Kentucky Office of Agricultural Policy Channels Unique Funding to Farmers

As the agricultural landscape in Kentucky evolved and demand for tobacco declined, many farmers began asking: What’s next? And how do we adapt to these changes?

Thanks to the Kentucky Office of Agricultural Policy (KOAP), established by the State General Assembly (and originally called the Governor’s Office of Agricultural Policy), funds from the 1998 Tobacco Master Settlement Agreement (MSA) with cigarette makers continue to support Bluegrass State farmers and help them navigate the changes. One of 46 states that receive annual MSA payments – about $27 million in 2024 – Kentucky handles its distributions in a unique way that directly benefits agriculture, early childhood development, and healthcare improvement, with half the funds going to farmers.

See more: Kentucky’s Top 10 Agricultural Products

“Our state is very unique,” said Brandon Reed, Executive Director of the KOAP and a fifth-generation farmer whose own family weathered the transition by raising cattle and leasing land to a fellow farmer. “The Kentucky General Assembly had the foresight to appropriate those funds in such a way that they diversify our farm families to give them the opportunity to come up with ideas and concepts on their own and have the capital, resources, and collaboration they need.”

Each year, the KOAP divides the federal monies in three ways:

1. Kentucky Agricultural Development Fund offers grants, forgivable loans, and other incentives through joint partnerships with local lending institutions. Programs provide incentives for energy-saving upgrades, such as solar panels, guidance on food safety for new additions like aquaculture, and financial support for veterinarians wanting to provide more large-animal care.
2. Kentucky Agriculture Finance Corporation (KAFC) provides participation loans and matching funds with low interest rates. The Agriculture Infrastructure Loan Program gives access to below-market financing to acquire, renovate, or build structures that help increase profitability, while the Beginning Farmer Loan Program gives young newcomers a boost to get started.
   “There’s no age requirement. This is for someone who hasn’t started a farm yet, and the money is very specific to them,” Reed said, noting that the average farming age in Kentucky is 57.1, younger than the national average.
3. 120 county councils give local support for everything from building new cattle and poultry facilities to purchasing equipment through cost-sharing, as well as specialized projects such as the Next Generation Farmer Incentive Program and the Youth Agricultural Incentive Program.

In addition, the Kentucky Center for Agriculture and Rural Development helps farmers develop plans for business growth. One established dairy in South Central Kentucky, for example, added cheese and ice cream factories and also ventured into agritourism for school groups and other visitors.

“I would hate to think of what Kentucky would be today if it didn’t have the Kentucky Office of Agricultural Policy and the Department of Agriculture because it truly is a life changer,” Reed said. “Over the last 24 years, over $750 million has been invested into Kentucky’s agricultural landscape.

“You’re looking at a generational change. This is a chance for that third- or fourth-generation individual who thought they would never be able to participate in agriculture to now have a path.”

See more: Must-Visit Stops on the Kentucky Bourbon Trail