculture is appointed by the Governor. He stated, "Every time the Governor changes, we lose the continuity from one director to another where if the board was designated and appointed by the Governor of who or what type of lifestyle that person had to have to be qualified to be on the board, then we would have more representation from our industry rather than just someone put there which could be put there for a favor or payback or however a person gets that position." Mr. Franklin said it is important that we investigate having a true board of agriculture to bring in all the entities to the director. He said farmers need to continue to tell the legislature and the public their story regarding agriculture and impress the importance of an agricultural industry. Alaska is capable of raising its own food, but there isn't enough interest or availability of people to get to Alaska to do the job. This is where the board of agriculture could help the director of the Division of Agriculture to put some things into place. He said the committee will hear about a lot of things that has happened in the past, but the past can't be changed. MR. FRANKLIN explained he believes the biggest thing is that farmers have to get involved and go to Juneau to let the legislature know what they are doing. Mr. Franklin noted his organization will be doing some strategy planning at their general membership annual meeting on November 14 and 15 in Anchorage to determine the type of action to take to Juneau in regards to HB 228. Number 3648 KELLY LADERE, Susitna Ranch, testified via teleconference from the Mat-Su Legislative Information Office. She informed the committee members she was raised on a homestead in the Susitna Valley during the 1950s and early 1960s. She said she earned most of her college money raising hay in that area and noted she has had eight years of college. Over the last 18 years she earned her living as a farmer and has about 1,100 acres. She noted she has farmed as much as 1,100 acres of crop land on other people's land, including her own. On the average, she usually crops between 3 and 500 acres. She informed the committee she sells meat from her farm in the legal fashion. MS. LADERE spoke of her research of other states and how they governed their agricultural industry. She said it was her conclusion after conducting the study that the most successful states were those in which a board of agriculture served as the governing body for the particular state. The majority of the board members were farmers and the remaining members were people in related businesses. MS. LADERE said she is very interested in HB 228. She will be very interested in watching it develop. She stated she would like to make specific comments to Section 03.10.015, "Agricultural Development Corporation." She said this is the section in which an agricultural development corporation is established for the purpose of financial business with the farmers. Ms. Ladere stated the section says that the Board of agriculture will serve as the board of directors of the corporation. She said if she is reading the bill correctly, then the only addition that would be needed is to name the change. Ms. Ladere said, "What I mean by that statement is that you would be setting up an administrative board that would also mean the financial board for this industry. And that being the case, what we're talking about is not these form of government with which we are functioning in the state of Alaska or any other state in the union, and it's not a form of government in which our United States of America functions. For a board to have the direct financial responsibilities as well as the direct administrative responsibilities I think is extremely inappropriate." Number 4125 CHAIR JAMES said Ms. Ladere brought up a good point and stated she tends to agree with her. She asked Ms. Ladere if she has ever received any loans from the agriculture revolving loan fund. Number 4136 MS. LADERE replied, "Yes." And, she is currently in good standing in paying one off. CHAIR JAMES said one of the things that she has been fighting over the last five years is a legislature that wants to decimate it. She said, "In the discussion with this, we also toyed with the idea there is some distress with the agricultural revolving loan fund and its behavior over the years. And then this legislative mandate that we have to meet that says that these people are doing a good job of managing and dissipating funds and collecting them and that sort of thing -- and one of the thoughts that we wanted to do, it's really not a problem of we don't have any money and soon we won't have any if we don't do something. Anyway, one of the other thoughts was to give that pot money - put it out for bid to some other bank or lending institution to manage under the same or similar guidelines that we have and that would be then not having it under the same other group of people. But that's how it got there - is trying to protect that fund and from either stealing by the legislature or what is may be determined by some to be not managed the way they thought it should." Chair James thanked Ms. Ladere for her thoughts. Number 4401 CRAIG TRYTTEN, Trytten Farms, testified via teleconference from Mat-Su. He referred to the personal conflict category and said he had concerns about being on the board and being able to get a loan. He also noted concern with the amount of per diem. Mr. Trytten indicated that he believes