Tight beef supplies and continued improvement in the U.S. and world economies, which would greatly improve the demand for beef, are expected to cause livestock receipts to increase by $100 to $200 million in 2011, according to UK.

“The overall beef supply will also remain very tight and support slaughter cattle prices,” the UK report stated. “Feed costs will ultimately determine how much of these strong prices will be enjoyed at the stocker and feeder cattle level. Calf prices will most likely improve into the spring and have the potential to exceed 2010 levels.”

Improved market conditions for beef cattle is one of the reasons the U.S. Department of Agriculture is projecting U.S. net farm income to increase 24 percent in 2010. “The balance sheet for ag is strong,” the UK report noted, despite the weak economy overall.

Calf prices rallied early last year, spending much of the spring and summer in the $115-$120 range. Calf prices fell sharply last fall, but have still remained above 2009 levels.

Strong export demand supported feeder cattle prices, offsetting much of the negative effect from rising corn prices last fall. Spring feeder cattle futures, coupled with last fall’s calf prices, are creating some attractive opportunities this winter for backgrounders right here in Kentucky to add pounds to the animals.

I also want to mention that I believe the success of the Kentucky Proud farm marketing program was a factor in pushing 2010 cash receipts higher. Retail sales of Kentucky Proud products exceeded $200 million last year.

Kentucky Proud and other diversification efforts are helping farmers keep going during a down economy. They also are helping many tobacco producers make a successful transition to other products. Tobacco now makes up less than 10 percent of Kentucky agricultural sales, compared with nearly 25 percent in the 1990s, according to UK.

Kentucky agriculture is one of the few sectors of the economy performing well during these tough times. Kentucky farmers have my admiration and utmost respect for their skill, toughness and resilience.

I urge them to keep up the good work this year as they forge ahead toward a mark that’s never been reached — $5 billion in cash receipts.