SCOTLAND'S red meat industry is going through a period of challenge and change but there are positive signs that the industry can look forward to a prosperous future, according to a trade body.

Jim McLaren, chairman of the promotional body Quality Meat Scotland, believes some producers may be unsettled by all the change but he noted that it brought with it new opportunites.

"The ongoing debate about the future shape of the Common Agriculture Policy remains a source of uncertainty for those who work in our farming industry," said Mr McLaren.

"Our abattoir operators also continue to endure extremely tight margins and consolidation, leaving worryingly little capital for investment.

"Notwithstanding the recent reduction in cattle prices, the fact is that current livestock prices and reduced livestock availability mean that operating margins for Scottish processors remain extremely low," he said.

"It is vital that our processors have adequate supplies of livestock to achieve the critical mass our red meat supply chain needs to operate profitably and to ensure we are able to meet the continued increases in demand for quality red meat."

Mr McLaren outlined that consumers continue to be picky spenders and are often opting for better value products rather than premium cuts.

Yet he maintained it is vital that QMS continues to closely monitor and respond to the purchasing trends of consumers.

"Consumers in our target markets are looking for best value red meat with guarantees of integrity and traceability - they expect it to have been reared to a high standard of welfare and to be produced in a natural Scottish environment," said Mr McLaren.

QMS' chief executive, Uel Morton, stressed that the organisation is still delivering strongly on behalf of levy payers.

He pointed out that the grant income sourced by the group for the year ahead was £1.3m.

However, income from levy is being eroded by a combination of falling livestock numbers as well as sheep and pigs being slaughtered south of the border, he warned.

QMS will continue to press the case for the return of this lost levy, of around £1.6m each year, but it is hoped that the expansion of pig slaughtering facilities in Brechin, along with evidence of more cattle coming back across the border to Scotland to be killed after being finished in England will help.

Looking at the organisation's financial figures in more detail, Mr Morton said: "Our proposed external spend for the 2014/15 year is £5.6m and this compares with an external spend of £5.8m for 2013/14.

"Putting these figures in context, it is worth remembering that the external spend figure has been fairly consistent having increased from £4.9m in 2009/2010 to £5.8m in 2010/2011, when levy rates last increased, to £6m in 2011/2012 and £5.9m for 2012/2013."

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