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LEXINGTON-You might not think that the U.S. would post near record net farm income this year given widespread drought and poor crop conditions, but think again.
The USDA is projecting that inflation-adjusted national net farm income for 2012 will reach its highest level in 42 years, according to the USDA Economic Research Service.
University of Kentucky Agriculture Economist Will Snell told the Interim Joint Committee on Agriculture at UK’s E.S. Good Barn today that while record low commodities were once considered likely, results are now estimated to be much better than expected.
A rise in commodity prices, increasing indemnity payments, and less detrimental than expected effect from low crop yields are all considered factors in the rise in net income, reports the USDA.
As for Kentucky, Snell said the state’s net farm income is typically $1 billion a year, but that the Commonwealth will be “challenged” to continue meeting that figure as buyout and direct payments to farmers wind down. Snell said both the local food movement-which offers direct funding to farmers-and the strengthening of the dollar internationally should help move the state forward.
As for agricultural cash receipts, Snell said Kentucky is not expected to reach a hoped-for $5 billion in total receipts for 2012. But, he said, the Commonwealth should be over the $4 billion mark “when it’s all said and done.”
“It won’t be as bad as some have anticipated,” Snell said.
According to the USDA, Kentucky has logged $2.8 billion in agricultural cash receipts for the first seven months of this year. That is a slight increase from the first seven months of 2011, Snell said.