Report shows scope for livestock performance improvements

Scottish livestock producers saw improved margins for their 2021 lamb and calf crops, but many businesses still struggled to deliver a fair return for their family labour and the level of capital invested.

Quality Meat Scotland (QMS) has published its annual enterprise costings report, which provides a snapshot of the industry during 2021 based on the results of more than 250 farms.

In each sector it compares the costs, revenues and margins achieved by the top-third of producers, the bottom-third, and the sample average.

See also: Marginal gains key to livestock farm profitability

Iain Macdonald, QMS market intelligence manager, said although 2021 was a more positive year for some enterprise types, there was still a wide range in performance.

“The success of top producers continued to be characterised by strong cost control, greater productivity and tight technical performance,” he said.

Key areas of difference were around the number of live animals reared to the point of sale and the level of mortality in breeding stock, with top-performing farms generally having lower replacement rates.

Having cull stock to sell off also offset the cost of replacements.

Mr Macdonald said the aim of the report, Cattle and Sheep Enterprise Profitability in Scotland, was to encourage farmers to examine how their business compares with the wider industry.

“It has obviously been a very difficult year for producers, but through benchmarking there may be some valuable insights that can be used to assess where there could be scope for performance improvements, to boost resilience against a volatile marketplace.

“For both cattle and sheep enterprises, achieving a margin from the marketplace that rewarded family labour and provided a return on the capital invested remained elusive,” Mr Macdonald said.

Key findings include:

• Fifty-five percent of suckler herds in the survey achieved a positive net margin in 2021, up from 45% in the 2020 survey year
• The number of store finishers achieving a positive net margin rose from 63% to 75%
• The less-favoured area (LFA) hill suckler herds surveyed had an average gross margin of £421 a cow, but the top-third averaged £635 a cow
• Results from cereal-based cattle finishing enterprises showed top-performing farms achieved the best growth rates, but started with the lightest-weight cattle. This resulted in the top-third finishing cattle 13 days quicker than the average, while selling them 7kg heavier
• LFA hill sheep enterprises achieved an average gross margin of £32 a ewe, up £6 on the year and pushing the average net margin to a loss of £14. However, the net margin for the top-third was just over £9 a ewe.

Looking ahead to the 2022 crop, Mr Macdonald said while market returns are likely to have increased further, unfortunately these are likely to have been offset by a further surge in input cost pressures.

The 2022 Cattle and Sheep Enterprise Profitability Report can be viewed and downloaded from the QMS website.