Is Scottish farming in a healthier state than Irish farming? Last week, Quality Meat Scotland (QMS) held an industry conference with the theme of “Rising to the Challenges” for modern farming. QMS is the industry body that markets and promotes sales of beef, lamb and pork under the Scotch label.

Listening to the various speakers and comments from farmers, it seems that both Irish and Scottish beef farmers are concerned about the same things – a lack of profitability in suckler beef production and whether farms have a viable future with falling subsidies.

The Scottish suckler herd has been in gradual decline, although there was a small increase in 2015 to leave breeding numbers at 437,000.

A government scheme launched in 2014 provides a payment toward suckler-bred calves of around €100/head/year, which has seen an increase in breeding numbers.

Farm income for a typical LFA suckler farm is around €30,000 when premiums are included. When excluded, farm income is approximately €12,000 according to QMS data.

When thinking about suckler farming in Scotland, we tend to think of large-scale units with 200 to 300 cows as the norm. This is true to a certain extent. Approximately 13% of farms account for 50% of the suckler breeding herd, yet the national average herd is only 47 cows. The average UK suckler herd is 28 cows.

While there are plenty of large breeding herds in the Border and Dumfries regions, there is a vast network of small-scale farms in the Highlands and north islands of the country, were crofters dominate.

Beef production is the largest sector in Scottish agriculture and contributes around 27% of total farm output worth around €1.1bn, which is at a three-year low due to lower beef prices. The outlook for 2016 is similar to 2015.

The national kill last year was around 411,000 head of prime cattle, increasing to around 470,000 when all cattle are included. Kill figures have been slowly declining in the past four years, but by less than 1% annually.

Average carcase weight of steers in 2015 was 380kg, but it is estimated by industry sources that more than 25% of steers fall outside of the industry kill spec by being too heavy. Heifer weights are around 336kg, with young U-16 bulls at 354kg carcase weight. Beef finishing in Scotland is very much a 24- to 30-month steer system rather than intensive young bull systems. Bull systems have seen an increase in 2015 due to lower cereal prices.

Low calf registrations in late 2013 and throughout 2014 would indicate a tightening of supplies in the second half of 2016, but there is no guarantee that this will follow through into improved beef prices.

Beef price

Beef prices in Scotland are usually the highest in the UK. But prices have been falling since they peaked in spring 2013.

Average beef price in 2013 was £4.03/kg (€5.16/kg ex VAT) on an R grade animal. In 2014, the average beef price dropped to €4.73/kg. Beef price in 2015 averaged closer to €4.50/kg. This week, steer and heifer prices are around €4.25/kg.

Quality-assured farms receive a 30c/kg premium on beef price and this is included in the annual prices outlined.

Unlike Ireland, there is a greater trend for suckler farmers to sell prime cattle for further finishing through the marts. With large finishing units in the south and east of the country, access to cheap feed and straw makes finishing less viable on the smaller farms to the north of the country.

Outlook

There is no doubt there is huge potential for Scottish beef farms to improve profitability. Focusing on soil fertility, grassland management, calving heifers at a younger age and increasing stocking rates will go a long way to improving farm income.

Whether there is an appetite among farmers to take steps to improving management within the gate remains to be seen.

To date, industry-backed programmes aimed at improving technical efficiency on farms have had a low uptake. Changing farmers’ mindsets seems to be the first obstacle that has to be overcome.

Just like in Ireland, simply relying on beef price increasing to make the farm more profitable will not work for everyone. Instead, farmers also have to focus on improving what is in their control, which is increasing kilogrammes of liveweight from the suckler herd by getting more live calves on the ground and increasing weaning weights.

The farmer’s view

John Ritchie farms 650 acres at Montalt Farm in Perthshire, of which 350 acres are owned with the remainder on a short-term lease of 10 years. A spring-calving suckler herd of 75 cows is run alongside a 600-breeding ewe flock.

