Story and Images by: The Lane Report
By Mark Green
Mark Green: What’s the Kentucky Agriculture Department budget, and how many employees does the department have?
Ryan Quarles: We’re around 215 employees, but we have some open positions now. We’re always looking to hire talented people at the Department of Agriculture. For a lot of folks, it’s a career where you’re not sitting behind a desk all day. Our hardworking inspectors may be out there working gas pumps or farms. Roughly half our staff are dedicated to fieldwork all across Kentucky.
The budget is usually around $33 million, give or take. Some of that money is pass-through money from federal sources like the EPA. We administer some of their programs when it comes to chemicals or pesticides; other money flows through us. Our state General Fund dollars are around $16 million, but our budget is around $33 million.
MG: Agribusiness in Kentucky remains a significant portion of a state economy whose GDP is $190-200 billion. What portion of that is ag?
RQ: Our direct farm cash receipts are usually around $6 billion a year. That’s dollars going into the pockets of farmers. However, due to low commodity prices and low cattle prices, that number is around $5.4 billion right now. We’re actually down 17 percent over the past two years.
You mention Kentucky’s GDP is around $190 billion. The total economic output nationally for agriculture is about the same number. Despite Kentucky being a small state with only 4.3 million people, our ag numbers usually have us ranked in the top tier of all states when it comes to the economic impact.
MG: Many elements of Kentucky business are directly connected to farm operations, but people might not think of them as agribusiness. Can you mention some of those?
RQ: We have a thriving bourbon industry in Kentucky, and a recent study showed that 15 to 20 million bushels of Kentucky corn go into Kentucky bourbon each year, which constitutes roughly 7 percent of our total corn output. As that industry grows, so does opportunity for Kentucky farmers. Another great example is Big Ass Solutions (formerly Big Ass Fans). That company has its roots in agriculture, as they developed those large, low-RPM fans for dairy barns. So there are a lot of agribusinesses that don’t necessarily come to mind at first but have deep agricultural roots.
MG: What today are the broad market forces that most affect farm revenue? RQ: It’s sometimes said that farming is the only industry that pays for all of our inputs at retail cost then sells its products at wholesale, and we pay the freight costs both ways – I think I have to attribute that quote to (Kentucky Agriculture Development Board Director) Warren Beeler (August 2016 One-on-One interviewee, see tiny.cc/kqojjy). We’re one of the few industries that produces a good without knowing what our sale price is going to be. Kentucky’s car producers have an idea what they’re going to sell that vehicle for; they know what their inputs are going to cost, and they’re able to project revenues. With farming, there’s oftentimes a year lag between putting seeds in the ground and knowing what price you’re going to get. In the global economy, the weather in South America very well could affect corn prices here in Kentucky this fall. So in one respect we’re very integrated with the international global economy, but the other respect is that Kentucky farmers continue to persevere through a high-risk occupation.
MG: How is the strong U.S. dollar on world currency markets affecting Kentucky’s farmers’ market prices?
RQ: A strong dollar always hurts exports, and we are an export-dependent agricultural economy: One in four rows of corn you see in Kentucky ends up overseas. About the same is true with soybeans, and 80 percent of our tobacco ends up overseas. We are sensitive towards the elasticity of the strength of the American dollar. Right now, agriculture represents about 5 percent of the total of Kentucky’s export portfolio, which is about $28 billion.
MG: Fewer exports then increases supply in the United States and causes lower prices?
RQ: That’s part of it. There seems to be a trend of commodity prices being lower not just in ag but also in metals right now and other commodities that are sold through Chicago (Mercantile Exchange). Oftentimes there’s a connection between other raw commodities and agriculture as well. You also have to remember that farmers respond to market forces. If they know corn prices were high, say, three years ago, more people are going to start growing corn. With our cattle prices right now (up 76 percent since 2009 to the highest on record), our beef herd has grown nationally over 2 million head recently; the supply has grown and that has caused a little dip in prices as well. We’re always responding to market forces greater than what you see on individual farm gates.
MG: Has Kentucky become more of a grain crop producer in recent years?
RQ: We’re about stable. There was obviously a run with the grain market back about three or four years ago when it hit its 2013 peak. People were growing grain in areas you traditionally wouldn’t see, particularly in Central Kentucky. However, we’ve always been a strong grain state. We consistently rank in the top 15 nationwide when it comes to our grain production. Corn is a billion-dollar industry. Soybeans is about a billion dollars. Wheat is still very strong as well. And particularly when you get out in Western Kentucky, we are part of the “breadbasket” that most people associate with the Midwest.
MG: Land in the Western Kentucky is similar to the Midwest?
RQ: The thing that’s unique about Kentucky, compared to the Midwest, is that a lot of our grain doesn’t leave the state. We export a lot, but we also process a lot of it here because we have a lot of livestock and about half of our grain is used for livestock feed. That’s one reason why we’re so efficient at producing cattle. That’s why poultry is our No. 1 livestock in the state, at $1.2 billion; it’s well on its way to becoming a $2 billion industry in our state because we’re able to lower our input costs on the feed side.
MG: Traditional family farms have long been consolidating and becoming part-time operations. How many farms are there in the commonwealth today, and what is the trend in operations?
RQ: We have 76,000 farms. That’s a lot of farms. That ranks us fifth or sixth in the nation in the number of farms. And 95 percent of our farms are owned and operated by families, so the corporate agriculture presence is quite small in Kentucky. We are a state of small family farmers. That sets us apart from most other agricultural states because we have a lot of people involved, and they’re used to growing specialty crops and have a focus on value. We grow everything from apples to zucchini and everything in between because we have such a large number of small family farms.