Farm Income Declines

Farm cash receipts for 2001 declined by 7 percent to
$3.65 billion compared to $3.9 billion the previous year. Kentucky’s lower net
farm income resulted from lower receipts for tobacco, horses, and government payments,
said Gregg Ibendahl, University of Kentucky Extension agricultural economist.

"With higher costs
for fuel and fertilizer, lower receipts for tobacco and horses,
and a slight drop-off in government payments, net farm income is
going to drop to $1 billion," Ibendahl said during an
agricultural economic outlook conference sponsored by the UK
Department of Agricultural Economics.

Tobacco and the equine
industries saw estimated declines in cash receipts this year of
$144 million and $210 million respectively. Equine was the leading
farm enterprise in the state for the second year despite the drop
in receipts due largely to lower receipts for breeding stock,
declines in yearling sales, and lost boarding fees largely as the
result of Mare Reproductive Loss Syndrome.

Total cash receipts are
expected to decline another 5 percent in 2002, Ibendahl said. The
major reasons for the drop are expected losses in the equine
industry because of Mare Reproductive Loss Syndrome.

Net farm income will
bounce back slightly in 2002 because of lower fuel and fertilizer
costs and lower interest rates but it is not going to be anywhere
near the 2000 level, which was a record year, but it may be above
the 10-year average.

"Key for farmers
is going to be government payments," Ibendahl said. "The
question is, are we going to get $20 billion in the U.S. in future
farm bills? Mainly those payments are helping to support land
values and net farm income."

Government payments
account for 30 percent of the net farm income in Kentucky,
Ibendahl said. But he added it accounts for around 85 percent of
the net farm income for many full-time farmers, based on Kentucky
Farm Business Management data.

-Laura Skillman

CORRECTION

Please don’t contact Murray State
University about the Vineyard Assistance Program described in last month’s
article, "Vineyards as an Alternative Crop." State funding for that
program expired last July. We apologize for our error.