SAC Outlook Conference 2006:
making positive choices
14th November, Murrayfield , Edinburgh
Part 2:
Opportunities for livestock businesses
Sandy Ramsay
Group Manager, SAC Select Services
Reviewed from the perspective of an upland
suckler herd farmer
by
James Irvine
Teviot Scientific, Cultybraggan Farm, Comrie,
Perthshire
Filed 02 Dec06
©www.land-care.org.uk
As in previous SAC Outlook Conferences (1,
2), we were treated
yet again to a diatribe on how inefficient too many Scottish farmers
are.
Personally, I am getting a bit fed up with this.
Especially since the figures Ross Finnie used to castigate many
farmers last year - and in previous years - have turned out to be
based on seriously flawed statistics. Unpaid labour costs were omitted.
A senior member of SAC speaking at an earlier meeting admitted that
many farmers previously relegated to the bottom third of the efficiency
scale were in fact in the top third when unpaid labour costs are
included.
Meanwhile a lot of damage has been done through
the Scottish Executive Environment and Rural Affairs Department
(SEERAD) using these flawed figures in their numerous road shows
throughout the land, in which SEERAD presented their view of the
pros and cons of total decoupling within CAP Reform. Their own economists
should have known better. Or was it the other way round? No matter:
both SAC and SEERAD should have known better. Even the Minister
himself, Ross Finnie, should have known better as he was an accountant
before he went into politics.
Sadly, the whole thing smacks of a device
by SAC to produce more income for its commercial wing, while at
the same time fulfilling the bidding of its paymaster, the Scottish
Executive. Clearly the Scottish Executive wants to get rid of using
CAP Reform money to pay subsidies to Scottish farmers, so that the
money can be spent on other so-called "rural" matters.
And it wants to achieve that goal rather quicker in Scotland than
in any other other EU Member State, to the severe detriment of Scotland's
farmers.
Instead of standing up for Scottish farmers,
the SAC joins the Scottish Executive in denigrating many of them
as being incompetent. Yet, as a whole, they have the reputation
of being the most efficient farmers in Europe. Globally their reputation
is high, but with mounting incredulity as to how their government
handles them.
So the question was whether the SAC business division, with the
help of SAC's economists, could do better this time
Sandy Ramsay assured us that this time the
costs of the unpaid labour of the farmer and family members were
allowed for in his calculations, which were taken from the report
recently published by QMS (3),
and in which I understand SAC played no part.
Was it indeed true that this time a different
third of Scottish farmers were being dubbed as inefficient drones
from those accused last time? We were not told. That would have
been too much of a confession. The ramifications that might have
followed from such a formal apology could be very damaging for the
SAC. So we got no apology. Strangely, there appeared to be no time
at the conference for questions concerning Sandy Ramsay's presentation.
Sandy Ramsay,
Group Manager, SAC Select Services
(Photo ©Kimpton Graphics)
To me, from the perspective of a suckler herd farmer situated on
"Less Favoured Area" land in Perthshire (but certainly
not less favoured as far as "the environment" is concerned),
Sandy Ramsay's presentation was riddled with holes. So much so that
it reminded me to be wary of those who think it cool to go to sea
in a sieve (4).
They went to sea in a Sieve, they did,
In a Sieve they went to sea:
In spite of all their friends could say.
On a winter's morn, on a stormy day,
in a Sieve they went to sea!
And when the Sieve turned round and round,
And every one cried, 'You'll all be drowned!'
They called aloud, 'Our Sieve ain 't big,
But we don't care a button! we don't care a fig!
In a Sieve we'll go to sea!'
Far and few, far and few,
Are the lands where the Jumblies live;
Their heads are green, and their hands are blue,
And they went to sea in a Sieve.
Edward Lear
Using the figures formally published by Quality
Meat Scotland (QMS) only the previous week, Ramsay reported that
for upland suckler herds there was virtually no difference in the
fixed costs between the top and the bottom thirds of the efficiency
scale. Surprise, surprise - there was quite a difference in the
variable costs between these two groups. But surely there is a big
hole in his argument about the demand for the bottom third to get
more efficient.
