Outlook for Beef & Sheep
Outlook for Beef & Sheep Douglas Bell Senior Agricultural Policy Consultant
Dumfries, 28th October 2010 1
Content
• Outline the current situation & trends for the beef & sheep sectors
• Examine some of the factors likely to shape the future for livestock farmers
2
Update & Trends
3
Scottish Farming Output 2009 (£m)
Crops
634
703 Livestock Livestock Products
311
Other Activities
324
923 Subsidies
£2.89 billion – 32% livestock 4
Share of Output by Sector 2009 Beef
4% 7%
Dairy
26%
11%
Sheep Poultry
£2.26 billion (ex subs)
Pigs Other Livestock
12%
21%
Cropping Horticulture
10% 2%
3% 4%
Other Agricultural Non-Agricultural 5
Scottish Beef & Sheep Output (£m) 800 600 £m 400
200 0 2005
2006 Cattle
Sheep
2007
2008
2009
Total Beef & Sheep Source: Scottish Government6
Breeding Stock Relative to 1999 1.10
Nos. at June 09 Nos. at June 10
1.00
Dairy Cows 187k 185k
0.90 Beef Cows 451k 457k
0.80
0.70 Ewes 2,778k 2,641k 0.60 Sows
0.50
33k 39k 0.40 1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Source: Scottish Government7
Scottish Livestock Output
Source: Scottish Government8
Scottish Finished Livestock Prices
Source: Scottish Government9
Beef Supply
10
Beef Price
11
Lamb Supply
12
Lamb Price
p/kg dwt
GB Lamb Price 500 480 460 440 420 400 380 360 340 320 300 280 260 240 220 200 180 Jan
Feb
Mar
Apr
May
2007
Jun
2008
Jul
Aug
2009
Sep
Oct
Nov
Dec
2010
Source: AHDB
But Supermarkets Have Helped! Lamb farm to retail price spread 2007
2008
2009
Jun
Jul
2010
70 60
%
50 40 30 20 10 0 Jan
Feb
Source: AHDB
Mar
Apr
May
Aug
Sep
Oct
Nov
Dec
ist p
Farm Business Income Farm Business Income by Farm Type 90,000
2007/08
80,000
2008/09
Farm Business Income (£)
70,000
60,000
50,000
40,000
30,000
20,000
10,000
LFA: LFA Mixed Specialist Cattle & 0 Beef Sheep Specialist General Cereals
Farm Type
Cropping
Lowground Cattle & Dairy Sheep LFA: Specialist Sheep
Mixed LFA: Specialist Beef
Farm Type
All Farm Types LFA Mixed Cattle & Sheep
Lowground Cattle & Sheep
Mixed
All Farm Types
15
Future Drivers
16
Global Issues
Climate change
Energy
Economic Turmoil
thinkquest
Water
Food
Source: Godfray / Food & Farming Futures Foresight project
17
Global Threat to Water Security
18 Source: City College of New York
Future Market Outlook • Global demand for meat to increase – China, Middle East, N. Africa – stronger for beef than lamb – stronger for pigmeat & poultry than red meat
• Decline in EU production to continue – economics, likely changes to support regime – Other parts of the world to fill the gap
• Economic recovery should see domestic demand increase (price?) 19
Climate Change – adaptation
– mitigation
20
Future Support – Short Term
30 Sept 09
€1 = £0.90930
30 Sept 10
€1 = £0.85995
30 Sept 08
€1 = £0.79030
21 Source: European Central Bank
Future Support – Short Term
Slipper farmers sent Packing
LFASS Payment Rates £/ha Land Category A B C D
Standard 2010 2011 6.31 8.71 12.59 17.37 21.68 22.76 26.00 27.30
Fragile Very Fragile 2010 2011 2010 2011 10.37 12.34 11.92 14.18 20.68 24.61 23.76 28.27 36.36 43.27 42.02 50.00 43.61 51.89 50.40 59.98
If >10% of 2009 livestock units were cattle multiply by 1.35 If >50% of 2009 livestock units were cattle multiply by 1.70 22
Future Support – Rural Priorities Q.
“Is the programme running out of money?”
A.
