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FRANKFORT, Ky. — Agriculture Commissioner Richie Farmer was pleased to hear that Kentucky agricultural cash receipts are expected to reach a record of nearly $4.3 billion in 2007.
Economists with the University of Kentucky College of Agriculture announced the forecast in its 2007 economic outlook. UK expects Kentucky farm receipts next year to reach $4.296 billion, which would break the record of $4.13 billion set in 2004. The forecast assumes normal growing conditions and no major disease outbreaks. UK said 2006 cash receipts will be $4.1 billion, the second-highest total on record.
“The state of agriculture in Kentucky is strong,” Commissioner Farmer said. “But almost as important as the strong financial numbers is a spirit of teamwork and optimism that I see throughout Kentucky. Government is working with private enterprise and the universities. Commodity groups are looking for common ground. And leaders of both political parties are making commitments to strengthen the foundations of Kentucky’s agricultural economy.”
The UK report said net farm income is expected to be lower in 2006 and 2007 than the record $2.082 billion in 2005. Lower government payments and rising production costs are expected to cut net income.
Crop receipts are forecast to rise 13 percent next year on the strength of increasing use of corn and soybeans for biofuels, according to the report. Corn consumption in the U.S. now exceeds production, and an increase in corn acres would lead to a decrease in soybean acres. Tobacco’s future is uncertain, depending on input costs, price and the availability of labor, which was an issue during this year’s harvest, the report said.
UK predicts that livestock receipts will increase less than 1 percent in 2007. High feed costs and increased marketings in the drought-stricken West are expected to result in lower cattle prices. Hog prices will drop on increased production and questions about trade. Broiler prices are expected to stay about the same. Kentucky goat producers who participate in the Kentucky Department of Agriculture’s graded and Tel-O-Auction sales “can expect very competitive prices,” the report said.
Produce sales inched up in 2006 and should continue to increase in 2007 as direct marketing continues to grow. Nursery and greenhouse income could be affected by higher energy costs and a slowdown in the housing market, the economists wrote. Most Kentucky dairy producers will see negative economic returns in 2006, and a slight increase in milk production nationally next year will not help, according to the economists.
“The 2006 results and 2007 forecast show that Kentucky is succeeding in diversifying its agricultural industry,” Commissioner Farmer said. “The investments of tobacco settlement funds and the Kentucky Proud marketing program are working.”
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