Auction marts should be categorised as critical rural businesses
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Following the recent closure of Forfar Mart, Neil Wilson, executive director of IAAS (Institute of Auctioneers and Appraisers in Scotland) has commented in depth on the role that auction marts critically play in rural communities and the impact their demise could have.
The last year has seen almost every business in the UK suffer from the highest levels of cost inflation in living memory.
Specifically, farming has seen ‘agflation’ accelerate even more than many other sectors.
Auction marts have not been immune to cost inflation. As well as the general cost inflation, auction marts continue to pay non-domestic rates at levels significantly higher than many others in the supply chain. Indeed, there are some agribusinesses which don’t pay rates at all. Auction marts pay tens, in some cases, hundreds of thousands of pounds per year in non-domestic rates.
Whilst rising livestock prices have helped offset some of these cost increases the reality of ever tightening cattle and sheep numbers means that many marts face pressure trying to grow numbers of animals going through the ring. In turn putting downward pressure on incomes whilst cost inflation keeps eating away at margins.
Everyone involved in the livestock sector will understand and appreciate the critical role that marts play in the farming economy.
Most importantly, they play a critical role in the marketing of livestock and machinery. Marts offer a collaborative, transparent, price discovery marketing mechanism through the live ring.
Willing sellers and buyers come together and freely trade with both parties having the opportunity to walk away if the price isn’t right.
There are very few other sectors who now have the beauty of this system, instead being at the will of major retailers as they are tied into challenging integrated supply chains. See the poultry, egg and pig sectors (and soon to be dairy sector again) for the dangers of this approach.
Marts also ensure that livestock can be marketed at critical times of the year making sure that animals end up in the right area of the country at the right time in a very efficient manner.
This really supports good animal welfare outcomes and is a critical component for fragile areas of Scotland. Allied to this is the clear evidence that through these sales, auction marts help support the clear traceability of the animals via Scot EiD, something that has really moved up the food chain agenda after recent revelations.
As part of this collaborative trading participation through the live ring, the trade creates a number of data points. Historically this data has been published as market price averages for different categories of livestock. Amongst other benefits, this has enabled farmers to make marketing decisions based on this data being freely available.
It has also enabled other non-mart livestock trading businesses, platforms and private sellers to operate using this mart-generated data to drive their own pricing – a practice that I will be looking to bring to halt in the near future.
Marts are also a critical part of the social rural fabric of Scotland. Their use as a central meeting point helps farmers with knowledge exchange, marketing intelligence and, critically, rural isolation. Recent reports completed by the Princes Countryside Fund and the University of Exeter both highlight the critical importance of auction marts in aiding with farmer health and promoting help seeking behaviours.
I am sure you will agree these are all things that we want to keep as part of our agricultural sector. Auction marts offer so much to farming communities and the livestock sector.
However, we do need support to ensure we have no more closures.
The support of the farming community is critical and has been absolutely fantastic in recent years, especially during Covid when everyone worked hard to keep the trade going whilst keeping everyone safe. I would encourage everyone to make use of your closest livestock mart as much as possible to encourage viability of the local farming supply chains.
Alongside others, we have been raising red flags with Scottish Government regarding their long-term support for the sector.
We have raised concerns regarding maintaining critical mass in the cattle sector. With suckler cow numbers now likely to be well below 400,000 (a c.25-28per cent reduction in 20 years) it could be argued that we are at or below the critical levels needed to maintain strong local supply chains and foster long term business efficiency for the good of the wider Scottish economy.
This closure of a longstanding Scottish auction mart in the Cabinet Secretary’s own constituency should serve as a warning to politicians and officials of the need to think very carefully about support for the farming sector and its supply chain businesses.
An increased pace in that thinking would also help build confidence across the sector and help ensure a healthy and thriving rural economy – not risk more closures and placing more pressure on farm businesses already facing tough decisions on all areas of their business management.
