Scottish livestock farmers see their margins improve

Against initial expectations and the background of early market disruption, Scottish livestock farmers saw their margins improve during 2020 in the face of the Covid pandemic and the impending political upheaval of Brexit, new figures have shown.

But despite this flicker of good news, making enough of a margin from the marketplace to cover the costs of family labour and to provide a return on the capital invested in livestock enterprises remained elusive for the majority of businesses, according to Quality Meat Scotland’s annual Cattle and Sheep Enterprise Profitability report, which was published yesterday.

Covering the 2020 lamb and calf crop, the figures also pointed to significant variation in the levels of financial and technical performance within the industry.

The report also highlighted a strong correlation between better economic performance and a lower carbon footprint of individual enterprises.

“Basically the better efficiency of resources used in the top performers tends to result in greater overall ‘yield’ per female and in faster finishing of prime stock - all of which equates to lower emissions per unit of output,” said Stuart Ashworth, QMS’s chief economist.

With six years of greenhouse gas emission estimates under the report’s belt, Ashworth said that, on the basis of net liveweight produced or added during the surveyed year, there had been some indication of reductions.

The overall industry figure of a 4-5 per cent reduction over the past five years was surpassed by a figure of closer to 7-10 per cent for those performing in the top third.

“Over time there have been some reductions in emissions,” said Ashworth.

“But equally, over time the results show the challenge of reporting against kilo of output, which can be affected by weather conditions at key times of the year, and the higher level of inputs needed to maintain animal welfare during these periods of weather challenges.”

And while the figures made it look like the sector would have difficulty in meeting the 32 per cent reduction committed to by the Scottish Government for by 2030, it was pointed out that so far the international procedure for carrying out these calculations failed to take into account sequestration of carbon in grasslands and other farm carbon stores.

The Intergovernmental Panel on Climate Change (IPCC) is still using the Global Warming Potential (GWP) 100 rather than the more representative GWP* system, which accounted for the cyclical nature of methane emissions.

Chief executive Alan Clarke revealed that QMS was working alongside a number of international bodies to have the approach changed.

Looking to the economics of the 2021 season, Ashworth admitted that things might not be quite as rosy.

For despite the early market disruption of the Covid pandemic, commodity prices had, in the most part, been reasonable throughout 2020.

But while these prices had remained relatively stable in 2021, there had been considerable inflation in input prices – with large increases in feed and fertiliser prices likely to bite into the bottom line as the year progressed.