Tobacco Buyout Helps Boost Farm Income to Record

Source from:  By Janet Patton HERALD-LEADER STAFF WRITER 09/07/2006

CASH RECEIPTS DROP FOR STATE'S GROWERS Kentucky farmers got less money for their goods last year, but took more money to the bank thanks to increased government payments. Cash receipts for farm commodities fell about $151 million in 2005 from the previous year, but net farm income set a record high, due largely to tobacco-quota buyout payments. "Cash receipts fell a little bit, but farmers pay bills on net receipts, not gross receipts," said Will Snell, a University of Kentucky tobacco expert and agricultural economist. Kentucky was one of 11 states to experience net growth of farm income in 2005 of more than 20 percent over 2004 levels. Cash receipts from Kentucky commodities totaled $3.97 billion, the National Agricultural Statistics Service announced Thursday. Total farm commodity sales were down 4 percent from the revised 2004 value of $4.13 billion. Both livestock and crop receipts were down -- 1 percent and 8 percent, respectively. Still, government tobacco payments, along with strong prices on some commodities, caused net farm income in Kentucky to exceed $2 billion for the first time ever. Government payments soared to more than $827 million, or 40 percent of farmers' profits. That figure is normally between 15 percent and 20 percent,Snell said. Cash receipts from tobacco, Kentucky's top crop at $342.5 million in sales, fell 19 percent after the 2004 buyout ended the government's price-support system. But Snell pointed out that U.S. Department of Agriculture figures are based on a calendar year, not a crop year. Some tobacco grown in 2004 and subject to government-mandated pricing was actually sold in 2005, so it is counted in 2005 receipts. The crop grown in 2005 was probably worth less than $300 million, Snell said. Horse sales, including stud fees, continued to lead the state with $1.01 billion in cash receipts, more than one-fourth of all commodity receipts. Sales were up $60 million in 2005. All poultry, taken as a single commodity, was again the second-biggest in sales at $813.8 million, down less than 1 percent. In third place, down 10 percent, were cattle and calves at $561.3 million. The largest marketing increases were for wool, sheep and lambs, floriculture, and barley. Enditem