A PREDICTION that between 20 and 30 per cent of beef production will in future be owned by either major retailers or by large meat processing plants was made yesterday by Colin Clark, who said that such a move would help them protect their supplies.
Speaking at a Quality Meat Scotland meeting in Dundee, Clark said he saw Scotland following the trend in the United States and Australia, where the big buyers have already moved into what has previously been the preserve of the farmer finishing cattle.
Following his purchase of the 1,000-acre arable unit at Thomastoun, Auchterless, in 2005, he bought cattle to finish annually. But for this businessman with an economist’s training, the sums did not add up and he abandoned that model two years ago.
However, following an agreement with supermarket giant Morrisons, his farm now operates as a bed and breakfast business for cattle in the final months of production.
Commenting on the small margins he found he was left with under the original system, he said that it is “the finishers’ optimism, not the breeder, that drives up store cattle prices”, thus leaving only small margins for the producer taking the cattle up to the time they are ready to go to an abattoir.
Not only that, he admitted that he originally had hundreds of thousands of pounds worth of capital tied up in finishing cattle whereas with the supermarket group owning them, this cash was now available for other ventures.
The system works with the retailer buying the cattle. Its preference is for native breeds and they are bought all over Scotland.
Clark feeds the animals traditionally with produce grown on his farm, but with no live weight gain targets in his contract. The supermarket decides when the cattle are ready for slaughter.
Generally, they go off the farm at up to 650 kilos liveweight, producing a 330 kilo carcase – where the sirloin cut is better than in a heavier animal.
The company does not use the traditional grading system as it does not suit either native breeds or its requirements.
Clark did not reveal the margins he now gets under this B&B operation, other than saying it was “more sustainable”.
Looking at the wider beef industry, he wondered just how sustainable it was. While he admired those at the breeding end of the beef production chain, he did not envy them and openly wondered how much longer people would be prepared to produce calves.
“I admire people who keep suckler cows,” he said. “I am sure those who keep them on lowland farms have an economic future – but will they chose to do it?”
He stated he was not a wind power enthusiast, but – in economic terms – he compared the income from renewable energy with that of farming.
There will be an estimated £105 million coming from wind generation in Aberdeenshire by 2015. This he compared with the £110m that will come from a £150 margin on each of the 750,000 Aberdonian arable acres.
“Which is the more resilient, sustainable and better investment?” he asked.