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Farm Economy Likely to See Record Cash Receipts
But Less in Farmers’ Pockets
By
Laura Skillman
 LOUISVILLE,
Ky., (Dec. 6, 2007) – Kentucky’s farm economy is likely to see
record cash receipts this year and again in 2008, but farmers
profits may not attain such lofty levels, say agricultural
economists with the University of Kentucky College of
Agriculture.
UK agricultural economists are predicting farm receipts for 2007
to reach a record $4.22 billion despite freeze and drought
conditions that impacted several sectors of the farm economy.
Barring any major weather or disease problems in 2008, receipts
could grow to $4.29 billion, said Will Snell.
Economist Snell noted increasing production costs, and lower
government payments could more than offset the increase in cash
receipts, resulting in less net farm income than the record set
in 2005. That being said, Snell noted that net income will still
be very strong this year and next compared to historical
standards. Kentucky’s net farm income was fueled in 2005, and to
a lesser extent in 2006, by a large number of lump sum payments
from the federal tobacco buyout program, he said.
Leading the way is the state’s livestock sector which represents
nearly two-thirds of the state’s 2007 cash receipts. Estimated
at $3 billion, this is a 10.9 percent increase from the past
year and livestock receipts are expected to climb again in 2008.
Horses, poultry and cattle registered significant gains. Equine
was the biggest contributor at $1.1 billion.
The growth in cash receipts is not evenly distributed across the
state. Growth has taken place primarily in the west with strong
grain markets, growth in the poultry industry, and the movement
of tobacco from the Bluegrass and eastern Kentucky regions to
west Kentucky, Snell said. Whereas cash receipts driven by lower
tobacco production, have dropped in eastern Kentucky.
Snell, along with fellow economists Lee Meyer, Kenny Burdine and
Tim Woods, presented an overview and outlook of the Kentucky
farm economy as part of the annual Kentucky Farm Bureau
Federation conference.
Due to poor growing conditions, Kentucky’s cash receipts from
crops are down 6.5 percent. Bucking that trend is higher cash
receipts from corn, reflecting a significant increase in acreage
in 2007 coupled with higher prices. The state’s receipts from
fruit and vegetable crops also were reduced somewhat by a spring
freeze and drought.
Snell said there’s a lot of excitement and enthusiasm in the
farm sector, but in the back of people’s minds there’s a nagging
feeling of having been here before only to see the cycle change
and prices decline. Helping to fuel the farm economy are strong
demand from exports, due in part to the low dollar, and the
renewable fuels push. But challenges and uncertainties that can
play a role include the outcome of U.S. energy policy and oil
markets on grain economies, the long-term impact of the
renewable energy boom on the livestock sector, declining tobacco
buyout money, trade policy, future government farm payments and
policy, immigration reform and production costs.
“Not only are we looking at the all-time high prices for a lot
of our commodities, but we are also looking at the largest
increase in production expenses and that’s certainly a concern
as we look at what direction the future of Kentucky’s
agricultural economy may take,” Snell said.
“I think we all realize there are a lot of challenges and
uncertainties about what may lie down the road in 2008,” he
said. “There’s a lot of enthusiasm, but we need to all be better
managers, keep a close eye on our production costs, keep a close
eye on what’s happening in the global picture, and with farm
policy issues in Washington, D.C.”
A copy of the outlook publication including information on
individual farm sectors can be found at
http://www.uky.edu/Ag/AgEcon/pubs/ext_other/2008KYOutlook.pdf.
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Contact: Will Snell, 859-257-7288
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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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