Louisville, KY – The state’s agriculture economy is set to break a record according to projections from the University of Kentucky College of Agriculture, Food and Environment ag economists.
The group told Kentucky Farm Bureau Federation members, during the organization’s annual conference that agricultural cash receipts could reach or exceed $6 billion for 2013.
The surge was brought on by strong poultry, equine and cattle markets along with record or near-record crop production levels.
Economist Will Snell broke the good news to a capacity crowd. He said 2013 was a very interesting year for agriculture having had another year of extreme weather conditions.
“Even though we had these extreme weather outcomes, the economic outcome is very similar between 2012 and 2013, and that is very, very, very robust Kentucky and U.S. ag economies,” he said.
Last year, at this time these same economists told the crowd that 2012 would likely see receipts of $5.3 billion, a record in itself, which by the time the USDA came out with final numbers last summer the total for ag cash receipts amounted to $5.29 billion.
Snell added that even though some crop prices had fallen, record production, very strong livestock and export markets left the state ag sector in a very favorable financial position.
Nationally, net farm income is likely to set a record of $131 billion this year. Snell said that was an increase of 15 percent over last year.
The USDA notes this would be the highest level since 1973, once adjusted for inflation. In fact, 2013’s forecast would be the fourth time net cash income, after adjusting for inflation, has exceeded $100 billion since 1973, according to information from the agency.
In Kentucky, the net farm income for this year is projected to be above that seen over the last two years.
“It’s likely that Kentucky net farm income will remain above the $1.5 billion level we saw in 2011 and 2012, though still fall well below the $2.1 billion record high in 2005, when lump sum tobacco buyout payments inflated income levels,” Snell said. “In recent years, tobacco buyout payments have averaged around $150 million annually, accounting for approximately 10 percent of net farm income, which will have to be earned from the marketplace after our last payment in January.”
Snell pointed out that Kentucky projections are better than national forecasts basically due to the state being more livestock dependent and grain yields here being higher than in other parts of the country.
The poultry sector still remains on top, moneywise in Kentucky’s agriculture industry accounting for 21 percent of the estimated cash receipt total. The equine industry came in second with 16 percent.
The horse industry, which once stood atop state ag commodities continues to rebound from recession era drops. Last November’s Keeneland thoroughbred breeding stock sales saw an increase of 38 percent over 2012 numbers.
Record grain production helped soybeans and corn finish the year representing 15 percent and 13 percent, respectively of the total ag cash receipts. The increase in yields will help counter grain prices that have fallen off from last year’s record levels.
The cattle sector came in at 12 percent, helped in part by those lower grain prices. Tobacco, dairy and all other ag sectors comprised the remainder of receipts.
Snell said the tobacco industry, once a billion dollar enterprise, could reach a post-quota buyout high this year.
The value of Kentucky tobacco is likely to top the $400 million mark with market prices expected to be in the $2.05 to $2.10 per pound range.
Kentucky’s horticulture sector continues to make strides expecting to reach $110 million in 2013. UK Extension Professor Tim Woods said it was another great year for horticulture in the state with a number of new markets opening up, especially on the produce side and the opportunities were still looking “pretty bullish” for 2014.
The forestry sector is also proving to be a driving force in ag economy numbers. Jeff Stringer, with UK’s Department of Forestry estimates that the forestry industry provided a total contribution of $12.7 billion to Kentucky’s economy, an increase of 3.3 percent over 2011.
If the Kentucky ag economy is expected to remain at current levels, it will do so in part because of the strong export market. Exports figure prominently for state producers. Snell said the Kentucky is still one of the most trade dependent agricultural states in the country.
“We rank number four in terms of trade dependency with almost half of our cash receipts being consumed or purchased by international consumers,” he said.
The outlook meeting also included projections for 2014. The economists foresee similar numbers for the coming year especially if livestock markets continue to thrive and with much of this year’s record grain crops to be sold in 2014. Official numbers for 2013 will be released by the USDA in the summer.
Snell said cash receipts could be between $6 billion and $6.2 billion in 2014.
“Certainly I think we all realize there are some clouds on the horizon with lower crop prices. We’ll have to do a better job in monitoring our marketing and management practices but again, I think our message today is a very vibrant and strong Kentucky agricultural economy,” he said.
To view the outlook publication, go to http://www2.ca.uky.edu/cmspubsclass/files/esm/Outlook2014.pdf.