Despite current strong farm gate prices the Scottish livestock industry must ensure it takes advantage of the world-class science and innovation being developed to improve its efficiency, according to Quality Meat Scotland chairman, Jim McLaren.
Speaking at a briefing on QMS’s plans for the year ahead Mr McLaren warned that despite strong farm gate prices over the past 18 months, margins in real terms are still tight.
“Looking at prime cattle prices as an example, current farm gate prices are at record levels, averaging 351p/kg dwt in March.
“However, this does not take account of inflationary pressures and if we go back to March 1995 and index up prices using the Retail Price Index we would get an average price of 363 p/kg dwt.
“So it can be argued that, in real terms, this week’s prices of around 354p/kg dwt still fail to match those received in 1995.”
And Mr McLaren pointed to the significantly increased costs of production over this period.
He added: “The cost of a general ‘basket of goods’ used in agricultural production has increased by 80% while prime cattle and pig prices have increased by about 60% and lambs around 84%.
“So, not only have farm gate prices failed to keep pace with the general level of inflation, input costs have been rising more quickly with the result that ‘everything else being equal’, producers are in fact working on tighter margins than they were in 1995.”
The good news is that producers have managed to improve their efficiency considerably - for example fertiliser usage on grassland has been reduced by 40% since 1995 – and Mr McLaren said it was vital the industry does not lose this momentum and continues to benefit from the latest research and technology.
“QMS currently has around 100 projects underway aimed at improving the efficiency of the industry and during the past year I have had the opportunity to see how these, and our marketing, economics and health and education activities, are benefitting the red meat industry in Scotland.
“Scotland has a long proud history of pioneering ground-breaking science and it is vital our industry continues to capitalise on the opportunities to improve performance and returns through the scientifically proven techniques at its fingertips.”
Mr McLaren also warned of the wafer-thin margins being endured by many in the processing sector, saying that without critical mass of livestock numbers processors’ margins were ”being stretched to breaking point” in some cases.”
He also drew attention to the December 2011 agricultural census results which show the Scottish beef breeding herd down 2.5%, the sheep breeding flock down 1.6% and the sow herd down 13.6% year on year.