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    QMS stresses the wider implications of the budget

    Matthew TiltBy Matthew TiltDecember 5, 20243 Mins Read
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    QMS Chief Executive, Sarah Millar. Picture - Chris Watt Photography

    Ahead of the Scottish Budget proposals, Quality Meat Scotland (QMS) is calling for recognition of the impact of the UK funding changes, stating that these could have a long term negative impact on Scottish businesses and the red meat supply chain.

    A crucial concern is that no sectorial impact assessment appears to have been done, which would have highlighted costs, competitiveness and confidence challenges across the sector, which is worth £2.8bn and sustains more than 39,300 jobs.

    QMS chief executive, Sarah Millar, said: “It’s crucial that businesses across the Scottish red meat supply chain are supported to invest both now and in longer term.

    “Whilst red meat production makes a vital contribution to Scotland’s economic and social fabric, particularly in rural and some of our most remote areas, very low profit margins are recorded by businesses across the supply chain.

    “In the last financial year less than a quarter of cattle and sheep farms made a profit before factoring in subsidy payments. And in the red meat processing sector in Scotland, the average operating profit margin is only around 2%.”

    Exacerbating this challenge is the decline in Scotland’s beef breeding herd which has reduced by more than 12% over the last decade, as well as declines in breeding sheep and pigs of between 5-6%. Throughput is paramount for low margin processing businesses, meaning that further declines could question business viability.

    “This is set against a continued popularity and demand for red meat in Scotland, and more widely in the UK, where there is a growing population.

    QMS market intelligence manager, Iain Macdonald commented: “We’re concerned that the combined impact of decisions in the recent UK budget will not only see our declining livestock trends continue, but perhaps even accelerate which has a knock-on effect to our economy and wider society.

    “With the imbalance between supply and demand set to widen – with beef and lamb production going down and the human population going up – we are faced with the reality of food price inflation and / or the reliance on inferior imports increasing.”

    “Meanwhile, additional declines in our livestock supply will limit the opportunity to grow sales into high value international export markets, where falling production is leading to considerable interest in Scotch Beef and Scotch Lamb. In the recent QMS export survey, we found export growth of nearly 50% in 2023/24; surpassing £100 million for the first time on record and reaching £137 million.

    “Our economic modelling estimates that the potential economic loss to Scotland just from a reduction in cattle numbers, without looking at other species, is £165.2 million in output, £43.7 million in GVA and more than 2,100 jobs

    “By contrast, if both governments were to work together with businesses across the sector on a systemic growth plan, this could enable the beef sector to meet rising domestic and export demand, which would also increase both output and GVA, taking it back beyond the 2023 level. This would involve stabilising the suckler beef herd, boosting productivity, and increasing the competitiveness of Scottish beef finishers to retain more store cattle in Scotland.

    “In turn, this would generate increased economic activity along the supply chain, supporting a wide range of businesses such as auction marts, hauliers, feed companies, machinery suppliers, financial services, secondary processors, and butchers.”

    Sarah Millar concluded: “Our modelling shows there is significant economic potential for our beef sector if collective action to change course, and boost confidence and investment is realised. A vibrant red meat supply chain would then support the social fabric of Scotland’s rural communities and beyond.”

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    Matthew Tilt
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    Machinery editor for Farm Contractor & Large Scale Farmer. Matt has worked as an agricultural machinery journalist for five years, following time spent in his family’s Worcestershire contracting business. When he’s not driving or writing about the latest farm equipment, he can be found in his local cinema, or with his headphones in, reading a good book.

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