Quality Meat Scotland (QMS) has launched its latest Red Meat Industry Profile report, highlighting the sector’s contribution to food security and the rural economy.
Following the volatility of the past three years due to the pandemic, Brexit and the Ukraine war, producers and processors have faced a range of challenges amplified by the cost-of-living crisis.
In the past year, livestock producers have seen feed costs spike above pre-war levels, while higher global oil and gas prices passed through to the cost of fertiliser, fuel and heating. In addition, rising interest rates have pushed up the cost of borrowing for businesses in the red meat supply chain.
The 2023 report shows that production continued throughout this challenging period and highlights that turnover from red meat processing rose for a third consecutive year – generating an estimated £926m of output for the Scottish economy.
Slow start
After a slow start to 2022 for the cattle sector, farmgate prices for finished stock rebounded through spring before reaching record high levels between April and December. However, store cattle prices were more subdued, struggling to rise above levels set earlier in the year.
The report also revealed that market prices in the sheep sector fell back from records set in 2021. Market supply was supported by a rebound in import volumes as Covid-19 control measures in China resulted a rebalancing of lamb exports from Australia and New Zealand towards the EU and UK. However, this trend of rising imports did begin to reverse in the final quarter.
In the pig sector, the report highlighted that the severe challenges continued for the first half of 2022 when elevated feed costs and a backlog of slaughter-ready pigs waiting to be processed weighed on margins and led to further losses for producers.
Falling costs
However, by the end of the year, a sharp contraction in breeding pig numbers had fed through to supplies, providing further support to market prices, while feed costs had begun to fall back. A tightening of supply in the EU also pushed up import prices, supporting the competitiveness of home-produced pork in the domestic and export markets.
The report found that, despite employment in the primary processing sector being estimated to have reduced by around 4%, the overall wage bill remained unchanged due to the impact of a tight labour market on wages and salaries. As the year progressed, labour supply challenges began to ease through the arrival of new staff from outside Europe.
Iain Macdonald, market intelligence manager at QMS and author of the report, said: “What the latest Red Meat Industry Profile does highlight is the industry’s determination to continue producing high quality products while dealing with a wide range of supply chain challenges and economic and political uncertainty. In the first half of 2023, we have seen Scottish households continue to increase their spending on beef, lamb and pork – proving that Scots still have a strong appetite for red meat.”
