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No return on investment for family farms without government assistance

Despite steadily rising production costs, higher market returns have offset an increased cost base and helped improve margins for a number of business types in 2021.

These are just some of the findings of Quality Meat Scotland’s recently published Beef and Sheep Business Profitability Report, which identified the continued correlation between technical performance, sound economic management and lower emissions intensity. within the top third of the most successful companies in the Scottish livestock industry.

The publication, also known as ‘Enterprise Costings’, covers the 2021 veal and lamb harvest and is based on a representative survey of beef and lamb producers. He highlights how 2021 has been marred by the continued impact of the Covid-19 pandemic and Brexit, which not only disrupted markets and the availability of labor in the red meat supply chain , but have also seen a steady upward trend in UK farm input prices.

“While 2021 was a more positive year for some of the business types in the survey, the range of performance and key factors contributing to variation in results between companies are highlighted in the results. The success of top producers continued to be characterized by tight cost control, greater productivity and tight technical performance,” said Iain Macdonald, QMS Market Intelligence Manager.

“In 2022, while market yields have likely increased further, unfortunately, these have likely been offset by a further increase in input cost pressures, many of which are related to the impact of the war in Ukraine on global crops and energy markets”.

Macdonald added that the report aims to encourage farmers to consider how their business compares to the industry in general:

“It has obviously been a very difficult year for growers, but through benchmarking there can be valuable information that can be used to assess where there might be opportunities for performance improvement, to strengthen the resilience in the face of a volatile market.”

The survey, which provides a snapshot of the industry in 2021, compares for each sector the costs, revenues and margins earned by the top third of producers, the bottom third and the average of the sample. The results omit agricultural support payments, except those directly linked to production, and strongly highlight the variation in technical and financial performance that exists when comparing Scottish producers in the top tier with those of the lower third.

“Nevertheless, for both cattle and sheep businesses, earning a margin in the market that rewards family labor and provides a return on investment remained elusive,” Macdonald points out.

For a seventh year, estimates have been made of greenhouse gas emissions associated with surveyed companies, reported on the basis of net live weight produced or added during the year. Over time, while average emissions have been relatively stable across different business categories, with year-to-year fluctuations, emissions have tended to be significantly lower in upper third herds than in the lower third.

Mr. Macdonald explains: “For farmers who are dedicated to the long-term viability of their business, which can fend for itself without support payments, technical efficiency and market focus are paramount, and these tend to to be accompanied by a reduction in emissions per unit of production. production.

“Climate change targets are set by law and in the years to come it will be vital for the sector to demonstrate reduced emissions, with increased productivity as the means to achieve this.”

The 2022 Cattle and Sheep Enterprise Profitability Report can be viewed and downloaded from the Quality Management System website https://www.qmscotland.co.uk/cattle-and-sheep-enterprise- costings-2022. A small number of printed copies are available and can be requested by emailing [email protected]

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