1. Regional Issues and Program Committee September 30, 2003 Larry D. Jones, Agricultural Economics

2. Farm Numbers, Kentucky 1940-2001 Thousands Year Farm Numbers Source: Ky Ag. Statistics

3. WHAT IS A FARM?

4. What is a Farm? Government says that a farm is a business that has $1000 gross sales of food and fiber per year OR Could sell $1000 annually

5. Farm Cash Receipts—Kentucky 1991-2002 Source: KY Agricultural Statistics Millions $ Total Livestock Crops

6. Kentucky Crop Receipts, 2002 ($1.15 Billion ) Millions $ Source: KY Ag. Statistics

7. Kentucky Livestock Receipts, 2002 ($1.96 Billion ) Source: KY Ag Statistics Millions $

10. Net Cash Returns from Ag. Sales KY and U.S. Avg. Per Farm Dollars Per Farm YearSource: 1997 Census

11. Government and Tobacco Payments as Percent of Net Farm Income in KY Source: U.S.D.A, E.R.S Percent

12. KY Ag. Production-2002 Commodity National Rank Burley Tobacco 1 Equine1 Other Hay3 Beef Cows8 Poultry12 Corn15 Soybeans15 Milk Cows18 Hogs19 Alfalfa Hay27

13. Type of Farm Organization Source: 1997 Agriculture Census

14. U.S. vs. Kentucky Farmer Profile 88% Caucasian 18,500 African-Amer. 10, 638 Native Amer. 8,731 Asian Amer. 27,717 Hispanic 7.6% Female Operated 98% Caucasian 523 African Amer. 123 Native Amer. 38 Asian Amer. 405 Hispanic 9% Female Operated Source: 1997 Ag. Census United States Kentucky

15. Kentucky Farms by Acres (75% of Farms Smaller Than National Avg) Source: Ag. Census

16. Farms and Sales of Ag Products Source: 1997 Ag. Census Percent

17. KY Farms by Sales (87% KY Farms Gross Less than $50,000) Source: 1997 Ag Census

18. Sources of Income for Average Farm Household (Farm Income is 10% of Total) Source: USDA Ag. Resource Mgt. Study

19. Average Farm and Off-Farm Income for Farm Households Dollars Size USDA Ag. Resource Mgt. Study

20. Importance of Agriculture in Kentucky Farming represents 3.2% of state’s economic activity and 6.2% of jobs Forestry, inputs, and processing means added 9.5% of economic activity and 11.8% of jobs Adding retailing means entire system equals 16.2% of state’s economy and 21.1% of the jobs Source: Godley and Jones IMPLAN, 2001

21. Current Trends in Agriculture Walmartization of production Globalization rewards low cost managers New trade agreements Shifting role of government policy Push for diversification, but…. Widespread restructuring of agribusiness

22. Current Trends in Agriculture Products replace commodities Product safety concerns will grow Environmental factors influence location and concentration Technology explosion accelerates Information is “new” source of competitive advantage

23. Implications for Markets Evolution from commodities to components Price change from food and feed to component pricing Farm marketing-price takers to negotiators Contracting expands Markets become “thin” Value of information

24. SUMMARY Basic underlying trends continuing Think broadly of agriculture—it’s a system to produce and deliver consumer goods Importance of healthy rural economies to farm families Don’t underestimate the value of objective information in the current environment