Kentucky’s agricultural sector could set record revenues


FRANKFORT, Ky. (AP) — Kentucky agriculture appears to be at a record pace to surpass $7 billion in cash receipts in 2022, supported by robust commodity prices that could reward farmers hit hard by rapidly rising production costs, an agricultural economist told state lawmakers. Thursday.

Despite all the challenges this year, Will Snell, an agricultural economist at the University of Kentucky, said his biggest concern is for 2023, when commodity prices could fall without a corresponding drop in input costs for farmers. Snell appeared before a legislative panel to discuss the effect of soaring inflation on Kentucky’s agricultural sector.


What do you want to know

  • Kentucky agriculture appears to be at record pace to surpass $7 billion in cash receipts in 2022
  • Market prices for Kentucky agricultural products — from corn and soybeans to chickens and hogs — have surged since 2020.
  • Tobacco was once the king of agriculture in Kentucky, but its decline has resulted in a highly diverse agricultural sector

Rising agricultural production costs outpaced rising prices elsewhere in the economy, Snell said. Fertilizer costs, for example, have more than doubled, he said. Snell recounted his recent conversation with a farmer who owed an agricultural store $100,000. Farmers have absorbed these significantly higher expenses in the hope that their investments will be rewarded later in the year.

It’s a big risk, but one that could pay off. Market prices for Kentucky agricultural products — from corn and soybeans to chickens and hogs — have surged since 2020.

As a result, Snell predicted a good year for Kentucky agriculture in 2022, assuming key variables unfold — that farmers have favorable growing conditions and export markets remain strong.

“I’m pretty confident to say as long as we have decent growing conditions, and with the prices we’re expecting this fall, we’re going to be well over $7 billion in farm cash receipts for 2022,” he said. Snell.

Bluegrass State’s record for farm cash receipts was $6.5 billion in 2014. Economists suspect last year’s amount topped that level, but data won’t be available until later this summer. Snell said.

Tobacco was once the king of agriculture in Kentucky, but its decline has resulted in a very diverse agricultural sector. The state’s major agricultural products include corn, soybeans, poultry, horses, and cattle.

Crop prices this fall could lead to increased net farm income for grain producers, assuming they have good yields, Snell said. Strong export markets for corn and soybeans should keep crop prices higher this fall, he said. For livestock producers, rising feed costs will pose a challenge, but rising market prices will help offset higher expenses, he said.

As for Kentucky’s net farm income — the amount left over after farmers’ expenses — Snell said he doesn’t expect a record amount this year. But it could end up being “relatively high” compared to the past decade, assuming returns are good, he said.

But he warned of the outlook for a bumpier year for Kentucky farmers in 2023.

“The world will react to these higher commodity prices and we are likely to see a pullback and a decline in commodity prices – especially crop prices – that we expect for 2023,” he told lawmakers. “These input prices tend to be quite rigid. We generally haven’t seen them fall as quickly as commodity prices. And therefore, this is our greatest concern.


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