SBC / NSA Joint Conference 12 Jan 09

Last year was challenging for Scottish agriculture and its associated industries, but 2009 will be pivotal, according to Richard Lochhead, the Cabinet secretary for rural affairs. Speaking on Monday 12th January in Bridge of Allan at a conference jointly organised by the Scottish Beef Cattle Association and the Scottish region of the National Sheep Association, Lochhead repeatedly pledged that the Scottish Government was willing to listen to farmers and work out solutions.

The loss of breeding animals was one of the main focuses of the conference. Stuart Ashworth, head of economics at Quality Meat Scotland (QMS), set the scene in his opening address at the conference.

He told delegates that recent costing showed that while net margins for less favoured area upland ewe flocks had improved, they were still only doing slightly better than breaking even. Recently improved returns for prime lambs had come too late to affect hill flock incomes, where losses were the norm.

It was the same with beef cows, where, despite improved returns for finishers that allowed them to break even, the increased prices had not fed through to store cattle producers. The net effect was a continuing contraction in the beef breeding herd and a dramatic loss of breeding ewes.

“Breeding ewes in Scotland are down to 2.8 million, the lowest number since 1920,” said Ashworth. Breeding cows are down to 3.4 million. From 2006 to 2007 there was a 5% decline in BCMS figures and a 4% decline in throughput of Scottish slaughterhouses. Supplies are predicted to be 5% down on last years and with the UK not self sufficient in beef what happens globally will affect us here.

The value of the Euro against the Pound means the €4000 per tonne that the Republic of Ireland was receives cost £2697 in January 2007, £2946 in January 2008 and £3876 in January this year.

He concluded:-
 Margins are wafer thin but falling input costs mean margins are improving.
 Policy implementation can still damage confidence.
 There is no reason for producer prices to fall.

SBCA President John Cameron challenged Lochhead forcefully in his opening remarks. “It is imperative that LFA money is effectively spent to maintain the livestock industry”, and asked: “Has any economic work been done to evaluate in financial terms the contribution that LFA livestock sector makes to the social fabric?”

John Cameron, President of both organisations, set the tone in his opening address. Cameron, who was once the largest sheep farmer in the EU, clearly still has the interests of hill farmers at heart.

He said: “We all note the decline in breeding numbers of cows and ewes in the 'less favoured areas'. It is imperative that support for these fragile parts of Scotland is effectively spent to maintain the livestock industry.”

Cabinet Secretary Richard Lochhead was quick to acknowledge that point and had a significant announcement to make. He said: “I am pleased to say that 94 per cent of the claims for the single farm payment (the subsidy regime that replaced virtually all previous support measures as from 2005] have now been paid.

“In addition, hill farmers will start to receive their Less Favoured Area Support Scheme (LFASS] cheques from Friday of this week. That will be around £61 million and it will be in bank accounts over two weeks sooner than last year.”

LFASS is currently under review and there are two schools of thought on how the cash should be distributed. The first, in line with Cameron's view and that of NFU Scotland, is that the vast bulk of support should be directed at those farmers and crofters who are actively engaged in production.

The contrary is that those in the most remote parts of Scotland have a greater need of the cash to maintain often frequently fragile communities. Lochhead clearly accepts that this debate will continue and made it clear that he is willing to take account of both arguments.

Agriculture and the wider food sector seem set to avoid the worst effects of the general economic downturn. Lochhead said: “There are grounds for optimism and for the industry to be upbeat. In fact, the opportunities out there may well be the best for a decade.

“The world is shrinking with new emerging markets and a growing demand for red meat. Here in Scotland we know that we can't compete on a low cost basis, so we must concentrate on developing quality, especially for beef and lamb. I appreciate the scale of the challenges in the livestock sector and we must do everything to maintain critical mass. Livestock production is at the very heart of our rural policies.”

However, if the livestock sector is to prosper, the burden of red tape, especially as it impacts on the red meat processing industry, must be reduced.

Ian Anderson, the Executive Secretary of the Scottish Association of Meat Wholesalers (SAMW) and a former senior civil servant, said: “Those who follow these issues will know that SAMW has spent the last year battling to overcome petty bureaucracy, inefficiency and unjustified cost increases imposed on us by the Food Standards Agency and others without any justification or proper dialogue whatsoever. This must stop.”

He used FSA and MHS as an example and in particular the lack of guidance on over 48 month cattle and procedures for 30 – 48 month cattle carcases from 1st January 2009. Without any consultation guidance arrived in plants on Monday 29th December and resulted in a complete shambles, he claimed on Monday 5th January. SAMW managed to have the mess rectified by the end of the first week.

Turning to MHS charges, Ian Anderson damned the increases as completely ignoring reality. A 12% increase in 2009 was blocked by the Cabinet Secretary and his team. Now consultation is on either +4%, +6% or +9%. He could not see how such increases could be justified in a period of low inflation or even deflation.

“Bloated, overmanned and inefficient” were words he used to describe the MHS while criticising the Optimisation Project for being woefully slow. He revealed incidences of MHS inspectors working for 20 minutes and then having 20 minute breaks. The practice of too many inspectors on a site and MHS reluctance to remove overmanning even after the Business Agreement Plans clearly showed that to be the case also concerned him.

His rant continued with criticism of DEFRA for transferring the cost of BSE Testing to the industry. He claimed “it is a public health measure and should remain Government's prerogative.”

Anderson also homed in on the steady decline in livestock numbers. He said “critical mass is crucial for the processing industry” and called for a change of mindset on the part of those who have the power to influence events.

He sought re-coupling, listing numerous EU countries where this happened. “They need to use all the powers available to them to enable more livestock to be produced and safeguard our world-class meat production.

“The review of the CAP and the current LFASS consultation must be used to maximise opportunity, but we need to go further than that to combat future dangers of declining food security.

“Our government needs to develop a different focus in dealing with European affairs. We don't need to look too far beyond our shores to see how it can be done.

“The Republic of Ireland and France are the role models. We must stop this 'too difficult' and 'the commission won't agree' mentality and replace it with a positive 'can do' attitude.

“The industry will throw its weight behind proactive efforts by government to improve our lot.”

Douglas Bell, Senior Agricultural Policy consultant with SAC gave a presentation on “Making the Most of SRDP”. SAC would be supportive of a review of the existing SRDP ((Scottish Rural Development Programme 2007-13).

The SRDP budget is £1.6bn, 70% supplied by the Scottish Government and 30% from EU. The bulk (1.1bn) goes to improving the environment through land management.

Food Processing, Marketing and Co-operation Grant scheme is possibly the only source of support to butchers. Guidance on how to apply for this is linked through the SFMTA Members only website. There is no paper guidance since it is so vast.

Julie Fitzpatrick from the Moredun Research Institute made a presentation on Animal Health Issues and Welfare. In the economic downturn increasing importance is laid on food production and science, engineering and technology. There are targets for reduction in animal diseases.

She focussed on Johne's disease because it affected both beef and sheep. Consequences of the disease is decreased productivity, poor fertility and increased susceptibility to parasites.