Tobacco, Horticulture & Forestry
Unfavorable growing and curing conditions will likely cause the KY value of tobacco
production to fall below $300 million in 2016 – its lowest level in the post-buyout era.
Improved yields may enable burley production to rebound modestly in 2017, but declining cigarette sales and slumping export demand will limit contract volume adjustments.
Continued but slower growth in the smokeless tobacco market coupled with a smaller than desired 2016 crop will provide support for the dark tobacco sector in 2017.
Excessive summer rain in 2016 resulted in modest decreases in produce sales to around $38 million.
Strong local demand should bode well for produce markets again in 2017.
Stronger greenhouse sales should offset slower nursery sales and reach about the same $96 million observed in 2015. Growth in 2017 will be driven by the regional housing market and retail economy.
The forestry sector declined 4.8% from $14.6 billion in 2015 to an estimated $13.9 billion in 2016. The reduction was anticipated with the collapse of the Verso pulp and paper mill in Wickliffe resulting in a loss of over $430 million in 2016.
Lackluster markets for the majority of hardwood lumber species continue to put a drag on the sector as well as demand for products such as railway ties. A slight dip in wood exports stopped a strong positive trend starting in 2011.
White oak stave logs used for bourbon barrels bucked the overall trend for most wood commodities, increasing almost 8% in delivered mill price with a statewide average of $1,252 per thousand board feet. A seller’s market will continue into 2017.
Source: 2016-2017 Kentucky Agricultural Economic Situation and Outlook, University of Kentucky College of Agriculture, Food and Environment