December 17, 2004 | By: Laura Skillman
LOUISVILLE, Ky.

Kentucky’s cash farm receipts are expected to reach a record level of nearly $4 billion this year thanks to strong grain and livestock markets, according to economists with the University of Kentucky Cooperative Extension Service.

In 2005, cash receipts are expected to moderate somewhat but still remain strong, said Larry Jones, UK Extension agricultural economist.

“2004, I think was an exceptional year for the state as a whole and 2005 is going to be pretty darn good as well,” he said.

Jones said livestock prices have been strong throughout 2004 helping boost cash receipts, while weather conditions have allowed for exceptional growing conditions for grain crops. As a result cash receipts for crops increased by 14 percent and livestock receipts by 13 percent above 2003 levels.

The largest sectors of Kentucky’s farm receipts are equine followed by poultry then cattle, Jones said during the annual Kentucky Agricultural Economic Outlook conference held in conjunction with Kentucky Farm Bureau Federation’s annual convention.

Demand for poultry, pork and beef continues to be strong, said Lee Meyer, UK Extension livestock marketing specialist. In 2005, consumers are expected eat more meat than ever before, with record high meat consumption of 224 pounds per person, primarily due to increased chicken consumption.

Balance sheets look good for farmers across the state.

“That’s not to say we don’t have some producers that aren’t doing well for a variety of reasons but when we look at the overall numbers for Kentucky, it’s very rosy from a balance sheet perspective,” Jones said. “There is strong equity.”

Net farm income for 2004 could set an all-time record due to strong cash receipts, low interest rates and government payments.

In the year ahead, corn cash receipts are expected to go down due to more normal growing conditions, the livestock sector will remain strong but have somewhat lower prices, so receipts will drop in 2005, but from a record high, Jones noted. Consequently, net farm income will as well.

Some risk factors to watch for in 2005 are growing conditions in prime production areas around the world; higher interest rates and the value of the U.S. dollar, he said.

Here are some highlights for specific commodities.

  • In Kentucky, changes in processing rules are allowing plants to process more chickens, resulting in increased production, Meyer said. As a result, expansion is taking place on farms, primarily on those already producing poultry.

  • Beef producers have enjoyed strong prices in 2004 despite closed Canadian and Japanese markets due to bovine spongiform encephalopathy (BSE). Strong demand along with lower production levels and cheap feed contributed to the strong prices. There are signs of growth in the U.S. cattle herd but demand is expected to remain strong. Little increase is expected in supplies over the next few years.

  • Grain producers across the United States produced record corn and soybean crops and usage is also robust helping to add money to farmers' pockets. The U.S. average yield for corn set a record of 160.2 bushels per acre and soybeans also set a record at 42.6 bushels per acres, said Steve Riggins, UK grain marketing specialist. The price outlook 
    for corn, wheat and soybeans for the coming months will depend on production prospects in the southern hemisphere. As the year progresses, growing conditions in the U. S. will dominate the markets. Strong exports and domestic use also will be critical to marketing opportunities for farmers in 2005.

  • Kentucky’s horticultural industry continues to increase. Since 1982, gross farm sales of fruits and vegetables have gone from $5 to $10 million to nearly $30 million in 2004, said Matt Ernst, UK Extension associate for agricultural economics. Continued growth in direct marketing is expected in the coming year along with an additional produce auction and a program working with state resort parks. The state’s nursery/greenhouse industries also continue to show modest growth and that is expected to continue in 2005.

Contact: 

Writer: Laura Skillman 270-365-7541 ext. 278
Contacts: Larry Jones, 859-257-7289;
Lee Meyer, 859-257-7272 ext. 228;
Steve Riggins, 859-257-7256;
Matt Ernst, 859-257-7272 ext.223