19th November 2013

Huge Potential to Improve the Efficiency and Profitability of Scottish Sheep Sector

A pilot project, funded by Quality Meat Scotland, has identified a raft of opportunities to add value, reduce waste and develop a more competitive, profitable Scottish sheep sector.

The project was undertaken during the 2012/13 lamb marketing season by SAC Consulting, (part of Scotland’s Rural College), SAOS and the Scottish Manufacturing Advisory Service, who reviewed the supply chain of farmers’ co-operative Farm Stock (Scotland) Ltd. The aim was to identify bottlenecks and inefficiencies in the supply chain which add cost, and ultimately reduce margins, for each link in the lamb production chain.

A report on the project, published today (19th November 2013), identifies the key challenges facing the Scottish sheep industry as: lack of sheep numbers; the large number (around 50%) of Scottish lambs now processed south of the border; falling lamb consumption, partly due to lamb being regarded as an expensive product. The reliance of many Scottish livestock farmers on Single Farm Payment for profitability is also identified as a challenge for the industry.

The report describes the Scottish sheep industry being hampered by what is known as an ‘adversarial trading model’, whereby each part of the supply chain is interested in achieving the best outcome for itself. The result is that every link of the chain – from farmers to hauliers, processors and retailers - is now struggling to make a margin.

An integrated collaborative supply chain, the report states, would deliver better outcomes and would help meet the objective of identifying problems and implementing changes that could increase margins for each part of the supply chain.

“Much of the opportunity lies with better coordination between farmers and the meat supply chain,” said Farm Stock Chairman Ian Watson.

“What quickly became clear in this study was that a lot of the individual businesses were using lean principles to drive efficiencies at their own level but they were missing the opportunities to link up with others in the chain to drive overall chain improvement. This is where I feel Farm Stock must play a key role in driving the findings of this study forward. Our view is that on average the supply chain can save at least £10 per lamb through better marketing and the removal of waste and inefficiencies in the whole process from drafting on farm right through to the retailer.”

The project team was also keen to see if a “lean thinking” approach, as used by manufacturing and service industries, could be applied to the lamb supply chain.  Lamb production is very different from an industrial manufacturing process, however a number of bottlenecks, areas of waste and opportunities to add value were identified through  visits and interviews with farmers, procurement, hauliers, processors and a retailer .

“One of the biggest issues facing the processing sector is the poorly planned supply of lamb, influenced by weather factors, which results from producer “push” rather than consumer “pull”,” said Iain Riddell of SAC Consulting, who led the project team.

“Solutions we considered included better communication within the chain and developing a better understanding of each other’s needs.  For example most farmers were pretty good at hitting spec but a significant issue is wet fleeces and dirty lambs arriving in the abattoir.  In return, Farm Stock Scotland and farmers would appreciate better feedback of weight and grading information from abattoirs, particularly linked to individual lambs. ”

Wet lamb fleeces require drying before processing and this can be solved, where practical, by housing lambs under cover prior to transit. Dirty lambs, which require clipping before processing, were another key issue which could at least be partly solved by ensuring lambs are given access to water only in the 12 hours before transit.

The recent high incidence of liver fluke has resulted in an extraordinary number of condemned livers, which has removed considerable value form the chain. There is a clear need for regular communication between processors and farmers, to address how this sort of major issue is tackled.

Hauliers were identified in the report as being in an ideal position to identify issues from both ends of the chain.  Haulage is an expensive business and short notice, loading delays, and part loads increase the cost of hauling lambs.  Hauliers have invested large sums in lorries that meet EU legislation and these high spec large lorries often struggle to manoeuvre up narrow farm roads and in tight spaces.

The possibility of setting up collection centres, which have potential to reduce lamb journey times and ensure full loads, whether on shared premises or redundant farm buildings, was identified by the report as worthy of investigation, although there may be legislative and financial hurdles to overcome.  Driver recruitment is an issue and the job would be viewed as more attractive if pick ups were made easier, incidence of dirty lambs was reduced, and lorry washing facilities were more widely available.

“The report also highlighted great scope to reduce waste on farm with few farms keeping meaningful records of lamb performance. By adopting technology such as EID for management purposes a huge amount of data could become available that could help identify why some farms or lambs are doing better than others,” said Ian MacDougall, QMS Technical Projects Manager.

Key on-farm issues in the period from lamb drafting to sale were identified as – poor handling and loading facilities; gathering lambs on time; keeping fleeces dry before transit and avoiding dirty lambs by offering only water in the 12 hours before transport.

Funding has now been secured from QMS, Farm Stock (Scotland) Ltd. and the Scottish Government Skills Development Scheme to run three regional training producer groups in central/southern Scotland through an eighteen month project, facilitated by SAC Consulting. The project aims are to enhance collaboration and communication in the supply chain, and improve productivity and profitability at all levels.

Copies of the report are available on-line at www.qmscotland.co.uk or can be requested by contacting Kirsty at QMS on 0131 472 4040 or emailing info@qmscotland.co.uk


Caption: The importance of taking steps to ensure lambs arrive at the abattoir as clean and dry as possible is flagged up in the report.

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