the bill needs more work. CHAIR JAMES asked Mr. Trytten to put his concerns in writing and send them to her. MR. TRYTTEN noted another concern with HB 228 is there is no mention of actually financing land. He said it talks about the agriculture clearing process, development processing, purchasing of livestock, machinery, storage, but it doesn't talk about the purchase of farm land. Number 4453 CHAIR JAMES asked Mr. Trytten if he is talking about the purchase of land from the state or a farmer. MR. TRYTTEN responded, "Well, whatever." CHAIR JAMES said that maybe it isn't in the bill, but she was of the opinion that one of the things that would be capitalized with the corporation was the agricultural lands in the state. The lands would continue to be sold the way they have been sold, which is under the state's financing. Chair James referred to the university and the roll it plays, the Soils Conservation Service, the Cooperative Extension Service, and any other places where any agricultural efforts could be orchestrated together to make better use of the funds that are available. Number 4630 MR. TRYTTEN said he is on the Wasilla Soil and Water Board and he thinks it is very important that when lands are dispersed, there should be a farm and conservation plan. He said he would also like to see seven members on the board and four should be farmers. Number 4657 CHAIR JAMES referred to a conservation plan and a farm plan and said one of the problems she has with a farm plan is you can make a farm plan today and the market is not there .... TAPE 97-60, SIDE B Number 001 CHAIR JAMES continued, "...having a problem under the mandates of their purchase of state land that they have a period of time when they had to have a certain amount of land cleared. And the crop that they're working on doesn't - didn't allow them to do that when there was other priorities that they had to do first." Chair James said a conservation plan, which is how you manage to use the land and protect the soil and water, certainly is a very important issue. She said she understands that very clearly. Over the last 30, 40 or 50 years, she has been concerned with keeping the soil on the ground and not going down the streams. A farming plan which specifically says which crops you are going to grow and when you are going to grow them, et cetera, is a good framework. Every year you have to make a decision on how the market affects everything, what the weather does, et cetera. Chair James described a loan situation her brother participated in the Yakamah Valley. She noted she supports the soil and water conservation efforts. Number 0201 BILL WARD, Ward Farms, testified via teleconference from the Kenai Legislative Information Office. He informed the committee members he has a farm on the Kenai Peninsula and a farm in the Delta Junction area. He read the following testimony into the record: "This legislation is comprised of two main components, the formation of a Board of agriculture and the creation of an independent agriculture development corporation. Each element of this legislation on a sound basis should be reviewed on single merits. "A board of agriculture, made up of newly appointed Alaskan residents, has the ability to bring forth experience and expertise from within the agriculture industry and help guide and manage the administration and development of agriculture policy in Alaska. This board, with its defined qualifications and service, merge, compliment and replace the efforts currently undertaken by the Agriculture Revolving Loan Fund Board and the Natural Resource Conservation Board. "It is imperative for government and the private sector to work together in the formulation and administration of public policy and the board of agriculture to ensure that the policies administered by our state government coincide with efforts of the private sector industry. Even if the Division of Agriculture is retained, the board of agriculture is a positive addition to the DNR [Department of Natural Resources] structure. "Agriculture must be represented by an advocacy agency to stimulate the development of the industry, to facilitate market growth for agriculture products, to interact with other agencies on matters of public policy and to protect the health and overall interest of the Alaskan public. "In the past, the DNR, Division of Agriculture, has served in this capacity and under the right circumstances, it should continue to do so in the future. Unfortunately, the Division of Agriculture has fallen victim to budget cuts, severe criticism from all fronts, lack of administrative support and poor staff attitudes. In truth, the division has no state budget because both the legislature and the Administration has chosen to steal dedicated funds from the ARLF (Agriculture Revolving Loan Fund) for operations rather than provide legitimate general fund monies. Bureaucracy downsizing may be warranted, but without the necessary internal reorganization the result is an agency unable to provide service to anyone. "The Division of Agriculture has no clear mission or long-term objectives. It has had no leadership for the past several Administrations and is left with a staff that is understandably either unable or unwilling to serve the agriculture industry. When you call the division and find that they have no market development program, no land disposal program other than piecemeal repossessions, a reduced inspection program, a loan program burdened