Speaking yesterday at the launch of the organisation’s Annual Review, QMS chairman Donald Biggar said the work undertaken by the body is crucial to building a sustainable, vibrant red meat industry in Scotland.

Highlighting the opportunities and threats facing the industry Mr Biggar said that in addition to our core activities, QMS plays a frontline role in developing innovation, such as the meat eating quality project it announced at the Royal Highland Show, and tackling key challenges such as climate change.

However, he warned that inflationary erosion, coupled with a decline in overall livestock numbers in recent years, has led to a reduction in the levy income on which QMS depends, to the point where reducing funding is impacting on levels of activity.

Following an eight year freeze in levy rates, the organisation is now planning to implement an increase, in line with inflation over that period.

“We are now at a crossroads in terms of balancing QMS’s income from levy with our ability to deliver effectively for the red meat sector to ensure it continues to be well-placed to move forward as a strong, dynamic and efficient player in Scotland’s food industry,“ said Mr Biggar.

Income from levy in 2008/09 was down to 33.9m compared with 34.2m in 2007/08 with estimated income for 2009/10 down to 33.7m.

Acknowledging the difficult times levy-payers have endured in recent years, Mr Biggar pointed out levy rates have been unchanged since 2001 in the case of cattle and sheep and 1997 in the case of pigs.

“However the harsh reality of the situation is the decline in numbers of primestock produced in Scotland in recent years means that we must now address the issue of our reduced income from levy,“ he added.

Since 2001 static levy rates have failed to keep pace with the average price producers receive for their livestock. In that time prime steer, sheep and pig prices have all increased by a remarkably consistent 58 per cent.

The proposed levy would mean an increase of 93p per head of cattle, 13p per lamb and 21p per pig, effective from 1 April 2010, subject to approval by Cabinet Secretary for Rural Affairs and the Environment, Richard Lochhead.

“We have been very encouraged by initial soundings with industry representatives regarding raising levy and by the depth of confidence that exists in the ability of QMS to deliver. The widely held view across all sectors is that it is vital our activity is underpinned by appropriate resources,“ said Mr Biggar.

QMS will also be pursuing the repatriation of around 31million levy funds annually from south of the border and has been discussing this approach with its sister organisation in Wales.

“The current situation, where levy funds are distributed according to place of slaughter, means Scotland and Wales receive less levy funds than if the approach was based on where stock originate,“ said Mr Biggar.

QMS Chief Executive, ‘Uel Morton, pointed out that for every 31 of cash which QMS received from levy-payers during the year a further 24p was leveraged from sources such as Government and Europe through co-funding.

Recognition of QMS’s strong performance on behalf of the industry came recently with news that it is the only meat organisation in Europe to secure a major EU grant, worth Euro 1.25 m over the next three years, to support its Scotch Beef and Scotch Lamb marketing activities.

“However, even with this EU cash injection our marketing budget this year is down 3630,000, that's 24 per cent, and we are now facing difficult decisions on the future allocation of the available resources,“ said Mr Morton.

One example of the squeeze on resources is the consolidation of Scotch Lamb marketing campaigns from spring and autumn to autumn-only this year.

QMS will be hosting a series of open meetings throughout Scotland in November to engage with the industry on its plans for future activities.