December 15, 2005 | By: Laura Skillman
LOUISVILLE, Ky.

Kentucky’s livestock sector enjoyed strong markets again in 2005, helping to keep the state’s farm economy steaming forward. The upcoming year also looks to be a good one for the state’s horse, poultry, cattle, swine and goat producers.

Consumer demand and trade have been key factors in impacting the state’s livestock prices, said Lee Meyer, agricultural economist with the University of Kentucky College of Agriculture. This year has been a profitable one for many in the meat industry. Retail prices are high by historical standards and demand continues to be strong.

“Typically when you see high prices, consumption is going to come down. But we haven’t seen that situation,” Meyer told attendees at the annual outlook conference conducted by UK agricultural economists at the Kentucky Farm Bureau Convention. “The leading factor is the increase in chicken consumption and poultry production across the board. We are seeing record levels of consumption there, and that’s been a positive factor for western Kentucky and the growers in that part of the state.”

More meat will continue to come on the market, driven by chicken, but strong prices will continue along with slightly higher retail prices, he said.

The broiler industry expanded by 4 percent in 2005 and is expected to continue to expand 3 percent annually for the long term. In Kentucky’s broiler industry, the expansion appears to be taking place with existing growers and is pushing processing capacity, Meyer said. Prices are expected to remain steady in 2006. 

The poultry industry represents 20 percent of the state’s total farm cash receipts, ranking second only to horses. Cattle also make up an important portion of the state’s farm economy at $652 million or 15 percent of total cash receipts in 2005.

Strong feedlot demand raised prices for feeder cattle above expectations for 2005, Meyer said. Beef production is expected to increase 2 to 4 percent in 2006 amid continued strong demand. Slaughter cattle prices will drop some in the coming year but will remain profitable as will the prices for feeder cattle. Feed costs will also continue to remain low.

The cattle industry is in an expansion mode, which will mean tighter supplies of feeder cattle until 2007 with increasing beef supplies expected by 2008-09. 

“Unlike past cycles when we saw a decline in demand, this time we are going to be adding more beef to the market but with increasing demand and that is probably going to change the face of this cycle when it comes to prices,” Meyer said. “We look for prices to be down but still profitable for the next two to three years.”

The impact of the Japanese market reopening to American beef will have very little impact on trade in the coming months, he said. The country will have to work to regain that market from other countries and convince Japanese consumers that U.S. beef is a quality product. 

Kentucky is the fifth-largest goat producer in the country with an estimated 63,500 animals. This industry is relatively new to the state but appears to be maturing. Modest expansion is likely to continue, Meyer said. Prices have increased nationally, and in Kentucky, thanks to special and graded sales supported by the Kentucky Department of Agriculture, prices have improved relative to other states. Prices are expected to remain strong in 2006.

Hog production in the United States will continue to expand in 2006 and Kentucky’s production declines have ended, which is a positive factor, he said. Prices dropped slightly in 2005 but remained profitable and are expected to remain profitable into 2006. Exports are a key factor for the industry, with the United States exporting 13 percent of its pork while importing only 5 percent. As long as it stays that way it is a positive factor, he said.

Contact: 

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

Contact: Lee Meyer, (859) 257-7272 ext. 228