For the purpose of economic analysis, upland suckler
farms were grouped together, whereas anyone in farming knows that
no two farms in Scotland are alike - especially upland farms. This
is because of the very variable terrain and climatic conditions,
even between small geographical distances. He happened to mention
that the cost of straw - again, surprise, surprise - was a factor
in explaining the differences in these variable costs. Of course
it is, depending on where the farm is, and where it has to get its
straw from.
There should have been no surprise either in his
finding that it was not labour costs that were making the difference.
Every farmer knows the impact of labour costs, even if he is lucky
enough to find suitable labour in the first place.
I do not recall him specifically mentioning maintenance
costs for machinery. He would have found a quick survey of the call
out and travel time charges for agricultural machinery specialists
informative. And of course the fuel charges involved in getting
around the more extensive farms that characterise the upland areas
are unavoidable.
Then there are the increased charges in the remoter
upland areas to get stock to and from the markets.
And so one could go on. There were so many holes
in the interpretation of the statistics that credibility in the
conclusions concerning the demand for improved efficiency was soon
sunk. Some farms may be "inefficient" but the farmers
involved may be highly efficient in using the resources that are
open to them within a sensible risk strategy.
SAC is also losing credibility in the advice that
it gives because it can be so inconsistent form one year to the
next. Remember how keen SAC used to be in advocating that farmers
should diversify their enterprise to supplement their income? (5).
Now farmers are told to concentrate on what they are good at. A
lesson that SAC itself had to learn the hard way.
It is easy for armchair economists or business
consultants to change their views. It gives them an excuse for another
talk, another paper, another grant. No additional costs are involved.
Perhaps even more fees can be generated. But for the farmer, a change
in policy is likely to incur substantial capital costs with little
chance of any return for some years. If he gets it wrong the consequences
for his business could be dire.
The upland suckler farmer this year may
be much more wary about following superficially persuasive but possibly
misdirected advice from SAC pundits.
So what was the message this time?
"Use your Single Farm Payment (SFP) to adapt
for farming without subsidy", he declared - omitting to mention
that even the most efficient upland stock farm cannot avoid making
a loss at the present time without dipping into the SFP to keep
the business going.
Indeed, it must be questionable if an upland suckler
herd, even if it remained in the top third of the efficiency scale
- using any amount of benchmarking - could show a profit in three
years time, even if what is left of a diminishing SFP and the declining
LFASS subsidy (dissipated by the Scottish Executive on anything
but farming) was included. Of course it would be far too risky from
a political stand point for Sandy Ramsay to come up with such a
realistic projection. But that is exactly the projection that the
upland suckler farmer has to make before he decides to implement
too much of Sandy Ramsay's computer generated advice.
What really matters is the price the farmer is
going to get for his calves in three years time. There are plenty
reasons beyond the farmer's control to suppose that it may not reach
the heights required to make such businesses profitable. Risk assessment
is essential, but Sandy Ramsay was not up front on that score. The
Scottish Executive has lamentably failed - in spite of promises
- to insist that the country of origin of meat products has to be
declared by the catering trade. Believe it or not, but it is the
dysfunctional VisitScotland and the Consumers Association who oppose
it, and Ross Finnie apparently bows to their demands. How can farmer's
get a better price for their products when their customers are prevented
from recognising them when they go out for a meal?
"Get a better bull", Ramsay advocated.
Presumably it would have a nice high Estimated Beef Value (EBV)
for weight gain. .Oh yes? So what then happens to the easy calving
that may have been the case with the "inefficient" bull
the farm already had? A few caesarean sections with a hefty vet
bill for time and medicines, plus a greatly increased work load
for the stockman (probably the farmer himself) could soon see off
any hoped for profitability. Oh yes, Ramsay would have no difficulty
in quoting an example of how his advice has proved to be effective,
but selected cases to illustrte his point may not be quite enough.
It is also worth remembering that the EBV value
for the "easy calving" parameter in the bull's female
offspring is virtually meaningless, because of the unreliable nature
of the data used to create it. Likewise the EBV value for other
maternity traits - such as milk production in the female offspring
- carry little credibility. This is again on account of the unreliability
of the data on which it is based.
"Improve the cattle handling facilities,
improve cattle housing, improve the fencing in terms of biosecurity"
and whatever, was also advocated. These can be highly expensive
ventures. If after three years of suffering rising bank interest
rates on the capital that may be incurred in trying to achieve this,
and the farm is still not paying, then the money has been largely
wasted. And there will be little chance of getting it back. The
upland suckler farmer would be better advised to get out now, just
like his colleague the upland sheep farmer.
