Enterprise Costings Highlight Challenges and Opportunities

One of the best steps livestock producers can take to prepare for Brexit is to look carefully at the performance of their businesses and seek out opportunities to improve what is in their control, according to Stuart Ashworth, Quality Meat Scotland’s Head of Economics Services.

Speaking today (Monday 13th November 2017) at the launch of QMS’s “Cattle and Sheep Enterprise Profitability in Scotland” publication, Mr Ashworth said it was important that farmers continue to benchmark their businesses to identify strengths and weaknesses.

The publication, also known as the “Enterprise Costings”, covers the 2016 calf and lamb crop, and is based on a survey of beef and lamb producers. It omits CAP support payments, except for those which are directly linked to production, and again highlights the variation in the financial and technical performance between Scotland’s top third producers and the bottom third.

The top producers continue to be characterised by high physical, and/or technical performance; strong control over costs; and the ability to maximise returns from the market place.

It is available free of charge to farmers visiting the QMS stand at AgriScot this week and can also be downloaded from the QMS website www.qmscotland.co.uk or requested by emailing info@qmscotland.co.uk.

“The survey shows some improvement in suckler herd margins but continues to illustrate the scale of the challenge of achieving a positive margin without CAP support with only a little over one-third of suckler herds in the survey achieving a positive net margin,” said Mr Ashworth.

The survey results also reveal 2016 proved challenging for finishers of store cattle with less than a third making a positive net margin.

Looking at the sheep sector, hill ewe flocks continued to struggle with only around one in ten achieving a positive net margin. However, profitability improved significantly among upland and lowground flocks with 66% and 85%, respectively, of those surveyed making a positive net margin.

“The lack of a seasonal upturn in prime sheep prices in the lead up to Easter 2017 made it a challenging year for store lamb finishers with the proportion of businesses making a positive net margin sliding from over 70% to less than 40%,” said Mr Ashworth.

The publication also includes, for a second year, estimates of the greenhouse gas emissions associated with the enterprises surveyed. This is reported on the basis of net liveweight produced, or added, during the surveyed year.

The calculations were made using the SAC Consulting’s resource efficiency calculator, AgRE Calc.

“In general, the results show a clear correlation between the strongest financial returns, the best technical efficiency and the lowest greenhouse gas emissions per unit of output,” observed Mr Ashworth.

“In the same way this report highlights the potential improvements in financial performance that can flow from higher technical performance, it also shows the scope to, at the same time, reduce greenhouse gas emissions per unit of output.”

The Enterprise Costings document can be viewed and downloaded via this link http://ow.ly/4WHm30gxy0F or requested by emailing info@qmscotland.co.uk