LOUISVILLE, Ky. — One might think, with the terrible weather most farmers faced this past year, farm cash receipts would be at an all-time low - think again.</p><p>
University of Kentucky ag economists reported at last week’s annual Kentucky Farm Bureau Federation conference that the state’s farm economy is likely to see record cash receipts this year and again in 2008.</p><p>
The economists including Will Snell, Lee Meyer, Kenny Burdine and Tim Woods are predicting farm receipts for 2007 to reach a record $4.22 billion despite freeze and drought conditions that affected most farming areas. Barring any major weather or disease problems in 2008, receipts could grow to $4.29 billion.</p><p>
That being said, profits are likely to fall as Snell noted that increasing production costs, and lower government payments could more than offset the increase in cash receipts, resulting in less net farm income than the record set in 2005.</p><p>
Snell also said that net income will still be very strong this year and next compared to historical standards. Lump sum payments from the federal tobacco buyout program got the ball rolling on record farm receipts in 2005. But the growth hasn’t been equally distributed across the state. As the west sees marked increases in grain markets, growth in the poultry industry, and the movement of tobacco from the Bluegrass and eastern Kentucky regions, cash receipts driven by lower tobacco production, have dropped in the eastern portion of the state.</p><p>
Topping the income list was livestock with nearly two-thirds of the state’s 2007 cash receipts. This sector brought in an estimated $3 billion, a 10.9 percent increase over last year and livestock receipts are expected to climb again in 2008. Horses, poultry and cattle registered significant gains.</p><p>
Equine was the biggest contributor at $1.1 billion. Cattle receipts were stronger partly because of so many being sold due to poor pasture conditions and low hay supplies.</p><p>
The bad weather of 2007 was more evident in crop cash receipts as they took a 6.5 percent loss with the exception of corn which saw a significant increase in acreage in 2007 along with higher prices.
All told, crop receipts topped the $1.2 billion mark with vegetables showing an increase of 15 percent at $23 million.</p><p>
Tobacco producers face many of the same challenges as crop producers as they are making their way to markets. The value of this year’s crop is likely to decline to around $300 million according to Snell. Both burley and dark tobacco acreages increased in 2007 as the demand remained high but a tough growing season and even tougher curing season will hurt the quality of the crop. Below average yields have resulted in a smaller crop.</p><p>
While cash receipts are still increasing, the economists reminded producers that challenges lie ahead including the effects of the U.S. energy policy and oil markets on grain economies, the long-term impact of the renewable energy boom on the livestock sector, declining tobacco buyout money, trade policy, future government farm payments and policy, immigration reform and production costs.</p><p>
“Not only are we looking at the all-time high prices for a lot of our commodities, but we are also looking at the largest increase in production expenses and that’s certainly a concern as we look at what direction the future of Kentucky’s agricultural economy may take,” Snell said.</p><p>
“I think we all realize there are a lot of challenges and uncertainties about what may lie down the road in 2008. There’s a lot of enthusiasm, but we need to all be better managers, keep a close eye on our production costs, keep a close eye on what’s happening in the global picture, and with farm policy issues in Washington, D.C.”</p><p>