Call for direct cash support to boost livestock numbers

CONSIDERATION should be given to the re-introduction of direct support for suckler cows and breeding sheep, according to the Institute of Auctioneers and Appraisers in Scotland (IASS).

Speaking in Edinburgh yesterday, Jack Clark, the president of the IASS, said: "Cow numbers have fallen quite noticeably since the reforms of the common agricultural policy became operative on 1 January, 2005. This clearly affects our member companies in terms of reduced throughput of store and prime cattle, but on the broader front, we need to be aware of the implications for future beef supplies.

"We would support any measure which would maintain cow numbers, and there must also be a case for the sheep sector, even if it is only on environmental grounds to maintain biodiversity on the hills. We have seen the number of cows in France increase and that may well be because there is still some direct support for farmers. Ireland has also introduced a headage payment on cows of 100 [68]. Something similar would be very helpful in the Scottish context."

The headline figures reveal that, in the year to 31 December, 2006, the number of livestock sold by IASS member companies, and that covers virtually every auction house, declined in line with the trend towards fewer animals on farms. However, the encouraging feature was that gross turnover increased by more than 8.5 million to just short of 380m.

During last year, a total of 3.51 million livestock were sold, compared with 3.85 million in 2005. The average unit value of all livestock increased from 96.22 to 107.99, a clear reflection of the trend to higher prices for most classes of animals. The gross value of prime stock slipped by 5m to 165.3m, while store stock increased from 199.8m to 213.5m. This again demonstrates quite clearly that store prices were on a rising trend for most of last year.

During 2006, 161,057 prime cattle and cull cows were sold by the auction marts, to reach a gross value of 84.3m, just short of 1m higher than in the previous year. But the salient point is that the average value of these cattle rose to 593.97 from 523.57. This increase in cash terms is attributed to the much improved trade for cull cows and the re-opening of the beef export market last May.

Prime sheep numbers slipped from 2.09 million to 1.85 million, with the gross value declining by almost 6m, but the unit value increased from 41.25 to 43.33 per head. The same pattern was evident for store beef animals, dairy cattle and store sheep where, in every case, throughput was reduced but average prices increased.

One quirk in the statistics relates to the increased number of rams sold in 2006. The initial expectation would have been that, with a reduced breeding flock, fewer rams would have been required. Not so, and last year just over 25,000 rams changed hands compared with 22,332 in 2005. However, the average selling price fell from 372.22 to 351.95.

There was also a significant increase in the number of pedigree bulls sold, mostly through the February and October events in Perth. Last year, 2,282 bulls changed hands - 484 more than in 2005. The average selling price remained broadly stable at 2,021 per head. The principal reason why more bulls were sold is that breeders in Northern Ireland and Wales are eligible for substantial grant aid towards herd improvement.

Clark remains adamant that the live auction system is the most transparent method of trading livestock. He said: "It is noticeable that, in recent weeks, we have seen an increase in the number of store cattle being sold through marts. At a recent sale held by my own company [John Swan] at St Boswells, we had 650 cattle on offer and 38 potential buyers around the ringside."

Bad debt is always a fear for auctioneers and, at any one time, a company might be lying out several million pounds. Clark said: "We have to be careful, but the great thing for our sellers is that they will always be paid. They can leave the mart on the day of sale with the cheque in their pocket. There are few other selling systems that match that practice."

Selling livestock will always be the core element of the auction companies, but most have diversified into a range of allied activities. Arbitrations, valuations, trading in entitlements to the new single farm payment and property sales now contribute significantly to commission income. The fact is that, without these activities, many marts would have to substantially increase their commission rates for selling livestock.