“There was only so much money in the pot in the first place. We are in the most challenging economic climate for many years and any amount of public funding that is available should be welcomed.” Source: Scottish Government Rural Priorities Website 23
Future Support – Longer Term
24
Conclusions • Confidence has returned?? • Returns from the marketplace have improved and look set to remain reasonably stable • Rising costs and or currency impacts could take the shine off • Support remains critical to business viability and therefore a major concern • Continued technical and management improvements will be crucial to future success • Take a bit of time to ensure you’re working smarter not harder 25
Dumfries, 28th October 2010 1
Content
• Outline the current situation & trends for the beef & sheep sectors
• Examine some of the factors likely to shape the future for livestock farmers
2
Update & Trends
3
Scottish Farming Output 2009 (£m)
Crops
634
703 Livestock Livestock Products
311
Other Activities
324
923 Subsidies
£2.89 billion – 32% livestock 4
Share of Output by Sector 2009 Beef
4% 7%
Dairy
26%
11%
Sheep Poultry
£2.26 billion (ex subs)
Pigs Other Livestock
12%
21%
Cropping Horticulture
10% 2%
3% 4%
Other Agricultural Non-Agricultural 5
Scottish Beef & Sheep Output (£m) 800 600 £m 400
200 0 2005
2006 Cattle
Sheep
2007
2008
2009
Total Beef & Sheep Source: Scottish Government6
Breeding Stock Relative to 1999 1.10
Nos. at June 09 Nos. at June 10
1.00
Dairy Cows 187k 185k
0.90 Beef Cows 451k 457k
0.80
0.70 Ewes 2,778k 2,641k 0.60 Sows
0.50
33k 39k 0.40 1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Source: Scottish Government7
Scottish Livestock Output
Source: Scottish Government8
Scottish Finished Livestock Prices
Source: Scottish Government9
Beef Supply
10
Beef Price
11
Lamb Supply
12
Lamb Price
p/kg dwt
GB Lamb Price 500 480 460 440 420 400 380 360 340 320 300 280 260 240 220 200 180 Jan
Feb
Mar
Apr
May
2007
Jun
2008
Jul
Aug
2009
Sep
Oct
Nov
Dec
2010
Source: AHDB
But Supermarkets Have Helped! Lamb farm to retail price spread 2007
2008
2009
Jun
Jul
2010
70 60
%
50 40 30 20 10 0 Jan
Feb
Source: AHDB
Mar
Apr
May
Aug
Sep
Oct
Nov
Dec
ist p
Farm Business Income Farm Business Income by Farm Type 90,000
2007/08
80,000
2008/09
Farm Business Income (£)
70,000
60,000
50,000
40,000
30,000
20,000
10,000
LFA: LFA Mixed Specialist Cattle & 0 Beef Sheep Specialist General Cereals
Farm Type
Cropping
Lowground Cattle & Dairy Sheep LFA: Specialist Sheep
Mixed LFA: Specialist Beef
Farm Type
All Farm Types LFA Mixed Cattle & Sheep
Lowground Cattle & Sheep
Mixed
All Farm Types
15
Future Drivers
16
Global Issues
Climate change
Energy
Economic Turmoil
thinkquest
Water
Food
Source: Godfray / Food & Farming Futures Foresight project
17
Global Threat to Water Security
18 Source: City College of New York
Future Market Outlook • Global demand for meat to increase – China, Middle East, N. Africa – stronger for beef than lamb – stronger for pigmeat & poultry than red meat
• Decline in EU production to continue – economics, likely changes to support regime – Other parts of the world to fill the gap
• Economic recovery should see domestic demand increase (price?) 19
Climate Change – adaptation
– mitigation
20
Future Support – Short Term
30 Sept 09
€1 = £0.90930
30 Sept 10
€1 = £0.85995
30 Sept 08
€1 = £0.79030
21 Source: European Central Bank
Future Support – Short Term
Slipper farmers sent Packing
LFASS Payment Rates £/ha Land Category A B C D
Standard 2010 2011 6.31 8.71 12.59 17.37 21.68 22.76 26.00 27.30
Fragile Very Fragile 2010 2011 2010 2011 10.37 12.34 11.92 14.18 20.68 24.61 23.76 28.27 36.36 43.27 42.02 50.00 43.61 51.89 50.40 59.98
If >10% of 2009 livestock units were cattle multiply by 1.35 If >50% of 2009 livestock units were cattle multiply by 1.70 22
Future Support – Rural Priorities Q.
“Is the programme running out of money?”
A.
“There was only so much money in the pot in the first place. We are in the most challenging economic climate for many years and any amount of public funding that is available should be welcomed.” Source: Scottish Government Rural Priorities Website 23
Future Support – Longer Term
24
Conclusions • Confidence has returned?? • Returns from the marketplace have improved and look set to remain reasonably stable • Rising costs and or currency impacts could take the shine off • Support remains critical to business viability and therefore a major concern • Continued technical and management improvements will be crucial to future success • Take a bit of time to ensure you’re working smarter not harder 25
