Scottish beef farmers warn of low price risks to future production

Scotland’s hill suckler herds would need to achieve market prices two- and-a-half times the current level to allow farm businesses to cover their costs, according to new figures from Quality Meat Scotland.

Unveiling at AgriScot the results of a survey of more than 220 Scottish sheep and cattle businesses, QMS senior business analyst Stuart Ashworth said this figure was calculated making an allowance for a 5% return on working capital and payment of unpaid family labour.

The figures do not factor in single farm payments and refer to 2006 – so don’t take account of the recent foot and mouth disease outbreak and soaring feed prices, said Mr Ashworth. Even without these pressures, he said the survey shows the difficulty of trying to make a profit from livestock in the the present business environment.

“Despite a small improvement in margins compared to 2005, only 4% of suckler herds achieved a positive net margin, compared to 3% last year, and none of the hill suckler herds achieved this milestone,” he said.

Those finishing cattle faired a little better with the average 8% improvement in prime cattle price between 2005 and 2006 benefiting them more directly.

“But still less than half those surveyed achieved a positive net margin. Equally, to break even after paying unpaid family labour and return on capital the average selling price would have to be 20% more than in 2006,” said Mr Ashworth.

A quarter of the ewe enterprises surveyed achieved a positive net margin, a slight improvement on the 20% that achieved this milestone in 2005.

However, poor prices in the second half of the 2006 lamb crop year put considerable pressure on store lamb finishers, where only 7% of those surveyed achieved a positive net margin compared to 36% in 2005.