The recently published annual report by Quality Meat Scotland (QMS), entitled "Cattle and Sheep Profitability in Scotland", once again highlights how dependent Scottish beef and sheep producers in our Less Favoured Areas are on EU subsidies.

Although the results show some improvement in margins among suckler herds (beef cows that naturally rear their calves), they continue to illustrate the challenge of achieving a positive margin without Common Agricultural Policy (CAP) support.

Forty-four per cent of suckler herds in the survey achieved a positive net margin - this is an increase from the 36% last year, and is much higher than 2014 and 2016. Put another way, more than half of Scottish suckler herds failed to make a profit when CAP subsidies were removed from the calculation - and that is in one of the better years when prices for weaned calves were higher.

One of the reasons for this lack of profitability in the absence of subsidies is our lack of economies of scale and inclement weather.

Scotland only has 450,000 suckler cows and the average size of a herd is just 56 cows. Sixty per cent of Scottish herds have less than 50 cows (average 17), and about a quarter have less than 10 (average 4).

Our miniscule beef industry has to face competition from the likes of the American continent and Australia that enjoy the advantages of economies of scale. Cattle are reared on poor land in huge herds and then taken to massive feedlots sited near major grain growing areas to be fattened. That not only keep unit costs down by spreading overheads, but also allows full-time vets to be employed, and generate sufficient profits to afford cutting-edge technology that leads to world-beating efficiency.

To give an idea of scale, some feedlots have annual throughputs in excess of 250,000 head, more than half the Scottish annual throughput.

Brazil for instance has more than 55m beef cows, and is increasingly producing beef from land that is not much use for anything else, in much the same way as we graze hill sheep on our poor hill land. Their cattle are increasingly moving onto the cerrado - scrubland similar to the Australian bush, that has been cleared and reseeded - to be grazed by huge herds of Nelor cattle, originally imported from India.

Major beef-producing countries like Brazil, the US, Canada and Australia are eyeing up the UK as a potentially lucrative market to export their cheap beef to.

With Brexit looming, and the prospect of changes to the system of supporting farmers through subsidies, the miniscule Scottish suckler beef industry looks very vulnerable to such challenges.

Inclement weather is perhaps the biggest drawback Scottish beef producers suffer from. Long wet winters mean that cattle have to be kept indoors, eating costly winter rations that are conserved and fed with expensive equipment. Then there is the cost of bedding, and strict environmental regulations that lead to more expense containing and handling slurry and effluent.

In the American continent and Australia, beef cattle mostly stay out-of-doors and are reared on cheap, pastoral systems, but our hardy Highland cattle could give them a run for their money.

Hill sheep, like many suckler cow herds, struggle to be profitable without subsidies. Large tracts of Scotland's hills and moorlands are no longer grazed by sheep, and there is every possibility there will be even less hill sheep in the future. All that unproductive hill grazing could be profitably utilised by cattle.

Highlanders are ideally suited for living out-of-doors all year round on our hills. They have an unusual double coat of hair. On the outside is the oily outer hair - the longest of any cattle breed - that is a barrier to wind and sheds rain, keeping the soft, downy undercoat warm and dry. This makes them suited to cope with high rainfall and very strong winds.

They are thrifty cattle that can overwinter on hills and moorland with no supplementary feeding except when the ground is covered in deep snow. Their skill in foraging for food allows them to survive in steep mountain areas where they both graze and eat plants that many other cattle avoid.

The Highland cow is an excellent choice for conservation grazing, where rough ground is grazed in order to provide habitat for other species. That could make them ideal for attracting payments from the environmental schemes that are being proposed as replacements for CAP subsidies.