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Poultry trumps equine as top industry in Kentucky

By TIM THORNBERRY
Kentucky Correspondent

LEXINGTON, Ky. — When you talk about livestock in Kentucky, you’re talking horses and cattle, right? That may have been the picture in the past, especially when it comes to the horse industry, which has been king of livestock commerce for many years.
But a new king has made its way to the Bluegrass state, and it may not be what many would expect, unless you have followed the poultry industry for the last 20 years.

Indeed, this year the poultry industry has topped the estimated $2.46 billion of state livestock receipts at about $930 million according to projections by University of Kentucky (UK) College of Agriculture experts.

The equine sector was expected to bring in $750 million worth of receipts, down considerably from the $1.1 billion mark achieved in 2007.

The poultry business here is relative new getting its start about 25 years ago, but steady increases through the years along with higher consumer demand has turned the industry into a farm receipts leader.

Lee Meyer, Extension professor in the department of agricultural economics at the UK College of Agriculture said the trend shows a change in the state’s ag landscape.

“It certainly shows an evolution and a change in Kentucky agriculture for one thing. The other thing is the impact of the economy, which has really hit the horse industry,” he said. “It probably wouldn’t have happened without the negative impact of the economy actually on the Thoroughbred industry, mostly.”

The poultry business has been built primarily in Western Kentucky over the last two decades and has come far in a fairly short period of time when it comes to its economic impact, a trend Meyer feels will continue. According to the Kentucky Poultry Federation, there are approximately 850 poultry farms in the state, with 2,800 poultry houses in 42 counties. In 2001, poultry receipts accounted for about $260 million, doubled by 2003 and is expected to reach $976 million in 2010, Meyer projected.

“I think we’ll keep edging up, not radically, but with relatively small growth, two to four percent per year,” he said.

If there is a limit to the growth of the industry, it would probably come by way of processing facilities, which are built to handle a certain capacity said Meyer. It is when these facilities are built that producers are contracted from the area to supply those plants. But before everyone sells the cows and horses to jump on the chicken bandwagon, getting into poultry will cost more than just chicken feed.

“It is a sizable investment. To get into the poultry industry you have to sign a contract with one of the processors and typically someone will build two to four houses at a time,” said Meyer.
He added that start-up cost could go as high as $700,000 and $800,000 as opposed to getting started in the cattle business with 100 acres and 20 cows.

Meyer also noted that when it comes to comparing the poultry industry to the equine sector, it’s not an apples-to-apples comparison.

“The receipts mean different things for different industries. The total value of that $930 million receipts figure is the total value of the birds produced in Kentucky so only a part of that is being received by farmers,” he said. “In the Thoroughbred industry, the receipts are not only the value of the horses, but it is the value of the stud fees and all those things that are in the picture, too.” 

The global recession has caused Thoroughbred auction sale prices to fall over the last two years, with prices being down 30 to 40 percent in recent sales according to Craig Infanger, Extension professor in the UK Department of Agricultural Economics.

Meyer said the best way to use the receipt figures is to use them within each respective industry and not between the different sectors.

“We can look at the poultry industry and say that we are getting steady growth and not a lot of variability. But when we look at what goes on with tobacco for instance, we saw a big drop from 2000-2001 and it sort of leveled off and came back, but you can’t compare really the $400 million for tobacco with the $930 million for poultry,” he said.

Meyer said the same is true about the comparison to the equine industry, as well and not to count out horses in Kentucky. He also said, to remember there is more to the horse economy in this state than just those that race.

“I always thought of the horse industry as Thoroughbreds, but there is really a lot more to it. There are more Quarter Horses in Kentucky than Thoroughbreds and there are all the shows that go with that,” he said. “I think the equine industry will come back maybe not necessarily in the next year, but I think in the next couple of years most likely it will come back.”

1/6/2010