For all that finished beef and lamb prices are continuing to head 'south', there are some small signs of optimism in the livestock sector, with both farming businesses and those in the processing sector investing in the industry on the back of a pretty tough year for all.

Speaking at a Quality Meat Scotland press briefing ahead of the launch of Scotland’s annual Red Meat Industry Profile, chief economist Stuart Ashworth, said the Beast from the East coupled with the long, dry summer of 2018, had and is still having huge implications on both the livestock and processing sectors.

He added that the national beef herd had contracted which combined with increased mortality rates at lambing time, resulted in reduced throughputs and profit margins for all.

However, with the abattoirs continuing to update their premises in the wake of a shortage of labour, and a fall in the number of beef-sired calf registrations, he added that there is potential for an increase in finished beef values at the end of 2019 and well into 2020.

“The beef herd continued to contract in 2018, leading to worries for the processing sector which operates on very tight margins,” he said.

“A reduction in beef-sired calf registrations, added to these concerns, signalling a potential reduction in prime beef production in 2020.”

Looking at trends in the beef sector, 2018 saw a continued move away from continental sires, towards native breeds.

The Limousin breed retained its position as the most popular sire in Scotland in 2018, with 20.6% of the calves born being sired by a Limousin bull. However, numbers lowered in 2018 to 114,000 head, down by 5.6%.

There were also heavy declines for the Charolais and Simmental breeds, which saw registrations fall by 8.4% and 5.9%, respectively.

In contrast, Aberdeen-Angus registrations continued to trend higher in 2018, reflecting the marketplace premium for Aberdeen-Angus-sired cattle. A 2.5% increase took place in 2018, taking registrations to 97,900 head and 17.7% of the total, up from a 16.8% share in 2017.

In the sheep sector, the extremely challenging spring of 2018 saw a sharp fall in the lamb crop. The legacy of the 2018 spring was a smaller breeding flock in the autumn of 2018, potentially limiting the recovery of the lamb crop in 2019.

Yet, despite the difficulties and the continued uncertainty about the future post-Brexit, Mr Ashworth said there is evidence that many of those operating at different parts of the chain are continuing to invest in their businesses.

“Despite the number of un-knowns there are welcome signals that the industry is committed to weathering the storm and investing for the future,” he said.

“Our industry is one which requires a long-term stance to be taken and has a track record of resilience and innovation. While, three years on from the Brexit vote there are still a huge number of unknowns, we can take encouragement in the commitment to the future being shown by businesses operating throughout the production chain.”

Processors have, he said, generally found it difficult to achieve higher wholesale prices and, with farmgate prices in 2017 being particularly strong for cattle and pigs and to a lesser extent sheep, processor margins are under pressure and volume becomes a key driver for profitability.

Looking at the figures Mr Ashworth said overall the total volume of meat produced by the 23 registered Scottish abattoirs during 2018 was up 3.5%, following three years of decline, at around 219,100 tonnes.

Further afield, beef supplies could tighten further if the claims that the recent announcement of €100m for beef farmers in Eire, is only available on the provision suckler cow numbers are reduced.

According to Fianna Fail's spokesperson for agriculture in southern Ireland, farmers have been misled by government.

“Farmers were clearly misled pre-election with the government message that the compensation package secured would be related to income and price losses incurred from the early onset of Brexit,” it said.

“The draft Commission regulation states that the ‘measures taken by Ireland shall be aimed at reducing production or restructuring the beef and veal sector’.”

As a result farmers are calling on the farming minister to state when he first found out that reducing production numbers would be a condition of drawing down funding and did the department make any case for market disturbance aid as provided under the CAP?

“Government has totally misled farmers that the fund would cover income losses."