with unwieldy regulations and mountains of paperwork, no relationship with their sister divisions or other government agencies and a staff looking to retirement as the way to restore their outlook on life. To correct this, the Administration will have to dedicate the time and resources to rebuild the agency from the ground up focusing on service to an industry and responsible public policy administration. In addition, the Administration and legislature will have to address long-term stable funding by establishing a balanced and reasonable general fund appropriations, federal allocations, land sale contracts, asset management, interagency agreements and industry fees. That will require a commitment by both parties to work together in a non-partisan way to provide long-term solutions to preserve the division as an agency of state government. I'm not optimistic that we'll see that level of commitment or effort from this Administration or legislature, and without it the Division of Agriculture is destined to disappear and its regulatory duties dispersed amongst other agencies. The agriculture industry will be left to fend for itself without government support or leadership. "House Bill 228 will give us the tools, as an industry, to manage our own growth and development. It will create a public/private partnership whereby the state provides agriculture classified lands and ARLF assets for the Agriculture Development Corporation to manage. Agriculture not only generates dollars which remain in the state, it also provides high quality fresh food for our citizens and stabilizes rural economies, provides aesthetic diversity, conservation enhancement and improved wildlife habitat. The implementation of House Bill 228 will create a board of agriculture made up of dedicated and qualified industry representatives who will manage the Agriculture Development Corporation to facilitate agriculture's growth, develop its markets and stabilize farm-based incomes, all of which will result in a significant contribution of the economy of Alaska. "I want to thank Representative Jeannette James for her dedication to agriculture and sponsorship of this legislation and I would like to encourage the passage of House Bill 228." MR. WARD requested from Chair James that she put the representatives from the university and extension service in the hot seat and ask them how their mission statements and budgets would affect agriculture. He understood that their budgets could not provide adequate service to the agricultural industry, and in some cases their directions were going more urban, away from the rural economy. Number 0832 CHAIR JAMES referred to her appointment on the deferred maintenance task force and the problems it has encountered because of the limited amount of funds. The reality, she stated, is that the budget can not grow unless something else shrinks. Until the people tell us they are willing to pay for services then the deferred maintenance plan will not change. As a matter of reality, it is important to look at what can and can not be changed. Therefore, you can count on the budget being smaller next year and agriculture is not considered important to the members in charge of the budget. But we need to be prepared when it is time for a change. In addition, there is a growth factor in the state which we have not been meeting for a number of years. The population is growing and as a result increasing infrastructure that needs to be maintained. We are at the point of needing to take programs away. The staff has already been cut to the point that they can not operate. This is serious business. She cited the road commission meeting of the Eilson Farm Road as an example of getting to a point where the road can not be maintained anymore. Number 1518 JIM ELLISON, Farm Alaska, stated the President of the United States is about to instigate a clean air act that could add another 50 cents to the gas dollar. "We're gonna get to a point where the working guy can't drive down the road. He doesn't have the money to buy the gasoline." Number 1547 CHAIR JAMES stated we have set our levels of acceptance way too low, according to the environmental movement. A realistic level is needed. She doesn't know how to change it because once government tightens up on something it never loosens up again. But we can keep it from going deeper. Number 1651 MR. FRANKLIN stated the biggest thing that we have to realize is that all of the standards were set on unscientific basis. The air quality in Fairbanks is based on a different standard than Los Angeles. Number 1757 HOLLIS HALL, Director, Alaska Cooperative Extension, University of Alaska Fairbanks, stated any action that articulates the needs of agriculture and creates a positive image would be good. In Alaska, a new philosophy of creating rather than buying is needed. The one area that this new philosophy can be achieved in is agriculture. The attitude and lack of support for a basic industry such as agriculture is foreign to him because he grew up in a state where agriculture was prioritized. There has been a deliberate procedure to destroy the support of agriculture by making the extension service weak. The research and experiment station has undergone a 27 percent reduction in the last seven years. The Alaska Cooperative Extension has undergone a 26 percent reduction. MR. HALL stated, nevertheless, the extension is trying to keep the services to agriculture and farmers in place in