Kentucky’s farm economy rebounded in 2003 from a disappointing 2002 thanks to improved cash receipts in both the livestock and crop sectors, according to a University of Kentucky College of Agriculture economist.

Increases in 2003 were led by sharply higher sales of row crops and rebounding sales of horses following the negative effect of Mare Reproductive Loss Syndrome, said Larry Jones, UK agricultural economist. Sales of grains and oilseed crops increased more than $200 million while equine sales increased an estimated $110 million from a year earlier.

Other aspects of the state’s farm industry also enjoyed a healthy year, Jones noted during the recent Kentucky Agricultural Outlook conference held in conjunction with the Kentucky Farm Bureau Federation’s convention. UK economists specializing in various aspects of the state’s agricultural sectors provided a recap of 2003 and a look ahead to 2004.

“Certainly the cattle picture is much rosier than in 2002, and in row crops we had better weather and some pretty good prices,” he said. “We had a sharp rebound in dairy. Sales of horticultural crops and hay also registered significant gains. So if you add it all up we had about $3.6 billion in farm receipts in 2003. You’d have to go back to about 1998 to find a comparable year.”

This year’s estimated receipts are 17 percent higher than a year ago with crops showing a 21 percent increase and livestock receipts up 41 percent. Equine sales were the leading contributor to farm cash receipts followed by poultry. Tobacco accounted for $450 million in 2003.

The forecast for 2004 is for gross cash receipts to be near this year’s level. Equine sales are expected to continue to rebound while cattle prices will also remain strong. Poultry and hogs will see some increases.

Grain crops in the coming year, are expected to decline 8 percent due to some moderation in yield levels following an excellent 2003, and tobacco is expected to decline to near $400 million.

Net farm income was buoyed by increasing crop and livestock sales, an excellent growing season and generally higher commodity prices for most agricultural products. This could be the second highest net farm income on record, Jones said, the highest being in 2000.

Net farm income may not be as strong in 2004.

“One caution is we are seeing some increases in input prices particularly for fertilizers,” he said. “The risk is that interest rates will be higher. We’ve enjoyed record low interest rates when you take out the inflationary aspects, and I think the odds are very strong that we will see some interest rate increases in 2004.”

Net worth in the farm sector remains strong, he said.

Government payments are uncertain but Jones said he would not expect them to be any higher in the coming year than they were in 2003.

“Overall, we think 2004 from a net farm income perspective won’t be as bright as 2003 because of higher input prices and interest rates, “ he said. “We are looking at an income that will be pretty much the average of the past decade.”

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