Kentucky agricultural economy improves; growth needed for grains

UK agricultural economist Will Snell presents during the 2017 Agricultural Economic Outlook at Kentucky Farm Bureau.  PHOTO: Katie Pratt, UK Agricultural Communications

UK agricultural economist Will Snell presents during the 2017 Agricultural Economic Outlook at Kentucky Farm Bureau.  PHOTO: Katie Pratt, UK Agricultural Communications

Kentucky agricultural cash receipts and net farm income rebounded in the past year from 2016 levels, but are still well below record levels set earlier in the decade.

Agricultural economists from the University of Kentucky College of Agriculture, Food and Environment are projecting 2017 farm cash receipts to be $5.6 billion, which is a 3.5 percent increase from 2016. Preliminary indications also point to a modest increase in net farm income from 2016 levels.

"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 ($5.7 billion) with modest gains in poultry, horses and soybeans, offsetting expected losses in tobacco, corn and cattle."

The state is largely following national trends, with U.S. farm incomes and cash receipts also seeing a slight rebound but still well below record-setting levels.

"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."

U.S. growers are expected to produce record yields in corn and the second highest yield for soybeans. This resulted in the second largest crop for each commodity, even with a reduction in corn acres.

"Early indications for 2018 will have prices remaining soft due to increased supplies, with farmers potentially replacing some corn acres with soybeans," said Todd Davis, UK agricultural economist. "This price scenario could change if a significant weather event occurs in South America during the 2018 growing season."

"Even though the general agriculture economy may be improving, that's not being felt by grain farmers as they face more projections of below the cost of production prices," said Laura Knoth, KyCorn executive director. "There are few bright spots being predicted for grain prices, especially with a record crop behind us and a trade battle in front of us. KyCorn is continually working on policy issues to help turn it around."

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For the entire outlook, visit the UK Department of Agricultural Economics website at http://www.uky.edu/Ag/AgEcon/pubs/extoutlook17-18.pdf

Jennifer Elwell