Profitability

Maximising margin and increasing profitability from better management on farm. This should include understanding the supply chain and how to utilise it more effectively including marketing stock to ensure greater profitability.

Understanding your supply chain

Production on farm is only one part of a huge supply chain that encompasses thousands of workers and contributes billions to the national economy of Scotland. While many elements of the supply chain may seem irrelevant to primary producers each one will, to varying degrees

Production on farm is only one part of a larger supply chain that sustains more than 39,000 jobs and generates £2.8 billion in output for Scotland’s economy, as highlighted in our latest Scottish Red Meat Industry Profile. While many elements of the supply chain may seem irrelevant to primary producers each one will, to varying degrees influence the costs and income that helps livestock producer business’s function.

Different parts of the supply chain influence your farming business in different ways.

There are parts of the supply chain that feed into you, for example, feed costs, vet charges, etc. And there are parts of the supply chain that you feed into, for example, the buyer who buys your stock, the processor who turns it from stock to product, and the retailer who is the link between the product and the consumer.

There are parts of the supply chain that you can influence and there are parts of the supply chain that influence you, that you cannot control.

However, you can mitigate costs to your business by ensuring that your cost of production is lean and efficient and you can maximise the income from the parts of the supply chain that you feed into.

Activity

UNDERSTAND YOUR SUPPLY CHAIN

Look at the elements of the supply chain that you directly feed into, such as markets and identify ways that you can maximise your returns from there by utilising data, best practice, or analysing trends. You can sign up to QMS’s weekly industry newsletter to receive weekly auction averages across beef, lamb and pork. In addition, you can get livestock market price data through Institute of Auctioneers and Appraisers in Scotland (IAAS) - Market Data | Institute of Auctioneers and Appraisers in Scotland

Look at the other elements that are one or more steps removed from you and consider how to maximise the returns you might get from that element of the chain and ask yourself some challenging questions.

- Which buyers have come back to buy your stock repeatedly?

- Look at who buys your stock and consider where they sell it – are you providing the best product?

- Could you measure your environmental credentials and use them as a selling point?

Is there an integrated supply chain that might provide a more reliable or profitable model?