Incremental improvements key to the success of Scotland’s top performing producers

Launched today, Scotland’s Cattle and Sheep Enterprise Profitability Report reveals that producers who make cumulative marginal gains continue to dominate the top third of performers in the livestock industry.

The report, commissioned by Quality Meat Scotland (QMS) on enterprise profitability covers the 2020 calf and lamb crop year.

QMS Chief Economist, Stuart Ashworth, says that the report’s findings continue to demonstrate the correlation between technical performance, sound economic management and lower emissions intensity for the best performers.

“The 2020 calf and lamb crop year will be best remembered for the challenges created by the Covid-19 pandemic and Brexit, which disrupted markets in their initial phases but also for high farmgate prices for cattle and sheep which contributed to a general improvement in margins.  Nevertheless, achieving a margin from the marketplace that rewards family labour and provides a return on the capital invested in livestock enterprises remains elusive and there is still a significant variation in levels of financial and technical performance within the industry,” says Mr Ashworth.

“Once again the report shows the rewards that come from making your animals more efficient. Good calving and lambing ratios, working hard to minimise your mortality in breeding and trading stock, working hard to understand where you sell those animals to good effect and choosing good genetics all aid in achieving improved results.

“Equally though, improvements to resource use efficiency can contribute to improved profitability. The report points towards benefits that come from things like maximising the potential and quality of grass and animals through things like managing the nutrition and health of both grass and animals, and seeking out innovations and fresh ideas.  The gains from these individual details on their own may seem small but, when added together, lead to useful cumulative marginal gains in input efficiencies and cost savings.”

The report, which provides a snapshot of the industry during 2020, compares for each sector the costs, revenues and margins achieved by the top-third of producers, the bottom-third, and the sample average.

The results omit Agricultural Support Payments (except for those which are directly linked to production), and strongly highlights the technical and financial performance variation that exists when comparing Scotland’s top third producers and the bottom third.

For a sixth year, estimates have been made of the greenhouse gas emissions associated with the enterprises surveyed, and are reported on the basis of net liveweight produced or added during the surveyed year. Over time there have been some reductions in emissions but equally, over time the results show the challenge of reporting against kilo of output, which can be affected by weather conditions at key times of the year and the higher level of inputs needed to maintain animal welfare during these periods of weather challenges.

“If you want the chance of having a freestanding, viable and long-term business, it’s primarily about technical efficiencies, but understanding the demands of the marketplace and matching these demands also brings reward. Given potential future changes to the structure of agricultural support and extreme weather becoming more frequent, this may become increasingly important.”