Scottish prime stock prices fall year-on-year

Scottish prime stock prices in 2015 were “generally” lower than the previous year, according to Quality Meat Scotland (QMS). 

In its report ‘Cattle and Sheep Enterprise Profitability in Scotland’, it was highlighted that store cattle and lamb prices also failed to match year-earlier levels for most of the period. Despite this, falling revenues were offset by lower feed, fertiliser and energy prices.

“Although the results show some improvement in margins among suckler herds, they continue to illustrate the scale of the challenge of achieving a positive margin without CAP [Common Agricultural Policy] support,” said the report.

“Thirty-eight percent of suckler herds in the survey achieved a positive net margin; this is an improvement from the one-third of enterprises surveyed that achieved this objective with the 2014 calf crop and 22% with the 2013 calf crop.”

Meanwhile, margins among store finishers reached their lowest level in three years, with only 305 of surveyed businesses achieving a positive margin. “Only cereal finishing systems are estimated, on average, to have made a small return after factoring in unpaid labour and the return on capital and land foregone.”

The proportion of hill ewe flocks achieving a positive net margin fell from 15% in 2014 to 14% in 2015, whilst 60% of upland flocks recorded a positive net margin, down from 68%. “Similarly lowground flocks also saw a deterioration in margins, with the proportion of surveyed flocks achieving a positive net margin falling to 66% for the 2015 lamb crop from 75% for the 2014 lamb crop.

“For store lamb finishers, the proportion achieving a positive net margin slipped to 71% for the sample from 75%. Nevertheless, business reporting positive net margins still struggled to deliver a fair return for labour and capital.”

The top producers are generally characterised by three main traits:
• High physical, or technical, performance
• Strong control over costs
• Maximising returns from the market place

Producers in the top third of sheep producers also tended to achieve higher outputs through higher stock performance. On average, they reared about 10-18 more lambs per 100 ewes. Whilst they didn’t always rear lambs to the heaviest possible weights, the larger lamb crop typically resulted in top-third flocks selling five to seven kg liveweight more lamb per ewe. In addition, they typically sold the highest proportion of lambs for immediate slaughter. This resulted in income per ewe from lamb sales being £14-£20 above the average.

The less favoured area (LFA) hill suckler herds had a typical gross margin on £285 per cow.

LFA upland suckler herds were divided into two categories: one group selling at weaning and the other selling yearling stores. “Those selling at weaning made an average gross margin of £319 per cow, but were outperformed by their counterparts selling yearlings, who achieved an average gross margin of £426 per cow,” the report claimed.

“Top-third producers selling at weaning made £442 gross margin per cow with 6% more liveweight produced per cow than the average while at the same time keeping variable costs 20% lower.”

Cereal-based finishers reported an average gross margin of £154 per animal with a net margin of £62. Those performed in the top third achieved a £120 improvement in net margin over the average. The top third of survey participants recorded a £120 improvement in net margin over the average. However, two thirds reported a positive net margin down from 80% last year.

Farmers selling forage-based finishers under 22 months of age achieved an average gross margin of £162 per animal, whilst those selling older cattle saw a gross margin of £164 per head.

LFA hill sheep businesses experienced an average gross margin of £25 per ewe, an improvement on last year.

With a 45% increase on last year (although still lower than two years), 60% of upland ewe businesses reported a positive net margin.
“Lowground breeding ewe businesses in the survey saw little change in technical performance from last year, but low prime lamb prices in June and July badly impacted on net output, and despite some savings due to lower feed and fertiliser costs this group saw some deterioration in margins,” said QMS. “Nevertheless, the average net margin remained positive at £21 per ewe and two thirds of those surveyed achieved a positive margin.”

Store lamb producers reached an average gross margin per lamb of £10 per lamb, whilst the average net margin rose on the year to £4.56. The number of businesses that reported a positive net margin slipped to 71% from 78% last year.

Want more stories like this in your inbox?

Sign up for our FREE email newsletter

Keywords:

My Account

Spotlight

Most read

Social

For the third year running, a grain fed cow won the World Steak Challenge. What do you think produces the best beef?