State loan raises troubling issues; odd priorities and possible conflicts

A state decision to lend $2.5 million set aside for Kentucky agriculture to a Louisville company that manages coal waste from power plants raises several concerns, not the least of which is this:

If Kentucky's elected and appointed leaders can't come up with a better use than this for $2.5 million generated by the tobacco settlement, we're suffering a drought of ideas.

Also concerning is whether Agriculture Commissioner James Comer is putting his political ambitions ahead of the interests of Kentucky farmers.

The loan went to a company owned and run by a couple, Charles and Janet Price, who are prominent donors to Republican causes and candidates, although, according to state records, not to Comer's campaigns.

Another concern: Should a fertilizer dealer be making decisions about lending public money to a fertilizer manufacturer?

As chairman of the Kentucky Agriculture Finance Corp., Comer and the majority of Gov. Steve Beshear's appointees to the corporation's board justified the 3.25 percent interest, seven-year loan because the recipient, Charah Inc., is using LG&E scrubber waste to produce pelletized sulfur to fertilize crops.

As The Courier-Journal's James Bruggers reported, the board approved the loan despite assurances from University of Kentucky soil and crop scientists that Kentucky soils are not deficient in sulfur and that adding sulfur to fields would be a waste of money for most Kentucky farmers.

Comer, a former legislator who has said the Clean Air Act has left most Kentucky soils nutritionally deficient by reducing sulfur spread by smokestacks, told Bruggers that he doesn't take advice from "research universities," preferring to listen to "actual farmers and fertilizer dealers."

One of the fertilizer dealers is Wayne Hunt of Hopkinsville, who sits on the Agriculture Finance Corporation's loan committee and made the motion to approve the loan.

Among Hunt's business interests is Agri-Chem LLC, which has a wholesale fertilizer division and multiple retail outlets.

A board member who makes money selling fertilizer should probably have thought twice about how it would look before championing (or even voting on) a loan to a company that will be drumming up business for fertilizer dealers.

The loan is from a revolving fund that is an outgrowth of a historic plan for restructuring Kentucky agriculture with payments from cigarette companies to settle state lawsuits over smokers' health care costs.

The loan fund ordinarily helps finance such things as barn construction and land purchases, and low-collateralized proposals for adding value to small-farm products that traditional lenders would reject without the state backing.

The $2.5 million going to the coal-waste company is expected to consume half or more of the money that will flow back into the loan fund from borrowers this year. That's a big chunk for a project of dubious worth to farmers and the rural economy.

Even if sulfur fertilizer becomes necessary in the future, this loan makes as much sense as lending Ford tobacco settlement money because farmers need pickup trucks.

The loan looks like a favor to benefit a few, but it also points out the need to consider revising state ag lending policy to, for example, better capitalize on the surging demand for locally sourced food. Kentucky still lacks the marketing expertise to make the most of this opportunity.

Meanwhile, we know Kentucky has reached a sacred-cow milestone when tobacco is subsidizing coal.