Sheep disappear from the hills as production costs eat into profits

ROG WOOD

Published on 6 Aug 2008

A report released by the Scottish Agricultural College (SAC) yesterday highlighted the dramatic decline in sheep numbers in the Scottish hills. The report revealed that stocks have dipped dramatically since 1999, most notably in the north-west, with many areas seeing a reduction of between 35% and 60%.

The figures suggest that this reduction in numbers is part of a process of downsizing coupled with a number of farmers withdrawing from sheep production, although the number of sheep per unit has dropped much more significantly than the number of holdings with sheep.

Cattle numbers have also declined, although not so starkly and not in the same areas.

The drop in cattle numbers in some areas has also been attributed to farmers downsizing their businesses or withdrawing.

However, in many areas, the changes are due to an increase in intensity as some farmers have expanded as others leave the industry.

Crucially, declines in livestock numbers appear to have accelerated after the introduction of the single farm payment and the decoupling of livestock numbers from payments.

SAC's review of the economic situation found that hill farmers are under significant pressure at present because most hill production is not financially viable.

The price that farmers receive for their livestock, for example, is often below the costs of production and much of the hill farming only continues because of the support payments provided by government.

Figures from Quality Meat Scotland, the promotional organisation, reveal that in 2007 low-ground breeding flocks were in the red with a net margin loss per ewe of 94p after deducting fixed costs of £44.54 from a gross margin of £43.60.

Upland breeding flocks had fixed costs of £44.97 but a lower gross margin of £35.09, so their net margin per ewe showed a loss of £9.88. It was hill flocks that took a financial hit last year. After deducting fixed costs of £42.09 from a dismal margin of £16.24, they were left with a net margin loss of £25.85 per ewe. Hence the rapid decline in sheep numbers in the north-west.

The report points out that prices for sheep and cattle have risen recently. These price increases have, however, been joined by simultaneous increases in input costs, extending concerns over farm profitability in Scotland.