THERE IS a quiet air of optimism around the Scottish sheep industry at the moment, writes farming editor Ewan Pate.

Times may just seem better in comparison to the torrid time endured last autumn, or it may simply be because grass is at last growing in sufficient quantities after a late spring.

More likely the magic ingredient to lift spirits has been the recent uplift in prices.

Jack Clark, managing director of auctioneers John Swan Ltd, at St Boswells, and chairman of this year’s Scotsheep event, said yesterday, “It is hard to believe that last autumn, in the wake of the foot-and-mouth outbreaks in England, Scottish sheep farmers had to sell 105,000 lambs to the welfare scheme at only £15 per head.

“On Monday at St Boswells we were selling hoggets at an average price of 150 pence per kilogram compared to 87ppk a year ago.

“Many have been fetching £70 to 80 per head.

“Spring lambs were 199ppk on Monday and only 117ppk a year ago.

“It gives a justifiable reason why sheep producers should look forward with confidence.”

Mr Clark was speaking at a preview day at Northhouses, Teviothead, Hawick, home of the Hepburn family and the venue for Scotsheep on Wednesday, June 4.

To add further to the encouraging news John Taylor, director of agriculture with event sponsors Bank of Scotland Corporate, said, “The euro exchange rate was 68 pence last September and two weeks ago it was over 80 pence.

“Now it has slipped back a little to around 78 pence but it is still giving UK sheep farmers a considerable advantage in the market.

“The general view is that the euro will remain firm for the rest of the year.

“It also means higher Single Farm Payments converted back from euros.

“At the moment the advantage over last year is around 17% and we have seen an increasing number of customers opting to be paid in euros and many making forward contracts to convert into sterling at favourable rates.”

However, rising production costs are also part of the equation, particularly as regards fuel, feeds and fertilisers.

Mr Taylor acknowledged that more working capital would be needed within farm businesses but that individual circumstances would need to be considered.

“There is still evidence of trouble for some despite price rises for end products and rising land prices have played a part in keeping some businesses going,” he said.

“The basic rules of borrowing haven’t changed but there is no doubt the wholesale cost of money has rocketed and put pressure on banking margins.”

Mr Clark had also noted the increase in production costs.

“With fertiliser so expensive it could be that more farmers will be looking to use animals to build fertility and this could help the prices of breeding stock,” he said.

“On this farm here at Northhouses the options are limited. It is a good all-grass unit finishing most of the lambs off grass but a proportion have to be fed grain-based feed and that feed has to be purchased.”

Northhouses is a typical 1600-acre Teviotdale farm running from 600 feet above sea level at the steading to 1200 feet at the top of the hill.

For the last 20 years the farm has been tenanted from Buccleuch Estates by Ian and Katherine Hepburn, now helped by their two elder sons.

Visitors to Scotsheep will have a chance to tour the farm and inspect the 1850-strong ewe flock.

The original stock had been South Country Cheviot until the 2001 foot-and-mouth outbreak which saw the whole flock culled in April, most distressingly right in the middle of lambing.

Now the hill pastures are stocked with 950 Lairg-type North Country Cheviots, 820 Cheviot Mules and small pedigree flocks of Texel and Suffolk.

There are also 130 suckler cows producing store calves.

“Hopper feeding lambs still pays but higher costs are definitely catching up,” said Mr Hepburn.

“At the moment we are still catching up from the worst spring weather we have had here in 21 years.

“Lambing went quite well but we have lost lambs since.”

Looking at the wider position of hill and upland farming in the Borders Mr Clark asked, “Should we be looking at production subsidies again to keep stock rearing viable?

“We need a balance of cattle and sheep to keep these hills right, so there is an environmental reason.

“However, if there is no production-linked aid how much more would the end price to the consumer have to rise to make farms like this viable?”

Some of the answers to these questions and more will be available at Scotsheep, with 153 stands, 41 sheep breed societies present and a full seminar programme.