August 5, 2005 | By: Laura Skillman
LEXINGTON, Ky.

Exports are vital to the health of the nation’s farm economy and are particularly important to Kentucky, making up a third of the total cash receipts in agriculture.

Last year, U.S. farm exports reached a record high of more than $62 billion. Ample global supplies of grains, oil seed and cotton prompted the U.S. Department of Agriculture to predict exports at lower levels for 2005, and that is exactly what is happening, said Craig Infanger, agricultural economist with the University of Kentucky College of Agriculture.

Midyear projections are for farm exports to reach $60 billion, down from 2004’s record but still the second highest year of export sales for the United States, he said. The country’s largest trading partners are in the western hemisphere and trade with Canada and Mexico remain strong, helping contribute to the positive trade outlook.

The good news for Kentucky farmers is that the export potential for soybeans, livestock, poultry and dairy products is strong. Poultry and poultry products have already risen 18 percent year-to-date. Poultry production in the state has risen steadily in recent years, and exports, primarily to Asia and the former Soviet Union, also have risen. There have been times when Russia has kept U.S. poultry out of the country, but Infanger said that seems to have been worked out and is not a factor today.

Exports account for nearly $1 billion of Kentucky’s $3 billion to $3.5 billion in annual farm cash receipts. The state is the second largest exporter of tobacco and eighth largest exporter of live animals of the 50 states, Infanger noted. Among the surrounding states, only Tennessee and Illinois are more dependent on foreign trade, with 40 percent of their sales going to export markets.

Horses make up the majority of Kentucky’s live animal exports. Farm income in Kentucky was once split between livestock and crops, but today livestock makes up a larger portion due to the resurgence of the state’s equine industry and the steady growth of poultry production, he said.

The United States grain exports are lagging behind last year because of large world supplies of wheat and corn and stiff competition from Argentina and China. So far, corn exports are down 20 percent from a year ago.

Trade embargoes initiated about one and a half years ago due to bovine spongiform encephalopathy have impacted U.S. exports. The loss of the Japanese and Korean markets were hit especially hard because they make up about two-thirds of the U.S. beef exports, said Kenny Burdine, Extension associate for agricultural economics.

Import markets also were affected as the United States stopped importing live cattle from Canada but increased beef imports. Live cattle imports recently resumed. In addition, less beef was imported to the states from Australia as they shifted focus to providing for the Japanese market and Uruguay became a more important exporter.

Cattle prices have not suffered substantially from export restrictions, thanks to strong internal demand and low cattle numbers in the United States, Burdine said. However, prices would likely have been higher if the restrictions were not in place.

Kentucky has only a minor amount of direct-export beef. Most Kentucky feeder cattle are sent to the Midwest to be finished. But they haven’t gone unscathed.

“It’s a nationwide market, and what impacts the export market affects what feedlots are going to pay for feeder cattle,” he said.

With all the other news in agriculture, the importance of exports often is overlooked, Infanger said. It is important to remember that in the past 10 years, 25 percent to 30 percent of total cash receipts for American farmers came from export trade.

Contact: 

Writer: Laura Skillman 270-365-7541 ext. 278

Contact: Craig Infanger, 859-257-7274
Kenny Burdine, 859-257-7272 ext. 229