Kentucky: Farm economy not expected to change much

Source from:  By Janet Patton HERALD-LEADER BUSINESS WRITER 10/18/2004

TOBACCO NO LONGER LARGEST COMMODITY IN KENTUCKY Although individual farmers might see big changes in the next few years from the tobacco buyout, the state's farm economy as a whole probably won't look much different. Kentucky's farm cash receipts have been in the $3.1 billion to $3.4 billion range for several years, but the proportion of that coming from tobacco has dropped steadily. What used to be the state's largest commodity has been surpassed by horses, beef cattle and chickens. In 2003, cash receipts from burley were almost $432 million in Kentucky, or 12.4 percent of total farm cash receipts. Some of that money will be replaced by buyout payments; the rest could be made up by continued tobacco production and by investing in other crops or livestock. The buyout isn't any scenario for doom, said Craig Infanger, University of Kentucky agricultural economist. "There's as much potential for gain as for loss." Infanger said that land values could see some modest negative effect -- a dip in growth -- but the strength of the overall farm economy and development pressures should keep prices high. Harry Richart, area president of National City Bank in Central Kentucky, said he sees little effect on lending because most farmers are already diversified. "The buyout is a bit of a non-event for us because tobacco has been on a downward spiral. It's part of the money, but less and less," Richart said. Keith Rogers, executive director of the Governor's Office of Agricultural Policy and the Agricultural Development Fund, said $165 million in diversification efforts over four years are helping farmers make the transition off tobacco. Many people are "almost in shock," about the buyout, Rogers said. "I think there's a whole host of unknowns. I don't think there's any question tobacco will be raised in Kentucky. It'll just be raised by fewer farmers." Enditem