Delta Junction, Fairbanks, Kenai and Palmer. In an effort to continue to make a commitment to agriculture the district office in McGrath was closed. The community development program was also closed. The extension program also went from four to two administrators. Number 2300 MR. WARD asked Mr. Hall whether the agents in Delta Junction and Palmer would be filled on a full-time basis or were they temporary positions. Number 2314 MR. HALL replied they will be a one year appointment, temporary positions. More than likely they will not be filled by individuals with an advanced degree in agriculture. They will not be permanent positions until there is more information on funding for the future. Number 2403 MR. WARD asked Mr. Hall what would be needed to convert the positions from temporary to permanent. Number 2420 MR. HALL replied funding at about $3.1 million would be needed to offer services as the extension did seven years ago. Number 2507 MR. WARD asked Mr. Hall if the urban coverage has been hit as hard as the rural farm-based coverage. Number 2521 MR. HALL replied probably not because 10 percent of the district agents are located in the town that has 50 percent of the population. Number 2617 CHAIR JAMES noted for the record that Representative Ethan Berkowitz has been in Anchorage listening via teleconference for a while. Number 2636 MR. TRYTTEN stated that he knows about the downsizing of agriculture in the state and federal budget. He suggested selling some of the land in the state, only 1 percent of it is owned by the public. He pays property taxes and has the worst roads, no mail, no fire or police services. Something is wrong. Number 2723 CHAIR JAMES announced that the legislators in Anchorage had to leave for other meetings. She noted that James Hayes from U.S. Senator Ted Stevens office was also in attendance in Fairbanks. Number 2751 WENDY REDMAN, Vice President of University Relations, University of Alaska Statewide System, said the impact on rural Alaska is disproportionate because the money being spent is so little in comparison to the needs. She suggested relaying some of the comments made today to the meeting of the Board of Regents in November. Number 3001 SENATOR WARD suggested in regards to the 50 cent increase on gas to send a letter to Newt Gingrich and ask him to follow the proper course for treaty ratification. It is on a fast track now and has already cost almost 7,000 jobs. SENATOR WARD further stated in regards to land ownership that there are four separate bills to transfer land from public to private ownership for large projects. Number 3206 MR. FRANKLIN asked Chair James where we go from here. Number 3218 CHAIR JAMES stated next week there will be a meeting in Mat-Su. The bill will be taken up again in Juneau in the House State Affairs Standing Committee. We will see if there is a way to refine the bill so that it is acceptable. MR. FRANKLIN asked Chair James if the bill has gone through the Legislative Legal Department. CHAIR JAMES replied the bill was drafted by the Legislative Legal Department. Number 3336 MS. REDMAN asked Chair James if the Administration has a position on the bill that she knew of. Number 3353 CHAIR JAMES replied that she has worked with Commissioner Shively. He will not oppose the bill. He also helped some with drafting the bill. Number 3431 MR. WELLS stated that the Commissioner wants to hear from the farm community before any additional work is done on the bill. Number 3535 CHAIR JAMES stated a plan is needed; the bill is only an idea. She is not going to write a simple bill so that the Administration has to write regulations to implement the chapter. Parameters are needed in the beginning. Number 3553 MR. WELLS stated he will work with all parties to develop a plan. Number 3631 MR. FRANKLIN explained one of the reasons he set up a meeting with the Commissioner was because he wanted to get general funding for the inspectors. The inspectors help the industry as a consumer protection program so the positions should be paid for out of the general fund. Number 3717 CHAIR JAMES wondered if there are fees collected. Number 3721 MR. FRANKLIN replied there were $91,000 in a federal grant for military inspection purposes. If the money goes into the general fund then it should be compensated back to the program as a receipt. He warned the Representatives and Senators that he will be beating on their doors in Juneau for those general funds monies. Number 3821 SENATOR WARD said the state institutions do not buy Alaskan grown products. He asked if it is because we do not have inspectors, and if anybody has tallied how much institutions buy in a year from outside farmers. Number 3913 MR. FRANKLIN replied that 99 percent of the institutions buy from outside products even though they have to consider local products according to law. The wholesalers and suppliers need to buy Alaskan products because they bid low enough to exclude the Alaskan farmer. Number 3958 ED AROBIO, Acting Director, Division of Agriculture, Department of Natural Resources, explained selling to the military has been a very good market for Alaskan farmers. The military has been very receptive. The difficulty is with the state institutions because of the state procurement procedure. The state tends to buy on a multi-item situation. Number 4055 CHAIR JAMES commented in other states an association is used to sell the crops. She would like to see that happen under the board of agriculture