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2006 Farm Cash Receipts Hit $4.1 Billion;
2007 May Go Higher
By
Laura Skillman
 LOUISVILLE,
Ky., (Dec. 6, 2006) – Kentucky total farm cash receipts are
expected to finish the year as the second highest on record and
are predicted to reach a record $4.3 billion in 2007.
Larry Jones, agricultural economist with the University of
Kentucky College of Agriculture, told farmers during the
college’s annual outlook conference at the Kentucky Farm Bureau
convention that the past three years in Kentucky agriculture
have been good ones.
“The U.S. Department of Agriculture’s Economic Research Service
has a quote on its Web site saying 2004-2005 were unprecedented
in our history, and in Kentucky I think we can safely add 2006
as well,” he said.
Kentucky’s total farm cash receipts are expected to reach $4.1
billion this year. The strong farm income for the past three
years has been the result of the livestock industry, Jones said.
Equine, poultry and cattle sales make up 61 percent of the total
farm cash receipts. In 2007, livestock receipts are expected to
flatten, but grain receipts are expected to see significant
increases.
Net farm income – the amount farmers actually put in their
pocket – is expected to decline this year from the record $2.08
billion set in 2005. Higher energy costs, interest payments and
lower government payments contributed to a lower net income for
farmers in 2006 and will do so again in 2007.
“One of the things that allowed us to set a record net farm
income in Kentucky last year was government payments, primarily
as the result of the tobacco buyout,” Jones said. “We’re not
going to set a record in 2006 or 2007, but it’s certainly going
to be well above the trend of the last 10 years.”
In 2006, equine sales are expected to be $1.06 billion, followed
by poultry and eggs at $850 million; cattle, $600 million; corn,
$381 million; soybeans, $338 million; tobacco $320 million; and
dairy, $176 million. The remainder comes from hogs, wheat, hay,
horticulture and other crops.
As we move into 2007, Jones said things farmers need to watch
for that could impact their income include international trade
agreements, the U.S. farm bill debate, energy costs, interest
rates, and national and world economic growth.
“All in all, I think we’ve seen some pretty good years as we
look at the total agricultural economy,” he said. “2006 and 2007
won’t be as good as it was in 2005, but they are still going to
be well above trend.”
Here are some highlights from the various agricultural
commodities underscored at the recent agricultural outlook
conference.
Corn prices are expected to lead all grains to higher prices in
the coming year and are already doing so in the latter months of
2006. Increasing demand from the energy sector along with stable
demand for livestock feed are driving corn prices, while the
impact corn prices will have on wheat and soybean acres are
affecting prices for those commodities, said Steve Riggins, UK
grain market specialist.
Consumption of U.S. corn is expected to hit a record 12 billion
bushels for 2006 – the fourth consecutive record. This exceeds
production by about 1 billion bushels. Demand is outstripping
supply, drawing down stocks of corn. Additional acreage will be
needed to meet demand or yields need to greatly improve, which
isn’t likely to happen in the short term, he said. Where the
additional acres will come from is uncertain, but they will
likely come from current soybean acres and from some acres that
have been set aside through the federal Conservation Reserve
Program.
Riggins warned that the strong grain prices are a bubble much
like the interest rates and housing bubbles. The question is how
long the bubble will last.
Tobacco continues its transition from price supports to free
market with about 8,000 farms growing tobacco today, compared to
30,000 prior to the tobacco buyout program. The remaining
growers have increased their acreage, and production is shifting
westward in the state, said Will Snell, UK tobacco marketing
specialist.
Demand for burley tobacco in the past year has been strong. For
the past five years, use has exceeded production, forcing
companies to draw down stockpiled tobacco. The result is an
opportunity for Kentucky’s burley industry to stabilize or even
rebound somewhat, he said.
“The industry is calling for 300 million pounds of burley, but
in recent years we’ve only been able to produce about 200-some
million pounds so there is a need to grow more tobacco in the
future,” he said.
However, lack of available labor has been a problem, especially
in the past year. If the labor issue cannot be resolved, farmers
may not be able to take advantage of this opportunity, he said.
Kentucky’s horticulture industry continues to grow, with the
green (nursery/greenhouse) industry leading the way with $80
million in sales. Fruits and vegetable sales are expected to
reach $28 million in 2006 and increase to $30 million in 2007.
Interest is also increasing for organic produce.
“In Kentucky a lot of produce sales are driven by direct markets
and that’s a really important aspect for a lot of our farmers,”
said Tim Woods, UK horticulture marketing specialist. “We had
over 1,800 farmers selling in community farmers’ markets and
farm direct markets.”
Wineries in Kentucky also continue to grow, from zero in 1993 to
41 in 2006. There are approximately 450 bearing acres of wine
grapes in Kentucky and additional planting are going in and
there is room for more, he said. |
Contact: Larry Jones, 859-257-7289
Steve Riggins, 859-257-7256
Will Snell, 859-257-7288
Tim Woods, 859-257-7270 |
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The UK College
of Agriculture, through its land-grant mission, reaches across
the commonwealth with teaching, research and extension
to enhance the lives of Kentuckians. |
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