Kentucky Agriculture to Make $4 Billion in Gross Receipts in 2005

Source from:  BRUCE SCHREINER Associated Press LOUISVILLE, Ky. 12/12/2005

Kentucky agriculture will likely yield a near-record $4 billion in cash receipts this year amid mixed results - the livestock sector flourished, grain farmers struggled with low prices and tobacco's influence waned, ag economists said Thursday. The state's signature equine industry will exceed $1 billion in gross receipts in 2005, and the growing poultry industry is close behind at around $900 million, said Craig Infanger, a University of Kentucky ag economist. Beef cattle receipts also were up. The livestock sector's strong showing offset declining cash receipts for row crops and tobacco, he said. High land values, strong export markets and an infusion of government payments helped nurture the ag industry in 2005 and leaves it in strong position for next year, he said. "This is a strong agricultural sector right now," Infanger said. This year's farm cash receipts should come close to last year's level, he said. Despite lower crop prices amid another U.S. bumper harvest of corn and soybean, net farm income in Kentucky should exceed $1 billion this year when factoring in government payments, he said. Infanger also predicted that farm cash receipts could reach a record $4.14 billion next year if exports remain strong and farmers have normal weather conditions. However, farmers will face production challenges from rising interest rates and higher energy costs that will squeeze farm income next year, he said. UK ag economists wrapped up the year in agriculture and offered forecasts for next year at a news conference that's become a staple of the annual Kentucky Farm Bureau convention. Tobacco cash receipts will likely drop to $250 million to $275 million this year as burley production plunged by 35 percent after the tobacco buyout, said UK tobacco economist Will Snell. Snell said he heard that burley growers are getting $1.55 to $1.60 per pound for leaf grown under contract for tobacco companies, slightly higher than expected but still a sharp decline since the buyout did away with the federal tobacco program and its price supports. With high production costs, Snell estimated that farmers needed to yield at least 2,100 pounds per acre to make money off the crop this year. The statewide yield, however, was only about 1,800 pounds an acre because of difficult growing and curing seasons. "As a result, a lot of the farmers with these low yields lost money," he said. Bolstering income for Kentucky's tobacco farmers will be "mailbox payments" expected to total around $1 billion between last January and next month, Snell said. Those payments include buyout checks - including lump sums taken by some growers - as well as so-called Phase II money as part of a multibillion-dollar anti-smoking settlement and payments from grower lawsuits. Snell predicted that more farmers will quit growing tobacco next year. Opportunities still exist for those remaining, if tobacco companies offer high enough prices, he said. Tobacco once accounted for a quarter of Kentucky farm cash receipts but now totals about 10 percent, Infanger said. Kentucky is the nation's top burley tobacco producer. "Because of the demand outlook, we feel there will be opportunities to have a viable tobacco sector here in Kentucky," he said. Lee Meyer, a UK extension livestock marketing specialist, predicted a continuation of strong feeder cattle and slaughter cattle prices. He predicted that Kentucky's poultry industry will continue to grow. Steve Riggins, a UK grain-marketing economist, said that large stockpiles of corn and soybeans from bumper harvests will hamper prices. He predicted that growing demand for corn as an energy source could help corn prices in the future. "So it's hard to be bullish ... about corn or soybean prices in the short run," he said. Enditem