eventually, at present the volume is not there yet. Number 4147 MR. FRANKLIN stated it would be surprising to many people that the inspector in Palmer has inspected $20 million worth of logs to go to Italy. A lot of time is also spent inspecting bans for color and quality. The public and the merchants are the ones demanding this. It is a necessary evil that does not need to come out of the ARLF. Number 4232 ALLEN MITCHELL, Acting Director and Associate Dean, Palmer Research Center, University of Alaska Fairbanks, stated in the early days the Division of Agriculture had annual agricultural development plans. The experiment station responded accordingly. This is not the situation now. The experiment station still has some resources and it would like to put them towards the development of agriculture in conjunction with the Division of Agriculture and the Cooperative Extension Service. Number 4353 CHAIR JAMES announced for the record that Sara Fisher from the office of Representative Gene Therriault is in the audience. Number 4412 MR. WARD commented one of the problems is the assumption that agriculture does not pay for anything, it just comes out of the general fund. Ironically, the fees are not recorded and there is a misunderstanding that the industry already pays for inspection services. For example, there is a fee paid to Mt. McKinley Meats for every animal processed. And the plant keeps the carcass and makes money off of it. He reiterated the industry is paying its way, but not all of it is being recorded. He suggested looking towards expanding the industry by transferring state land sales to the Division of Agriculture. TAPE 97-61, SIDE A Number 0001 MR. WARD continued by suggesting further consolidation within the Department of Natural Resources such as combining forestry, with the exception of the fire-fighting bunch, with agriculture. Number 0108 SENATOR WARD asked Mr. Reece when he was with corrections whether there was there something formed with the Governor and the Division of Agriculture in terms of procurement policies for corrections. He asked, "Did it fall by the wayside?" Number 0132 MR. REECE replied it did fall by the wayside. There probably was not enough emphasis placed by the Administration to finalize or implement the concept. Number 0143 SENATOR WARD stated maybe we could chat about this further. He thought that it had at least been attempted. Number 0204 MR. REECE stated that the Division of Agriculture took a lead role along with the Palmer office. It was the emphasis of the division, however, that pushed the concept. The division tried to consolidate purchasing with state agencies and to obtain market data for pricing. Number 0256 MR. AROBIO said the division recently received pricing information from one of the procurement agencies. The figures made Alaskan purchasing so far out of line that it would not make sense for anyone to do it. The division does not believe that is the reality because it knows that the farmers are selling more and it is really not that out of line. It could be a lack of understanding by outside vendors. There is no reason why it can not work, but it might take a legislative push. Number 0408 SENATOR WARD stated the institutions are not opposed to it. Number 0426 MR. AROBIO replied it is not the institutions; it is the people who buy for the institutions. Number 0431 SENATOR WARD stated maybe we ought to revisit the issue again. Number 0502 MR. AROBIO stated the pioneer homes, the university system and the hospitals did not have a problem with procuring Alaskan products; in fact, they like them. It is not working above those systems, however. Number 0552 HERB SIMON testified next via teleconference from Mat-Su. He stated he was concerned in legal terms how the board of agriculture would perform. Under the present Division of Agriculture if something goes amiss, the producer has an option of redress of a grievance. He noted, however, that not many in the past have been too successful. He reiterated he was curious how the board would be organized to protect the state and the individual producers in terms of liability and sovereign immunity. In addition, he was also curious how the board would handle product inspections and cited the issue of "e-coli." Number 0839 MS. COTTING replied that regulatory functions would have to be taken care of with the formation of the board of agriculture. The bill drafter did not want to tackle the issue just yet. But, the whole area of regulatory functions would have to be dealt with later on. Number 0921 CHAIR JAMES stated that Mr. Simon found the hole. Number 1028 MR. SIMON replied the state of Alaska has been negligent in funding product inspections appropriately even though there had been a greater demand on product inspections. He suggested including provisions to prioritize the function of product inspection. Consumer confidence at present is at an all time low. He asserted that we all have a responsibility to ensure to the public that the products are fit for human consumption. Number 1220 CHAIR JAMES stated there are a number of producers in the Fairbanks area who were selling their products as pesticide free. Alaskan grown agricultural products have an advantage when selling to outside markets because we are isolated and have cold weather which gets rid of a lot of the diseases and insects. Therefore, it is important to ensure that nothing is brought into the state as well. Number 1414 MR. WARD asked Mr. Husby to