April 18, 2008

 

Scotland beef producers see increased sales offset by high input costs

 

 

Beef producers in Scotland said that with the price of cattle rising by almost 12 percent, incomes and cash flows were boosted, yet were eventually offset by the higher production costs.

 

Gavin Hill, senior beef specialist at the Scottish Agricultural College, informed that top-grade cattle in Scotland

are now making at least GBP260 per kilo, with some achieving as much as GBP270, The Scotsman said in a report.

 

In the next few weeks, Hill noted, the numbers could climb higher.

 

At its current rate, the number is around GBP40 per kilo more than in the late months of last year.

 

However, Hill pointed that last autumn the cost of production was up by GBP16 per kilo on the same period of 2006.

 

Now, the cost of production is GBP40 per kilo higher than at this time last year.

 

Hill explained that the improved returns barely cover for increased costs.

 

The reforms of the common agricultural policy agreed in 2003, which were only implemented in 2005, ended the direct support on production.

 

Hill estimated a negative margin of not less than GBP100 per head. He pointed that the option for many farmers right now is to cut back on numbers.

 

However, Hill contends that reducing the average herd size should not be undertaken without due consideration for the structure of the entire business. He explained that selling the cows, particularly at present high levels is easy, but cutting the fixed costs might well be a lot harder.

 

Higher ex-farm prices for beef have given a real boost to producers, but supermarkets have not yet reflected this trend in retail terms, the latest consumer survey conducted by analyst TNS for the Meat and Livestock Commission indicates.