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Doom-laden margin figures ‘need change’

Doom-laden  margin figures ‘need change’

Farmers have been challenged to change the way they calculate net margins – and to more regularly take a bath – to help Scotland’s beef sector.

Agricultural economist Peter Cook accepted he and his colleagues had for years been spreading doom and gloom on suckler cows by using net margin calculations which showed suckler cows persistently losing significant amounts of cash because the figures assumed all costs at their full market value.

He, however, told a Quality Meat Scotland planning for profit seminar at Oldmeldrum that those using home-grown grain and straw at cost of production could produce positive net margins per cow.

His plea follows QMS chairman Jim McLaren recently acknowledging that its persistently negative message on margins was doing nothing to stimulate beef production and instead assisting the continuing decline in the national herd at a time when ex-farm cattle prices had hit record highs and demand remains good.

Mr Cook said the reality was that since 2000 Scotland had lost a third of its prime cattle supplies in response to the 12% decline in cow numbers.

The throughput of prime cattle had also plummeted by almost 200,000 a year since the 1980s to just under 400,000 in 2012 as a result of farmers stopping finishing dairy bull calves. which 30 years ago made up a significant proportion of the kill handled by Scottish abattoirs.

Mr Cook said not all sucklers lost cash. For cows calving in 2011 he showed a positive net margin of £170 a cow where farmers used their own grain and straw at the cost of production. Conventional thinking demand the figures are calculated using the opportunity cost of the market value of the grain, which produced a negative margin of £49 a head.

Mr Cook also reminded those contemplating removing sucklers that fixed costs for the farm remained the same regardless of whether the cows are there or not. “Most farms would lose more money if the cows went because they would still have the fixed costs. Folk tend to forget that,” he added.

Mr Cook said farmers should look at any beef enterprise as part of the entire farm business rather than in isolation. Cows frequently played an integral role in that and added value.

“We should not talk ourselves into a hole. It is farming systems which make money, not individual enterprises,” he added.

Mr Cook also highlighted the challenges farmers faced in making best use of their farms and them often being overworked as staff numbers had in the last decade declined.

Farmers needed think time, he said, and had to take time out. The solution to that came from the 100-plus delegates who accepted they should do that by more frequently taking a bath and soaking for a while rather than showering.

They also conceded they could do more to improve cow fertility and health, make better use of soil and grassland management as well as genetics to boost stock performance and reduce mortality. Greater collaboration was also seen as a benefit in reducing costs.

There too was a need for trusted impartial technical advice and for a greater flow of information between store producers and finishers on the performance of livestock.