Costs Take Big Bite Out of Beefy Returns

UK - Beef farmers in Scotland have seen their ex-farm prices shoot up by an average of 12 per cent since the turn of the year, but the high returns are being rapidly shrunk by soaring production costs.
calendar icon 18 April 2008
clock icon 1 minute read

Farmers should not get carried away by the extra money they are receiving as the reality is that the lift in end-prices has almost totally been swallowed by increased production costs, reports The Scotsman.

Gavin Hill, senior beef specialist at the Scottish Agricultural College, has a sound knowledge of the industry, but he is also something of a number-cruncher. During a one-to-one session yesterday with The Scotsman, Hill explained the market realities and the need for farmers to exercise caution.

He said: "Top-grade cattle in Scotland are now making at least 260p per kilo on the hook, with some achieving as much as 270p with the distinct prospect of returns going higher over the next few weeks. This is around 40p per kilo more than in the late months of last year.

"However, we have to remember that last autumn the cost of production was up by 16p per kilo on the same period of 2006. Now we are seeing that the cost of production is 40p per kilo higher than at this time last year. It's great to see prices increase, but that fact is that much of the improved return is doing little more than cover increased costs. Feed, fertiliser and fuel are all much more expensive than 12 months ago."

  • View the TheScotsman story by clicking here.
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