The farm is a typical upland setup for the region and lies around 850ft to 1,000ft above sea level. It is a family farm, with John working with his father and mother, supported by his wife, who also works full-time off-farm.

For John, the challenges to his farming future are clear. With the reform of the SFP, the farm payment has dropped €12,000 and his father is set to retire in the coming years.

The aim for the farm is to get better, not bigger by taking on more land like a lot of his farming peers in the area.

John realised that the market price alone will not make up for the drop in BPS. Instead, he focused on maximising the kilogrammes of liveweight produced on-farm.

Ewe type has changed from a Scotch mule to a more prolific Texel mule and lambing percentage has increased from 170% to 194% from the same breeding flock of 600 ewes. More kilogrammes of lamb produced from the same land area and flock size meant more output and higher farm income.

In the past, only 50% of lamb was sold off grass by the end of October. This left very little grazing to winter sheep and, as a result, concentrates and silage were introduced early in winter.

Since changing breed type, over 75% of lambs are now sold off grass by early November, meaning there is greater grass supplied for winter grazing ewes which has greatly reduced costs.

Cattle

With John aware of his father’s plans to retire, he started making changes to the suckler herd almost 10 years ago after doing some production costings for the farm.

In 2006, there was a serious deliberation over the future of suckler cows on the farm, with high mortality, calving difficulty and a lack of profit. Around 80% of the 75 cows mated weaned a calf for sale and more than 100 acres of good grazing land was used to produce silage just to feed the cows in winter.

Cow type at this point was a large 800kg to 900kg Simmental-cross cow bred to a Charolais bull, with progeny sold as yearlings.

John said they had cows that were too big and inefficient for an upland farm and that was nobody’s fault but their own.

John said they had cows that were too big and inefficient for an upland farm and that was nobody’s fault but their own.

A Salers bull was purchased in 2006 and, since then, cow type has gradually changed to a half-bred Salers female served with a Salers bull. Hereford was also used to reduce cow size.

Cows are now 650kg to 700kg liveweight and calves sold per cow mated has averaged 94.5% over the past five years. With very few interventions and lower mortality, the vet bill at calving time has reduced from €2,400 to €330.

The smaller cow is now wintered on 9kg/day of straw and 5kg of pot ale syrup at a combined cost of €1/day. Silage is only fed from one month ahead of calving until turnout.

Calves are sold at 11 months old. This spring, calves averaged 420kg liveweight and sold at €1,150/head. While this was still €80 to €120/head less than a Charolais or Limousin-cross calf, John was quick to point out that he now has an extra seven calves to sell annually, which is worth more in total farm income than a higher price per head and fewer animals to sell.

This winter was the first year that surplus Salers heifers were sold to neighbouring farms for breeding. He now has a suckler farmer who wants his surplus heifers every year and will pay a price to compete with the store trade.

Age at first calving for homebred heifers has been reduced from 36 months to 24 months, which has simplified herd management and labour greatly, as well as lowering production costs.

Overall, in the past five years, the suckler herd has seen profitability increase from around 11% of total farm sales to an estimated 30%.

Despite the increased output from his suckler and sheep flock, he maintains that investing in grazing and soil fertility has been his best investment to date.

The change in suckler system has freed up 50 acres of good grazing land, as less silage is required. This 50 acres will be used to increase the sheep flock, as it has a faster return on investment and will require less labour in a one-man system.

John has also joined a grazing discussion group. Despite the increased output from his suckler and sheep flock, he maintains that investing in grazing and soil fertility has been his best investment to date.

He is now a strong advocate of paddock and rotational grazing, as well as making use of clover. He outlined to his farming peers that he is still learning, but sees grazing as an area that will help to reduce his production costs the most.

In conclusion, John is positive about the future of his farm. Taking actions and implementing changes to simplify his farm to suit a one-man operation have benefited his business.

There are still challenges to be addressed, but he is confident that he is better placed to face them.