<b>By TIM THORNBERRY<br>
Kentucky Correspondent</b> </p><p> LEXINGTON, Ky. — Cautious optimism may be the best approach to a new year for state farmers as they received a hint of good news last week at the Kentucky Farm Bureau Federation conference.
University of Kentucky (UK) agriculture economists addressed the meeting and discussed their annual outlook report estimating farm cash receipts could reach record level at $4.3 billion for 2008.</p><p>
Livestock receipts have been responsible for the steady increase in farm receipts during the past several years according to the report, but next year crop receipts are expected to rise by 12 percent, based on normal growing conditions, while livestock receipts could see a slight decrease by 2.4 percent.</p><p>
The big question will be, how much of that increase will be profit?
The group warns that record cash receipts won’t equate to record net income as higher cash receipts will be offset by lower government payments and higher input prices.</p><p>
Tobacco</p><p> The state’s structure of tobacco production continues to evolve during these early post buyout years.</p><p>
The shift has gone out of the east and more toward the west with its bigger farms.</p><p>
But the demand is still greater than the supply and tobacco companies will likely ask for more burley and dark tobacco according to UK’s Will Snell.</p><p>
“After several challenging growing seasons, coupled with increasing costs of production, the contract price incentives offered by the companies will be very critical in determining the acreage response,” explained Snell in the report.</p><p>
“In addition to price expectations, labor supplies, infrastructure investments, and the confidence/trust remaining tobacco farmers have in the companies in an era of no safety nets will ultimately determine how Kentucky farmers will respond to this opportunity.
Snell also wrote that with the right conditions and selling environment, the value of next year’s crop could grow to nearly $350 million.</p><p>
Corn, soybeans, wheat</p><p> Last year was the year for corn all across the nation as prices remained high and producers boarded the bandwagon and increased acreage to the tune of 22 percent nationally and more like 30 percent for the state.</p><p>
UK Ag Economist Kenny Burdine said in his Outlook Report that with grain prices being what they are, a good weather year here could have been remarkable for producers.</p><p>
“Prices for all grains have been strong and have only become stronger since harvest time. It is frustrating to think what an incredible year this could have been for grain producers if weather had been more favorable,” he wrote.</p><p>
Next year, however, soybeans and wheat, which had tighter supplies, will likely move up the production ladder as carryover supplies of corn were up. Stocks-to-use for the 2007-08 corn marketing year is projected to be above 15 percent according to Burdine.</p><p>
Soybeans carryovers were 200 million bushels and around 7 percent of total use.</p><p>
Historically, according to TFC Commodity Charts, a Web source of daily commodity futures and financial market information, the critical level is 10 percent. The 2007 crop will be about half of that in 2006 with wheat production down 46 percent this year over 2006.</p><p>
Livestock</p><p> As the state’s agricultural environment continues to change from crop dominated, namely tobacco, to a more diverse setting, livestock has taken the lead.</p><p>
Livestock cash receipts top $3 billion last year which included $1.1 billion from the equine industry.</p><p>
This year’s drought, however could lend a hand to a decreased in cattle production.</p><p>
Many farmers culled their herds due to a lack of hay for feed so rebuilding may be what many producers face this year said UK Ag Economist Lee Myers.</p><p>
“I think what we are looking at is some rebuilding of herds,” he said. “This will take some of the heifers out of the meat chain and put them into the cow chain. That’s going to pull production back a little bit and give us a pretty good upcoming year.</p><p>
“We pushed a bunch of cattle to market that would have gone to market next year and we’ll probably have higher revenues this year with the pretty good prices we had. But we are going to pay the penalty for that next year in terms of a drop in cattle revenues.”
Myers also predicts hog production to go up about two percent once the winter months are over partly due to exports. Sheep and goats will likely remain about the same with a slight increase in poultry production.</p><p>
Dairy</p><p> The state’s dairy industry has declined over the last several years but last year saw an increase in prices thanks in part to strong export markets for dairy products. However, while the U.S. herd has expanded, Kentucky has not followed suit and the decline continued this year.</p><p>
According to Burdine’s dairy outlook report, “Monthly milk production reports are suggesting that Kentucky will see another decrease in dairy cow numbers by the first of the year.”</p><p>
Burdine anticipates another year of increased milk production with expansion of cow numbers and steady increases in production per cow. The good news about this, he noted, will be that strong demand should absorb that production increase. All told, milk prices will likely start strong and level off averaging about the same as 2007.</p><p>
Horticulture</p><p> Total cash receipts in 2007 are expected to be about $103 million, with floriculture earning $44 million; nursery, greenhouse and sod with $36 million and produce at $23 million.</p><p>
The industry continues to grow with ag diversification, even though produce receipts dropped in 2007 due to weather conditions. In fact, this year could have been a record year for produce sales had it not been for the weather reported UK Ag Economist Tim Woods.</p><p>
He also sees the 2008 season as “fairly positive” for commercial vegetable production. Wine production is also expected increase in 2008 as more wineries come into production and expand capacity. Woods noted in his 2008 outlook that, “While 2007 production may not have reached grower expectations, there remains a high level of optimism toward expanded market opportunities.”</p><p> |
