Confidence 'not yet' returned to Scotland, despite record figures

Confidence may not return to the Scottish red meat industry for another year, Quality Meat Scotland (QMS) has warned in its annual industry report, despite contributing a record £2.1bn to the Scottish economy.

Figures published the Scottish Red Meat Industry Profile, published yesterday (18 June) showed that the red meat sector's contribution to the Scottish economy was up 10% year-on-year. However, despite strong livestock prices, tight supply and a buoyant export market, improving levels of confidence in the cattle and sheep sectors, this had still not translated into investment in breeding stock. It said that processors' concerns over future livestock availability remained intense.

Stuart Ashcroft, head of economic services at QMS, said: “Tight supplies globally led to strong livestock prices during 2011 and this generated increased confidence in the cattle and sheep sectors. However, this confidence failed to materialise into greater stock numbers as producers took high prices as an incentive to cull their least productive breeding animals.”

The report showed a decline in the Scottish suckler herd for the first time since 2008, down 2.5% or 522,000 head of cattle since 2010, while the breeding ewe flock also fell, down 1.7% to 2.8m head.

There was also further consolidation in the pig industry, with a sharp contraction in the sow herd, down nearly 14%, while input costs remained high and prices were still below 2009 levels. Confidence among pig farmers remained cautious.

Ashworth said: “We have some benefit through the improved prices during 2011 and the output of the livestock sector broke through the £1bn mark. The good news is that there has been increased revenue into the sector, but I will stress that increased prices at the farmgate and abattoir sector does not necessarily mean increased profits.

“In the throes of a weak economy generally, the processing sector struggled to pass on the increased cost of sourcing livestock. While strong demand for beef and pork facilitated an upwards movement in retail prices during the summer months, consumption fell back towards the end of the year as prices were perceived by many consumers to have reached prohibitive levels."

He said that this was particularly true for lamb, with a 21% increase in the retail prices year-on-year helping to stifle consumption.

He also pointed out that processors were shielded by strong overseas demand and buoyant export trade, assisted by a weaker sterling exchange rate, but that many were feeling increased pressure on margins, particularly with  energy and distribution costs rising.

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