In another impact of Gov. Mike Dunleavy’s state budget vetoes, Mat-Su farmers are now worried about getting needed state inspections to be able to sell fresh produce to major retail stores.

Large grocery chains like Safeway, Fred Meyer and Wal-Mart require inspections to ensure proper handling before they purchase locally-produced food.

“It’s a corporate rule,” said Molly Thomas, produce manager for the Wasilla Wal-Mart.

Farmers say the governor’s vetoes of funds for the state Division of Agriculture, which required layoffs of half the division’s staff, will limit the division’s ability to do the inspections.

U.S. Department of Agriculture rules require the inspections, which have been done by the state agriculture division.

These are absolutely needed for farmers to be able to sell to the large grocery chains and access local markets, said Arthur Keyes, a local farmer and past director of the agriculture division.

“Two kinds of inspections are done. One is a ‘GAP’ audit, or good agricultural practices, and the other is a “GHP” audit, which insures good handling,” he said.

Farmers actually pay for these inspections, and the money is enough to pay the state’s costs. But what Dunleavy vetoed was the division’s “receipt authority,” or its ability to receive payments for services from third parties.

The agriculture division now charges about $2,000 for these inspections, and while it is possible to get these done by inspectors brought up from the Lower 48, the costs would rise to $20,000.

This is beyond the ability of most local farmers to pay. “It will particularly affect new farmers who want to access local markets,” Keyes said.

The governor’s vetoes similarly cut the receipt authority for the division to receive payment from farmers wanting to participate in a project to demonstrate growing practices for industrial hemp, which became legal in the U.S. in the federal farm bill enacted last year.

Farmers in the Lower 48 are jumping on the bandwagon in a potentially huge new market for industrial hemp products. However, Alaska farmers will be cut out of this because federal rules require a state agriculture division regulating the new industry, which Alaska will be unable to do.

With both programs – food inspections and industrial hemp demonstrations – no state general funds were involved.

The vetoes also affect the state’s ability to certify that Alaska seed stock for products like potatoes are disease-free, which is important to growers.

In a talk last Thursday to as group of peony growers in Anchorage, Dave Schade, the current director of the agriculture division, said about half of the workers in his division have been cut.

“I laid 17 people off. It was a really tough thing to do. I have 16 left,” Schade said.

Despite that, the division remains capable of delivering certain core services, and despite the cuts affecting emerging industries like hemp it is important to note that the governor left intact an important $1.1 million state grant supporting the new peony industry, Schade said.

People familiar with the agriculture industry say the governor is supportive of the local industry but that the vetoes appear to be the work of staff in Dunleavy’s Office of Management and Budget who have little understanding of on-the-ground effects of the budget cuts.

“We were told that the hemp projects were cut because this is not an existing industry,” said one person interested in what could in fact be a major new industry for farmers here as well as in the Lower 48.

There may also a bias and misunderstanding among people who advise Dunleavy that hemp is marijuana. Although the plants are similar what is known as hemp does not contain delta-9-tetrahydrocannabinol, or THC, the compound that creates the “high” of marijuana.

However, to ensure that locally-produced hemp or hemp products sold in the state do not contain THC or impurities federal laws do require regulation and testing by state agencies.

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