University of Kentucky agricultural economists predicted a new record for agricultural receipts at the Kentucky Farm Bureau Commodity Conference and Annual Meeting last week. Before, the record was set in 2014 at $6.5 billion. Economists are predicting agricultural receipts in excess of $6.7 billion this year. The average has been $5.5 billion per year over the past five years. Net farm income is expected to hit $2.5 billion, the highest net farm income since 2013.
COVID-19 created hard times for Kentucky farming. However, due to strong crop yields and increased grain exports and meat demand, they are experiencing vast economic growth. Kentucky’s agricultural economy is matching nationwide trends. Grain and poultry go hand-in-hand in Kentucky because of the global need for both. Nationwide, beef exports are up by 37%, and corn exports have doubled. Overall, it looks like the U.S. farm industry will hit record levels approaching $175 billion.
University of Kentucky agricultural economist Greg Halich believes that prices will rise or stay the same in 2022. Either way, he states that “profits will tighten due to rising input costs.”
Agricultural Prices Increase in the U.S.
The U.S. had a low grain supply at the beginning of the year. Grain supply continued to go down as exports increased. Due to this, prices in the U.S. rose. Price hikes didn’t only happen to grain, though.
For example, the U.S. logging industry saw higher demand in 2021. Thus, higher prices. Kentucky’s hardwood has reached such high demand that harvesting and processing can’t keep up. Prices have doubled for essential woods like white oak and yellow poplar. Forest product exports are up by 29% this year. Supply and demand are evening out for some species of wood. But it’s still a seller’s market.
Individual states and the U.S. are predicting record-breaking profits overall. But agricultural economists say that outside pressure and competition will keep affecting prices in 2022. Labor costs will also affect farming industry profits. Feed, fertilizer, and fuel costs are almost guaranteed to go up for farmers. Profits may be high now, but the market is always changing. U.K. economists recommend that farmers watch the market and plan ahead.
COVID-19 Payments Help Support Agricultural Business
Agricultural producers’ incomes were on the rise in 2020. This is partially because of the Coronavirus Food Assistance Program, which contributed to the 20% increase in income. Payments from the government are expected to go down by 40% in 2021. Even with this decrease, government payments still make up nearly 25% of farm income.
COVID-19 support might have been the extra push some farms needed. Now, farms that weren’t doing well can focus on maintaining the financial foothold they gained over the last couple of years.