Alaska agriculture mainstays — dairy, loans and ag board — face uncertain future under Dunleavy budget

PALMER — Even as Alaska farming keeps trying to grow, several actions by the Dunleavy administration threaten the state’s last dairy, a crucial loan program, and the state board that oversees the funds.

A budget proposal by Gov. Mike Dunleavy to eliminate the state’s dairy program gained traction with a House Finance Committee amendment Thursday. The 6-5 vote, which restores a cut rejected by a subcommittee last month, saves the state $179,000, budget officials say. The money can still be restored during the ongoing budget process.

That money pays for an Alaska Department of Environmental Conservation environmental technician — her name is Barbara Hanson — who conducts federally mandated dairy inspections.

Without an inspector, Alaska’s only milk producer, the Havemeister Dairy near Palmer, would be forced to close. A new goat dairy on Kodiak Island also wouldn’t be able to supply milk to the public. Federal regulations require inspections of publicly consumed milk, so the program is the state’s cost of regulating that business.

Dairy operator Ty Havemeister said Friday he’s still trying to get specifics on that $179,000 figure and just what it pays for. Otherwise, legislators see a number that’s “a little overwhelming when there’s one of me," and that makes it hard to convince them to maintain the dairy program.

“I’d like to know what the real number is so maybe the industry can bear part of it,” he said Thursday.

The money actually pays for four to six people in a year: Hanson’s position, but also lab techs who run tests and lab evaluation officers who certify on-site labs, as well as personal services and some travel, said Ruth Kostik, acting administrative services director for DEC.

Hanson also carries out implementation of the federal Food Safety Modernization Act for produce grown on larger farms. That work, which is federally funded, will be carried out by other staffers, Kostik said.

The staffing hours under the dairy program break down this way, she said: 108 hours administration; 1,730 hours laboratory staff; and about 590 hours state veterinarian staff, which includes 356 hours for Hanson. She worked 1,300 hours on the federal produce safety rule.

A Dunleavy spokesman said the governor believes Alaska farms should be able to operate without subsidies, though there are ongoing “internal discussions” within the administration about dairy inspections. He didn’t have specifics.

“Today we have one functional bovine dairy. There’s a second goat dairy on Kodiak Island,” spokesman Matt Shuckerow said. “At the high point, there were 65.”

Alaska farm supporters say another aspect of the governor’s proposed cuts could gut a program that’s helped state agriculture blossom.

Dunleavy also wants to end the state’s Agricultural Revolving Loan Fund, which currently administers 55 active loans, according to the Alaska Farm Bureau. Farm backers say the loans are crucial in Alaska, where it’s difficult to get a traditional bank loan due to the lack of farming knowledge at most lending institutions.

Deciding which Alaska farmers get those loans, which can range from tens of thousands to hundreds of thousands of dollars, is the job of the seven-member Board of Agriculture & Conservation. Without the loan program, the board would be defunded, Shuckerow said.

“As a result, the board’s future is going to be significantly different if it is going to exist at all," he said.

The agriculture board is already in flux.

New people sit in six of seven positions after Dunleavy’s appointment of a Fairbanks resident with a history of criticizing state agriculture decisions and officials and other farmers.

The appointment of John Anderson, a firefighter at Fort Wainwright, was announced in January.

Anderson owns 907 Livestock with his wife, Michaella, an aide to state Rep. Bart LeBon, R-Fairbanks. Their business raises livestock for 4-H and meat as well as poultry and eggs. Her family are third-generation growers. He claimed at the most $20,000 in farming income last year in a state filing.

Anderson took the place of Troy Shelden, a high-level loan officer at Alaska USA Credit Union who grew up on a farm in South Dakota.

Other members of the board, including former chairman Ben VanderWeele — a Palmer grower considered one of the most successful farmers in the state — made it clear to the governor they wanted Anderson out or they would resign, according to several people familiar with the situation.

The governor appointed Anderson, then “fired the smartest person on the board,” VanderWeele said in a recent interview.

“Troy Shelden, he’s the one and only banker on the board. Many times when we’re dealing with loans and collateral and risk, we ask, ‘Hey Troy, what do you make of this?’" he said. "Then for political reasons they fire him and put John on there.”

VanderWeele said he told the governor he wouldn’t serve on the board if Anderson remained, “because of his reputation.” He declined to provide additional specifics except to say Anderson was “unprofessional on a personal level” in the past.

Minutes from the past year’s meetings show that Anderson frequently phoned in and made comments critical of board decisions and VanderWeele and former agriculture division director Arthur Keyes.

Anderson stayed. All other board members except the new chair, North Pole grower Stu Davies, are gone.

Anderson last week said he didn’t hear anything about former board members wanting him out.

“From as far as I knew the governor just felt he had to go in a different direction,” he said.

Anderson said he was concerned about what he called the board’s “lack of transparency” in posting minutes and other meeting information. He also criticized decisions surrounding the sale of a state-owned slaughterhouse in Palmer.

The five new board members were appointed in mid-February and announced last month: Charles Matthew Hale, Wasilla; Jeffrey Vance, Homer, the husband of state Rep. Sarah Vance; Matthew Bates, Delta Junction; Robert Jones, Point MacKenzie; and Tiani Heider, Wasilla.

The governor “has chosen to take the board in a different direction,” as governors often do at the start of a new administration, Shuckerow said.

Chairman Davies said he didn’t know why he was allowed to stay but praised the makeup of the new board as better representing the entire state.

The former members of the agriculture board were no strangers to turmoil, presiding over the eventual shutdown of Matanuska Creamery amid heavy state subsidies and a federal investigation into misuse of grant funds.

That board came under fire from numerous critics — including Anderson and Heider, who for several years has authored a blog that’s often critical of state Division of Agriculture leadership, including former division director Arthur Keyes and former Alaska Grown marketing director Amy Pettit.

Anderson’s online comments about her were the most disrespectful she’s seen, said Pettit, who’s now the executive director of the Alaska Farmland Trust. She said he also had a history of releasing confidential information obtained about other farmers through records requests.

Pettit said it was a mistake to replace a banker, Shelden, with someone with no financial background to serve on a board that administers loans.

“That was just such an embarrassing act,” she said.

Anderson said he wants to expand the board’s mission beyond loans, as set in statute, to the more general goal of improving agriculture in Alaska.

“We have people from Fairbanks, Homer, Southcentral,” he said, adding many sectors are now represented too. “We just have so much experience and so many different avenues of where we come from that we shouldn’t just be focused on loaning.”

Heider said she was “delighted” to be asked to serve on the board as a small producer, selling vegetable starts on the side of Knik-Goose Bay Road.

“It’s generally understood by those not in the ‘agriculture industry’ that the BAC is not interested in you unless you’re a big outfit and you’re going to produce marketable crops," she said.

Heider said she doesn’t know what the board’s future is but hopes the state can keep the agricultural Revolving Loan Fund, which she called the only local source of funding for farming.

“That is a resource that should still be available to agriculture," she said.

Correction: This story was changed to reflect the fact that John Anderson works at Fort Wainwright.