Home Agricultural Kentucky’s agricultural economy is thriving; revenue records expected | New

Kentucky’s agricultural economy is thriving; revenue records expected | New


Agricultural economists at the University of Kentucky predict that the state’s farm receipts in 2021 will exceed $ 6.7 billion. If achieved, it will be a new record, surpassing the previous record of $ 6.5 billion in 2014 and the average of $ 5.5 billion over the past five years. They expect net farm income to approach $ 2.5 billion, the highest since 2013.

Economists from the British College of Agriculture, Food and Environment shared their forecasts for Kentucky’s agricultural and forestry economies at the Kentucky Farm Bureau’s annual meeting.

Kentucky’s agricultural sectors are fueled by many challenges caused by the COVID-19 pandemic and are experiencing tremendous economic growth due to increasing grain exports, high crop yields and strong global demand for meat . As a result, corn and soybeans are tied with poultry as the state’s top agricultural commodities in 2021. Each accounts for 18% of all projected sales.

“Nationally, grain stocks were lower at the start of 2021, and with increasing exports, our stocks declined further as the year progressed. This has led to higher prices throughout 2021, ”said Greg Halich, British agricultural economist. “For the next crop year 2022, prices are expected to remain stable or even increase, but profits will tighten due to rising input costs.”

Corn, soybeans and poultry are followed by equines, which had a good sales season and hold a 16% market share. Cattle come next with 11% of projected sales.

“In 2021, the horse market saw a huge recovery and Keeneland sales increased 35% from 2020,” said Kenny Burdine, UK agricultural economist. “Beef exports are expected to set a record in 2021. After several frustrating years for beef producers, a further decline in the number of beef cows and continued global demand are expected to lead to improved prices for calves and cattle. ‘fattening in 2022.’

Kentucky’s agricultural economy is consistent with national trends. U.S. agricultural exports are likely to end 2021 at record levels approaching $ 175 billion. In September, corn exports more than doubled, beef exports increased 37% and forestry products increased 29% on the year. The US Department of Agriculture projects a 23% increase in net farm income, which will only be surpassed by the all-time high of $ 123.7 billion set in 2013. In 2020, producer incomes increased by nearly 20%, mainly due to government Coronavirus Food Aid Program payments designed to help farmers meet the challenges of the pandemic and Market Facilitation Program payments to help resulting export losses of the trade war. While government payments are expected to be 40% lower in 2021, they continue to account for about a quarter of U.S. net farm income.

“Despite the hard-hitting events of the pandemic, the U.S. agricultural economy not only survived, but experienced remarkable growth, initially thanks to financial support from the government, followed by significant export gains, impressive agricultural yields and a boom. growing global demand for meat products. British agricultural economist Will Snell said.

Customers of the Kentucky Farm Business Management program achieved record net farm income in 2020, and profits for 2021 are expected to exceed these.

“An average commercial-sized farm is in excellent financial health in terms of solvency and liquidity,” said Jerry Pierce, coordinator of Kentucky Farm Business Management. “Farms in the bottom third of net farm income have made huge financial health gains in 2020 and are poised to consolidate their position in 2021.”

The forestry industry, which includes logging, primary wood processing, secondary wood processing, pulp and paper, paper converters and wood residues, continues its upward trend. In 2020, the sector added nearly $ 14 billion to the state’s economy. Strong demand for Kentucky hardwood continues to exceed harvesting and processing and has led to a seller’s market for the timber.

“The prices of important species, such as white oak and yellow poplar, have increased by more than 50% this year,” said Jeff Stringer, chairman of the UK Department of Forestry and Natural Resources. “As demand for high-quality white oak continues, driven by the cooperage industry supplying white oak barrels to bourbon distillers across the state, prices for white oak lumber will remain robust. While supply and demand are closer for other species, prices will remain on an upward trajectory in 2022. “

Higher prices and good yields in specialty crops, which include produce and nurseries, will likely allow the industry to surpass record 2020 revenues, but rising input costs will limit the profitability and growth of the industry. Cash receipts for 2021 are expected to be $ 16 million for fruits, $ 44 million for vegetables and $ 118 million for nursery and greenhouse production.

“Strong competitive pressures will continue outside the United States in the commodity market,” said Tim Woods, agricultural economist. “As Kentucky growers benefit from strong local demand and high local prices can remain in direct markets, the import supply will continue to increase. Labor costs are a major constraint for this sector.

In 2022, economists predict that commodity prices will continue to be relatively high, but rising input costs will squeeze farmers’ profits next year.

“Farm input costs are likely to increase by double digits in 2022, with much higher prices for fuel, fertilizer and feed,” Snell said. “The costs of labor and supplies continue to be a concern, not only among farmers, but throughout the food supply chain and the rest of the economy. Farmers will be asked to keep a close watch on input and commodity markets as they develop purchasing and marketing strategies amid this turbulent, volatile and uncertain agricultural economy. ”

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