State restores veto-killed program that puts Alaska-grown produce in stores

PALMER — A state program that costs nothing to administer was restored this week to keep Alaska-grown produce in groceries, but the state’s nascent hemp program remains in limbo.

The state’s ability to carry out federal food-safety audits was threatened by Gov. Mike Dunleavy’s more than $400 million in budget vetoes in June. Without them, large grocers such as Fred Meyer refuse to sell locally grown produce ranging from broccoli, greens and potatoes to cabbage, carrots and sprouts.

Vetoes to the division cut marketing, inspections, the Agricultural Revolving Loan Fund and the administration of the federal audits. State agriculture officials stopped administering the programs in mid-July, triggering immediate concerns in the farm community.

The vetoes triggered the loss of 17 agriculture division positions and resulted in the layoff of eight people, officials said this week. The Department of Natural Resources had previously said 20 employees got laid off, leaving a staff of 16.

A bill reversing most of the vetoes and setting the Permanent Fund dividend at $1,600 awaits Dunleavy’s decision. The governor has until the end of the month to sign it, veto all or portions of it, or allow it to become law without his signature.

But in the meantime, the Alaska Division of Agriculture announced this week that the produce audits are up and running again.

State agriculture director David Schade sent a letter to the farming community Monday saying the division was working with the governor’s office and the Office of Management and Budget to make sure the audits, among other programs, are prioritized.

“We are working on this issue, and ... assure you we will conduct the audits and make sure you and other farmers can meet these industry standards and sell your crops to local retailers,” the letter says.

A separate program that inspects seed potatoes for sale on commercial markets was also restored. Sixteen farms participate in the seed potato inspection program, which was about halfway done for the season when the vetoes put inspections on hold.

Both programs will operate out of the state’s Plant Materials Center in Butte.

[‘I don’t really know what’s left’: Dunleavy budget vetoes raze hemp program, threaten Alaska-grown store produce]

While they show up in the budget as an expense, the audit and inspection programs -- as well as hemp -- cost little if any state money. Instead, they’re entirely or partly funded by the industries they support.

Schade said he requested authority for $25,000 to do the produce audits -- all of it funded by industry receipts -- and another $25,000 for the potato inspections, about half of which is paid for by farmers. The division serves as a third party to administer the federal programs.

But another veto still stands that removed $375,000 in receipt authority needed to start the state’s hemp program, signed into law last year. Employees at the state’s Plant Materials Center ripped up all but a handful of plants when the vetoes came down.

Schade said he couldn’t comment on the hemp program.

Sen. Shelley Hughes, a Palmer Republican, introduced the bill that led to Alaska’s law legalizing industrial hemp.

Hughes on Friday said she has been encouraging the governor, as well as state budget director Donna Arduin, to reinstate the hemp program.

“I won’t hesitate telling the governor again,” she said.

Hughes said the program could get off the ground with $200,000 instead of $375,000 because growers aren’t going to have a full year with the delay. The money wouldn’t come out of state coffers anyway — industry members would pay it, she said. The line item was a veto target, like any receipt authority, because it shows up as an expense in the budget.

The prospect of an Alaska hemp industry has attracted more interest than any other crop, agriculture officials say.

Hughes said state officials have told her they predict 350 to 450 growers, 400 to 500 processors of CBD oil for human or animal consumption, and 440 processors of fiber or biomass products.

Alaskans may be inclined to think of big failed farm boondoggles like the Point MacKenzie agriculture project when they think of government-backed farming, she said. “This is not a boondoggle. This is different. It will be supported by the people actually in the industry.”