Boosted by continued gains in its equine and poultry industries, Kentucky's farm cash receipts stayed relatively stable this year as higher yields for most crops helped offset lower prices hitting some sectors, agricultural economists said Thursday.
The projected cash receipts — coming in a volatile year for farmers due to trade uncertainties and challenging weather — remained well below the record statewide high of $6.5 billion in 2014, the University of Kentucky ag economists said.
But the diversity of Kentucky's farm sector, plus strong yields, have helped it weather the volatility better than in some other parts of the country, they said.
"What has held up Kentucky farm income over the last several years ... is that we've done very well on the yield side," said UK ag economist Will Snell.
They don't foresee a rebound in Kentucky's ag cash receipts next year due in part to projected losses for soybeans, tobacco and cattle.
Snell warned that a continued period of low commodity prices has produced cash flow problems for some in the farm sector. Next year will be a crucial time for those farmers relying increasingly on operating loans, he said.
"Trade developments and, of course weather, will be key in determining the outcome in the direction of prices, income and loan repayment ability," Snell said.
The ag forecasts by the UK economists have become a fixture at the Kentucky Farm Bureau's annual meeting in Louisville.
Statewide ag cash receipts in 2018 are forecast at $5.7 billion, matching last year's level, the economists said in their report. Higher yields for most crops, except tobacco, along with strong equine and poultry markets helped offset lower soybean and dairy prices, they said.
Kentucky's renowned horse industry is expected to lead the pack with a 10 percent increase in cash receipts, the economists said. Equine receipts are expected to exceed $1 billion this year. The industry is benefiting from a strong economy, boosting horse sales and breeding stud fees.
But poultry production is expected to keep its perch as Kentucky's top agricultural enterprise, accounting for 21 percent of projected 2018 sales, they said. Cash receipts for the poultry sector are forecast to increase 3 percent and approach $1.2 billion this year, they said.
The equine sector ranks second statewide in projected sales, followed by soybeans, cattle and corn, they said.
Sectors expected to suffer declines in 2018 cash receipts include dairy, wheat, hogs and tobacco, they said.
Statewide ag cash receipts for 2019 are forecast at $5.6 billion to $5.8 billion, with continued gains in the equine and poultry markets offsetting anticipated losses for soybeans, tobacco and cattle, they said.
Kentucky's net cash income — the amount left after expenses — has averaged $1.8 billion in the past three years in the farm sector, down from the $2.3 billion average during the boom period of 2011 to 2014, the economists said. Kentucky's farm income has held up better than national trends due to the bluegrass state's diverse farm sector and above-average grain crop yields.
Cattle prices and value in 2018 were able to stay relatively flat in response to strong export markets for beef, the economists said.
Soybean farmers already struggling from the U.S. trade conflict with China suffered another setback in the fall when a wet harvest period hurt the volume and quality of the crop, the economists said.
China has all but stopped buying U.S. soybeans in response to President Donald Trump's trade tariffs.
Despite the trade tensions and a higher valued U.S. dollar, American ag exports increased 2 percent in the fiscal year that ended on Sept. 30, the economists said. Strong corn and meat exports offset lower soybean shipments, they said.