So what will happen to SEERAD's beloved "environment"
then? Does either SEERAD or SAC really think that highly skilled
stockmen are going to be content being told how to farm their animals
as a secondary tool for the care of the "environment"
as determined by a bunch of city ecologists In Scottish Natural
Heritage (SNH) who find it distasteful to shift their HQ from Edinburgh
to Inverness in spite of enormous "incentives" (bribes
by any other word) so to do?
The upland suckler farmer may have also figured
out that the independent laboratory Biobest may be cheaper and quicker
than SAC laboratories. And that it is quite possible to achieve
good cattle health surveillance working with his vet at a cost considerably
cheaper than going through an SAC Cattle Health Scheme. The piece
of paper (certificate) that an SAC Cattle Health Scheme could provide
is hardly relevant to most upland suckler farms, as it carries no
additional benefit in terms of the price they get for their suckler
calves. These farmers are store producers, not breeders. They are
already overloaded with paper work and they emphatically do not
want any more. Nor do they want any more inspections on top of those
they already have.
But all this should come as no surprise. SAC will
know as well as anyone that suckler herds in the uplands of Scotland
have never been profitable without subsidy. It would have been more
honest of Sandy Ramsay to have said so, rather than pretending otherwise.
And in twenty years they all came back,
In twenty years or more,
And every one said, `How tall they've grown!
For they've been to the Lakes, and the Torrible Zone,
And the hills of the Chankly Bore!'
And they drank their health, and gave them a feast
Of dumplings made of beautiful yeast;
And every one said, 'If we only live,
We too will go to sea in a Sieve,
To the hills of the Chankly Bore!'
Far and few, far and few,
Are the lands where the Jumblies live;
Their heads are green, and their hands are blue,
And they went to sea in a Sieve.
Edward Lear
For Scottish upland suckler herd
businesses to survive they might well do better to batten down the
hatches, reducing numbers and costs to a minimum while keeping the
land in adequate condition, and waiting until our politicians acquire
a better sense of proportion in what they demand - if they ever
will. If they take too long about it, then yet another Scottish
icon - and the industry that goes with it - will be gone.
The tragedy of this is that Scottish hill farming
could do fine if only the government allowed us to have a level
playing field with our European neighbours, and stopped using farming
as a bargaining chip to gain some other political advantage in some
other political arena.
But will you ever get an SAC employee to
say so?
©www.land-care.org.uk
References
1. Irvine, James (2005). Review:
SAC Outlook Conference 2004: "Benefiting from Change"
Murrayfield Stadium, 16th November.
See SOCIAL/ECONOMIC/POLITICAL Homepage, filed 23 Jan 05,
www.land-care.org.uk Click
Here to View
2. Irvine, James (2005). "Talk
up farming: don't talk it down: and never mind the reality".
A review of SAC Outlook Conference, November 2005, "Taking
marketing opportunities".
See SOCIAL/ECONOMIC/POLITICAL Homepage, filed 17 Dec 05,
www.land-care.org.uk Click
Here to View
3.QMS report (2006). Cattle
and sheep profitability in Scotland. figures for 2005. Click
Here to View pdf
4. Lear, Edward (1812-1888).
The jumblies - a poem. Click
Here to View pdf
5. Irvine, James (2001). "New
enterprises - new beginnings" Farmers workshop sponsored by
SAC, Coupar Angus
LandCare Scotland: Vol 1, pp 45- 50.
6. Linklater, Magnus (2006).
Could we be on the verge of losing another British industry?
This article, which was originally published in the Spectrum Magazine
of Scotland on Sunday
on 19th March 2006, is reproduced on Land-Care with the kind permission
of the author and the newspaper
See SOCIAL/ECONOMIC/POLITICAL Homepage, filed 21 Mar 06,
www.land-care.org.uk Click
Here to View
Further reading recommended by Land-Care
www.land-care.org.uk is running a serios of articles
on the papers given at the SAC Outlook Conference 2006. Those so
far reviewed are as follows:
 Keynote
address - Peter Russell, Head of Rural Group, SEERAD Click
Here to View
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