Good Expectations

Agriculture means
a lot to the economy of our state, and to Kentucky’s heritage and
culture.

Like everything else, it’s changing. This month’s cover story
describes some of the business planning needed to be successful in
farming these days.

Last month a group of University of Kentucky agricultural
economists issued a shorter-term forecast for farming in the
state, and the outlook for 2001 is pretty good.

Income from Kentucky farm products should show a 5 percent
increase this year, to a record $4.25 billion. Net farm income may
not reflect that increase, however. More than half of Kentucky’s
net farm income last year came from government payments, much of
it in the form of emergency aid and tobacco settlement payments.
That level of aid will likely be lower this year.

Here’s more on the forecasts for specific products:

Horses. In 1999 sales of horses and mules became the
largest agricultural enterprise in Kentucky, and last year’s sales
are projected to have reached $1 billion for the first time. The
gains are the result in part of higher prices for thoroughbreds.
Kentucky leads the nation in thoroughbred sales. Twenty-nine
percent of the sales of horses in the United States come from the
five counties around Lexington. The UK experts expect smaller
increases this year, as a result of weaker demand resulting from
what they think may be a slowing national economy.

Tobacco. The outlook for tobacco income in 2001 is
optimistic, but complicated by a long list of issues including
lawsuits, political and program changes, and domestic and
international demand. Last year income from sales of tobacco hit a
record low, but payments from tobacco settlement dollars and
federal disaster aid resulted in a record high level of cash
receipts.

Livestock. The economists expect the strong economy to
continue to increase the demand and price for beef for the next
few years. They expect hog prices to stay at profitable levels for
the first half of this year, then decline as a result of an
expansion in production. Poultry is expected to continue its
several-year expansion.

Grains. Uncertainty clouds the forecasts for corn,
soybeans, and wheat. Worldwide demand is strong, and supplies are
low, but growing. Grain income will depend on who plants how much
this spring, and what the weather does around the world.