‘Green shoots’ of potential increase in cattle numbers

‘Green shoots’ of potential increase in cattle numbers

Scotland’s sharpest cattle farmers appear to have weathered the storm well last year with some improved performances, according to the results of the annual enterprise costings report by Quality Meat Scotland (QMS).

Launching the 2013 edition of the Cattle and Sheep Enterprise Profitability in Scotland report, Stuart Ashworth, QMS head of economics services, said that, for both sheep and cattle farmers, the outlook for the coming year was looking encouraging. There are, he said, some “green shoots” of an arrest in the decline of cattle numbers with indications that more female cattle are now being retained on farms.

Ashworth said there had been signs of ewe numbers starting to increase before the bad weather, and associated problems, including fluke, hit confidence last season. He said it would take the industry time to recover again from this check but a good open winter in the coming months could help the process significantly.

This year’s survey results, he warned, continue to show significant variation in levels of financial and technical performance within the industry.

“Across some of the cattle enterprise types those in the top third reported higher margins in 2012 than those in the top third in 2011 even although the average margin fell in all cases,” said Mr Ashworth.

Mr Ashworth pointed out this had been achieved despite the fact that the period the report covers – the 2012 calf and lamb crop year – was a time of very challenging weather conditions. These exceptional conditions challenged farmers’ resilience in numerous ways – from higher feed and veterinary costs to changed sale profiles resulting in the sale of lighter animals.

“In common with previous years there are a number of recurring themes that characterise top performance. Top producers show a high level of physical, or technical, performance, strong control over costs and they maximise returns from the market place,” said Mr Ashworth.

Looking at suckler herds, those in the top third of gross margin per animal achieved higher output through higher calf rearing percentages and typically selling heavier calves resulting in higher yield per cow in the herd. They also typically received 4-9 p/kg liveweight (lwt) more for the calves they sold. They also had lower herd maintenance costs.

“Suckler herds in the top third of financial performance were also characterised by strong control of variable costs. In all cases those in the top third had lower total variable costs than the average while achieving higher output. Fixed costs were also firmly controlled – in all cases top third producers had lower fixed costs per kg of output even if, on occasion, fixed cost per cow was higher than the average,” said Mr Ashworth.

The LFA hill suckler herds surveyed had an average gross margin of £233 per cow. The top third averaged £425 per cow gross margin, an improvement of £192 per cow. The top third achieved a positive net margin of £27 per cow against the average of (-)£135. Of the 15 producers surveyed six achieved a positive net margin, an improvement on last year but still emphasising the challenges of farming in an extensive way on severely disadvantaged land.

Non-LFA suckler herds reported an average gross margin of £242 per cow while those in the top-third achieved a gross margin of £403. A significant contributor to this improvement was the 14% greater sale weight per cow. Although the top third did manage variable costs to a level 20% below the average they did carry higher fixed costs which reduced their advantage at net margin level.

Looking at the sheep sector, Mr Ashworth said those in the top-third of sheep producers similarly achieved higher outputs through higher stock performance. Typically they reared about 15-20 more lambs per 100 ewes than the average.

“Although they did not necessarily rear lambs to the heaviest weights, the larger lamb crop typically resulted in top third flocks selling 9 – 13 kg lwt more lamb per ewe. They also typically sold the highest proportion of lambs for immediate slaughter. The net effect being that income per ewe from lamb sales was £20 per ewe more than the average.”

LFA hill sheep enterprises in the survey achieved an average gross margin of £26 per ewe. The top third benefited from higher prolificacy and lamb weights resulting in a net output £20 per ewe higher than the average, with variable costs only £1 per ewe higher this improved productivity transferred almost entirely into a gross margin £19 per ewe better.

Slightly higher fixed costs among the to -third eroded this improvement to £15 at net margin level which left the top third with a positive net margin of £2 per ewe. Twenty percent of these businesses achieved a positive margin, a significant decline from the 57% who achieved this objective for their 2011 lamb crop.

Eighty per cent of upland ewe enterprises surveyed reported a positive net margin with an average of £13 per ewe and those in the top third achieving a net margin of £28 per ewe.

Variable costs and fixed costs among the top third were higher than the average. Thus, the major contributor to improved returns was improved physical performance which saw those in the top third produce 15% more lamb per ewe.

To download a copy of “Cattle and Sheep Enterprise Profitability in Scotland 2013” visit www.qmscotland.co.uk or request a free copy by calling QMS on 0131 472 4040 or emailing info@qmacotland.co.uk The publication will also be available to collect at the QMS stand at AgriScot and the Royal Highland Winter Fair.

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