Farming: Producers urged to trim fat from costs

However, yesterday an industry expert predicted there might be a slight rise in the pre-Christmas weeks. Kev Bevan, of the Scottish Agricultural College, predicted an improvement through the autumn killing season at a farm open day at Moffat.

But if that lifted a little of the economic gloom in the 200 or so producers present, he then warned: "Do not lose your hat on there being a big improvement."

One reason why producers have not hit the 300p per kilo dead weight that for many would provide a profit has been an increase in beef on the market. A proportion of this has come, unexpectedly, from the dairy sector with male calves being raised and then sold on the market.

Bevan thought this supply would slow with the increased price of grain in the past three months and the poorer end-beef prices of the first nine months of this year deterring dairy farmers from keeping male calves.

The price of beef on the supermarket shelf has also been affected by the attraction of cheaper white meat from the poultry sector as consumers rein in spending amid the recession.

This may change, however, with almost two-thirds of the cost of producing chicken meat based in the price of food. With the surge in cereal prices, it might be expected there would be a sudden increase in the value of chicken on supermarket shelves, but Bevan said the forward buying of food and the more integrated poultry sector means it could be some time before the higher price was seen.

Most beef farmers use their single farm payment to subsidise their enterprise, but Bevan warned that the forthcoming reform of the European Union's common agricultural policy would see Scottish producers receiving less in their subsidy payments. "I believe that by 2015, when the new regime is well in place, the single farm payment may wither away quite dramatically," he said.

If that is the case, then his SAC colleague Gavin Hill advised producers to look at reducing production costs, with one of the best methods of doing so being the improvement in calving percentage. Statistics showed that the top producers averaged 7 per cent more calves than the average producer and Hill said these extra animals made a big difference to the bottom line.

Another method of improving the producers' percentage of the end product, Bevan suggested was having a more integrated supply chain, with more money coming back to the producer.One or two big buyers are now operating on a forward contract basis and this might help remove some volatility in the market.

Earlier the host farmer, Willie Davidson, of Poldean, stated that one of his main rules of management was to keep his cows breeding and any barren stock went down the road.

Although he did not personally believe in estimated breeding values, saying they were "a sign of a stockman who did not know his stock," he does keep records on calving, with difficult cows being weeded out.