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Kentucky farm income rebounds from 2016, but not to 2014 level


LOUISVILLE, Ky. — State agriculture cash receipts for 2017 are projected to rise 3.5 percent to $5.6 billion – this is the forecast from the University of Kentucky (UK) College of Agriculture, Food and Environment (CAFE) at the recent annual Kentucky Farm Bureau meeting.

“Higher crop yields, improved livestock prices and fairly stable input costs helped Kentucky agriculture and Kentucky farm incomes rebound in 2017,” said Will Snell, UK agricultural economist. “For 2018, assuming a normal growing season, Kentucky ag cash receipts are expected to be slightly higher with modest gains in poultry, horses and soybeans, offsetting expected losses in tobacco, corn and cattle.”

Net farm income for the Bluegrass State is expected to increase slightly to an estimate of $1.1 billion-$1.2 billion for the coming year. This is up from last year’s level of about $1 billion, but is still well off the $2.1 billion average from 2013 to 2015.

Statewide cash receipts in 2017 are expected to be $5.6 billion, up from last year but still well below the $6.5 billion of 2014. The forecast for 2018 is $5.7 billion, assuming a normal growing season.

“For grain farmers in Kentucky this is the third year in a row of good yields, but low prices, which have kept overall returns near breakeven,” said Sam Halcomb of Walnut Grove Farm in Adairville. “Besides good weather, there has been some, but not enough, relief from input prices.

“I don’t foresee any strong run-up in grain prices in the near term, and we cannot expect above-average yields each year. So we must continue to drive production costs lower to survive this portion of the commodity cycle.”

This follows national trends with farm incomes and cash receipts across the U.S. seeing rebounds, albeit still well below record-setting levels. Growers are expected to produce record yields in corn and the second-highest yield for soybeans. This should result in the second-largest crop for each commodity, even with a reduction in corn acres.

“The U.S. agricultural economy rebound was primarily in response to a strong export market, which was up 8 percent in 2017,” Snell said. “Any future disruption in trade will likely put additional downward pressure on agriculture prices in the midst of ample global supplies.”

Poultry remains the state’s No. 1 agricultural commodity, with wholesale broiler prices up from 2016 levels and the industry largely recovered from the economic effects of recent years’ avian influenza outbreaks. Poultry comprised 20 percent of all 2017 Kentucky agricultural sales.

The equine market recovered from the global recession and stabilized in 2017. With early indications of strong 2017 yearling and breeding sales, the industry is expected to exceed $1 billion in Kentucky farm receipts and have continued growth into 2018.

Improved livestock prices enabled sales growth in the industry in 2017. Calf prices are roughly $30 higher per cwt. than they were in 2016. “Beef producers are continuing to grow their herds, but it has likely slowed some,” said Kenny Burdine, UK agricultural economist. “Production increases for all major meats will put pressure on beef and cattle prices in 2018.”

The burley and dark tobacco crops had a better growing season in 2017, which resulted in both a higher quantity and quality crop. This boosted the value of the crop to approximately $350 million. That is a significant increase from the $83 million established in 2016.

The equine industry also saw major gains this past year, with the market having fully recovered from the global recession. With early indications of strong 2017 yearling and breeding stock sales, the industry is expected to exceed $1 billion in Kentucky farm receipts and is expected to continue its growth into 2018.