Louisville, KY – State farmers are poised to reach a record $5.3 billion inagricultural cash receipts this year.
That was the news delivered by University of Kentucky (UK) College of Agriculture economists during their annual report on the condition of the state’s ag industry and projections for the new year.
The report was unveiled to a packed house at the Kentucky Farm Bureau Federation Meeting. While many variables went into their calculations, the panel did all possess one consistent message; the Kentucky agriculture economy is strong.
UK’s Will Snell began the session with an overall view both from a statewide perspective and nationally. He told the gathering that Kentucky is in line with the rest of the nation, economically speaking.
“One topic this summer that just dominated the discussion of the farm economy was the drought. What will be surprising to many people is that despite the fact that we had one of the worst droughts in our nation’s history, and it’s still ongoing, the USDA is projecting that net farm income will remain near all-time record high levels, certainly considerably above our 10 year average,” Snell said.
That amounts to about $114 billion, a mere three percent below the previous record set in 2011. Snell went on to say that lower crop yields were offset by more planted acres and all time record levels for crop prices and relatively strong livestock prices.
Crop insurance also figured into the farm economy picture. Snell said some estimates place the total, nationally at $20 billion once all payments are made.
Exports have played an important role in this year’s numbers. On a national level ag exports were worth nearly $140 billion and the USDA is predicting even higher numbers next year.
From a state perspective, Snell said the drought may have had a bigger impact here than nationally especially when corn yields are taken into consideration. The latest National Agricultural Statistics Service information estimated Kentucky corn yields to be 68 bushels per acre, off by 71 bushels from last year and just over half of where the current U.S. yield estimates stand at 122.3 bushels.
With that said, the state’s cash receipts through September were higher each month than those from 2011, 10 percent higher, in fact.
Cash receipts are based on a calendar year and not a crop year so helping the cause were crops like corn and tobacco grown in 2011 but sold this year, Snell pointed out.
Couple that with a strong tobacco market, an increase in the equine sector and a soybean crop that turned out to be better than expected and the state will enjoy record high ag cash receipts this year.
“For the first time in history, we’ll exceed $5 billion,” said Snell. He quickly added that many would remember the same news last year which turned out to be just slightly lower once USDA numbers were finalized last summer.
From a percentage standpoint, both corn and poultry will represent 18 percent each of total projected receipts while soybeans and horses are close with 14 percent each. Cattle will account for 13 percent with tobacco coming in at seven percent and dairy totaling four percent of the money pie. The remaining 12 percent is listed as “other."
Exports also have figured prominently in Kentucky’s ag economy. Snell said exports accounted for nearly half of all state agriculture cash receipts. He also noted that the Kentucky is the 5th most ag trade dependent state in the country.
Along with Snell were Kenny Burdine, Cory Walters and Tim Woods, all from UK’s Department of Agricultural Economics, along with Kentucky Farm Business Management Program coordinator Jerry Pierce and Jeff Stringer from the UK Department of Forestry. Each gave a short summary of different ag sector represented in the state.
Burdine, who reported on the livestock sector, said the equine market was showing signs of improvement, while poultry has remained the largest source of Kentucky cash receipts for the last three years and likely to be in the top two this year.
While the cattle market remains positive price-wise, the cow herd has lost 212,000 beef cows since 2007.
Walters said the big news in grain production remained the loss of corn yields. Offsetting that however, were increases in acres and higher market prices. He also noted that ending stocks for corn and soybeans would be fewer going into next year’s planting season and prices should remain strong.
Woods said the horticulture sector continues to see growth and this year’s cash receipts projection should be around $121 million.
“In its own way (horticulture) has been responding to a lot of efforts that we’ve put in the state to try and encourage diversification particularly on the produce side,” he added.
“Despite some impacts from the recession, we’re still looking at a pretty strong year with a number of different factors contributing to it but mostly things have gone well for the annual vegetable folks.”
Snell said this year burley and dark tobacco crops could reach the $400 million mark, the highest in the tobacco buyout era.
And the forestry economy has a direct impact in Kentucky of over $6.3 billion with a total impact of nearly $10 billion, according to Stinger. The state is the leading producer of hardwood saw and veneer logs in the South and in the top three nationally.
Stringer added that he thinks declines experienced over the last few years will come to an end next year.
While this year looks to be in record territory again, the economists are projecting 2013 to be slightly better with the possibility of receipts reaching the $5.4 to $5.6 billion level.
A copy of the outlook publication including information on individual farm sectors can be found at http://www.ca.uky.edu/cmspubsclass/files/esm/2013Outlook.pdf.