talk about the future for research from the university in terms of the budget and the consequence of the budget reduction. Number 1500 FRED HUSBY, Acting Dean, College of Natural Resource Development and Management, University of Alaska Fairbanks, replied, right now, the school of agriculture, experiment station and extension service are at their critical-mass point. Further reductions will result in a layoff of one or two researchers, at least, along with the program. He noted, accreditation of the forestry degree program would be threatened, if a forestry faculty member was lost. If a couple of people were lost at the Palmer research center and the Fairbanks station, it would threaten the ability to keep them open. He explained the budget cuts have been continuous since 1992. We started in 1992 with about $3.7 million of state funds for the experiment station and have lost approximately eight or nine faculty members that have not been replaced. In addition, $3 million has been lost to the university administration. Now, the School of Agriculture has to fight for that $3 million every year for the Science and Technology Fund. Furthermore, another $1 million has been lost through cuts from the university and the Governor. He reiterated we started with $3.7 million, we lost $4 million and we are still here. Somebody wants us here and it isn't the university administration. There are clients, constituents and a few legislators that continue to support the program. This year the faculty contracts have been reduced from 12 to 11 months because of another $500,000 cut. We are trying to look at things positively to help keep the moral up. Number 2038 MR. WARD stated it was scary to hear about the loss of the research faculty members because he needs technical assistance to help him operate for a profit. He wondered whether it was possible to move the experiment station out of the university system to obtain additional funding. Number 2153 MR. HUSBY replied formula funding is based on rural population and the gross national product of agriculture. Competitive grants are usually very specific. Therefore, he did not see the federal government helping more, but the state government could help more in terms of quality faculty members. He suggested a tri-partied appointment of faculty which included teaching, service and research activities. Number 2514 CHAIR JAMES reiterated her concerns of the reality check and the serious budget problems of the state: a lack of growth. Agriculture would be a good source of growth, but the budget problem is a serious issue. Number 2833 MR. HUSBY stated there has been $30 million in cash receipts from agriculture and that number increases yearly. We know that we cannot get more money; we would just like to make sure that no more money is taken away. We are on-line in regards to revenue coming into the state as an industry. We are all at a critical mass-point. Number 3024 MR. HALL stated often times we are more interested in letting someone do it for us, but in this case people are willing to do it for themselves. The state should not wait to develop an industry such as agriculture. Otherwise, what will the state do when the oil wells go dry. Number 3152 MR. WARD stated there is a need for the disposal of lands and requested that the Division of Agriculture work on it. He asked how much could be sold and put into production, and how much demand is there. Number 3316 MR. AROBIO replied the Division of Agriculture already knows the amount of lands that are classified or potentially classified for agriculture to be sold. The issue of demand would take more time, however. Number 3338 MR. PETTY stated he would like to see the university clear some of its land and grow crops. Number 3405 CHAIR JAMES replied it is an option. The university manages its lands tightly. Number 3411 MR. HUSBY explained a section in Eielson was requested to set up a demonstration farm but the program would not have had any money to develop it because of its declining budget. Number 3558 MR. AROBIO stated the university has additional land in the Delta Junction area, but the program does not have the budget to do anything with it. Number 3603 MR. HUSBY stated former Director Jay Kerttula of the Division of Agriculture transferred 360 acres to the Delta project. Number 3625 CHAIR JAMES stated she remembered the pork project a few years ago when the university was willing to make land available for the project in Nenana. Number 3710 MR. AROBIO stated there is 175,000 acres classified for agriculture use in Nenana. The problem is getting to it. Number 3720 MR. HUSBY stated the university lands office was interested because it believed that timber and agriculture were the best source of revenue on the managed lands. Number 3735 CHAIR JAMES stated she had a constituent in the Nenana area who was talking about utilizing a section of university land for a game bird project. Number 3816 CHAIR JAMES thanked all of the participants and announced next week the House State Affairs Standing Committee will be at City Hall in Wasilla. She indicated the bill would be held over. Number 3855 SENATOR WARD explained medical issues prevented Lyda Green, Chair, Senate State Affairs Standing Committee, from being here today. She is very interested and supportive of agriculture. ADJOURNMENT CHAIR JAMES adjourned the joint meeting of the House and Senate State Affairs Standing Committees in Fairbanks at approximately 3:30 p.m.