The Associated Press
FRANKFORT - The Kentucky Agricultural Development Board Friday approved a plan that would earmark $20 million of the state's national tobacco settlement money for a loan program aimed at helping tobacco farmers.
The Kentucky Agriculture Investment Trust would be used to help tobacco farmers secure loans to diversify their crops. Qualified young farmers would also be eligible for low-interest loans to help establish themselves as farmers.
The program would be set up through the Kentucky Agricultural Finance Corporation.
Kentucky gets about $120 million a year from a tobacco settlement fund that was created to settle lawsuits in which the states sought to recoup costs for treating smokers' health problems.
Kentucky has been earmarking half the money for agricultural diversification projects, while the other half has been divided between early childhood development and health care.
This new trust fund could help keep at least some of that tobacco settlement money flowing through the state for years beyond when the money would otherwise have stopped, said board member Sam Lawson.
"This gives it perpetuity now," Lawson said. "This could continue to revolve. And as one farmer repays, these dollars are available then to go out."
Value-added producers in Kentucky could also be helped through the program, spokeswoman Kara Keeton said.
Under the plan, the state would also work with local banks to "buy down" interest rates so farmers could afford loans that would help them diversify, Lawson said.
The plan would also create a revolving loan program for counties seeking to offer similar programs locally. Money for county programs would come from counties' own shares of the tobacco settlement.
Lawson said the trust fund may be operational for farmers before the end of the year.
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