Remote farms still far from profitable

Published on Thursday 19 November 2009 21:55

FURTHER proof came this week of the financial divide in the Scottish livestock sector, with both cattle and sheep producers in the hard and remote hills losing money on their enterprises in 2008 while their colleagues in the easier ground turned in improved profits.

The same research confirmed that the top livestock producers and their more average counterparts live worlds apart, financially.

Speaking at the launch of the Quality Meat Scotland booklet on cattle and sheep profitability in 2008, Stuart Ashworth, head of economic services, described the overall figures as "quite pleasing" but admitted the returns in the more remote areas were an issue for the politicians to sort out through the support system.

The scale of the issue for policy-makers on future subsidy was demonstrated by news of losses of up to 40 per ewe and that only one in five of all sheep farms in the hills is making a profit.

There were also a number of cattle producers who worked throughout 2008 and still returned a minus figure of up to 126 per cow in the Less Favoured Areas. However, this sector also demonstrated the wide variation between farmers, with some cattle producers averageing 355 profit per cow.

The improved margins in 2008 came through a number of factors, according to Ashworth.

Some livestock producers had effectively "nibbled away" at costs, in particular making savings on feed and fertiliser bills. He expected further improvements when figures for 2009 come under the microscope as these two areas of expenditure have come down in price.

"I am confident that further economies can be made," Ashworth said. "I may sound like a worn record but the story is still get the productivity right with numbers of calves and lambs being born. Then keep them alive. It is also noticeable that all the best results come from producers who make the best use of genetics and who market their produce well."

He said there was still a frustrating financial gulf between the top third of producers and the rest of the industry, with those at the upper end making good money. Apart from the management of these more profitable farms, a significant factor was the use of family labour.

Commenting on the current situation, Ashworth said the sheep sector looked rosy although he cautiously wanted to see slaughter figures for October and November before stating categorically that the decline in ewe numbers had been halted. "However, we can say it has definitely slowed down," he added.

The cattle sector also looked as if it had turned the corner, with a reduced number of heifers heading off to the slaughterhouse. In both sectors, there was not only the drop in feed and fertiliser costs but bank charges were now very low and, combined, these should help provide a base for profitable figures being issued when the 2009 lamb and calf crop are reviewed.