For the past 10 years the Scottish food and drink story has been one of constant growth, but farmers don’t feel like they’ve got their due.”

This conundrum is at the crux of Scottish Food and Drink Federation (SFDF) CEO Dave Thomson’s strategy for working with his near neighbours in the food and drink manufacturing supply chain.

“Farming is critical to manufacturing, and it’s very clear to those involved in the industry at a strategic level that primary producers don’t feel they’re getting returns that the rest of the sector are,” he reports.

SFDF are not to be confused with their Scottish produce promoting cousins – Scotland Food & Drink (SF&D) – rather, the Federation’s role is as a lobbying organisation for those food and drink manufacturers which operate in Scotland – be they global giants, such as Unilever, or home-grown outfits like MacSweens. They do, however, work closely with SF&D and, as chair of its innovation committee, Dave was closely involved with ‘Ambition 2030’, the strategy to increase Scottish food and drink sector’s turnover to £30bn in just over a decade.

“With Ambition 2030 we were very aware that something had to change. The aim is that primary producers are part of any element of the strategy – we need farmers and fishermen to produce the raw materials,” Dave advises.

CH market development

There is still huge scope to develop the UK market even before we look for new markets beyond our shores.

“We need to target the London metropolitan area, which fits in with a general aim to prioritise the high-end market within the M25,” Dave reports.

“Scotch beef would be Scotland’s vanguard product in the southeast, but there are more oatcakes sold within the M25 than in Scotland.”

While the potential for UK growth is being scrutinised, Dave’s members are still very busy across the world, not just to develop new markets for traditional Scottish products, but also to see how they can fit in with emerging global food fashions.

“Companies are desperate to understand next year’s trend,” he says, explaining that his members’ development chefs spend time in the USA, Australia and South Africa to develop products based on the next vogue.

It is hard to square farming’s long-term production cycles with the ephemera of the latest food craze, Dave is willing to admit. The key for producers keen to release their share of Scotland’s food and drink success is collaboration.

Collaboration

“I would like to see more farmers working together to create power,” Dave asserts, “if farmers can work together they could negotiate a better place in the market. The question is how do we get some farmers and food producers working together to collaborate? It takes a long time to establish trust and prove that it is going to work.”

He cites the good examples he’s seen in the industry, for example Mackie’s and Taypack who, when they realised they would compete against each other in introducing a new Scottish crisp to the market, decided to work together.

At a larger scale, the Nestlé factory in Girvan is working with dairy farmers within a fifty-mile radius to enrich their pasture in order to produce a high-quality chocolate ‘crumb’ which is used in other Nestlé products.

“If you have a collaborative relationship with your customer you should see the benefit,” Dave says, “the problem is, how do you know where there is an opportunity? Who tells you? Do you share with the farm down the road? SAOS can talk until they are blue in the face but it requires trust and first steps. It requires hand-holding and personal relations as well as business sense.”

He is adamant that the supply chain should work together and that SFDF should be helping members and colleagues in other trade associations eg NFUS to try to be cognisant of what those opportunities might be.

Brexit challenges and opportunities

Unsurprisingly, the food and drink manufacturing sector shares many of farming’s challenges – and opportunities – with regard to Brexit. Staff, customs and tariffs and the difference in emphasis by the UK and Scottish Government on the food and drink sector.

Again, Dave is closely watching out for the potential effects on the agricultural sector.

“Farming is an industry that produces food. Yes, there are enormous environmental and sociological benefits,” Dave believes, “but if you’re not helping farmers to grow and produce, it will be wrong-headed of government.

“In areas where viability cannot be guaranteed, government support must be maintained.”

Dave is worried about the effects of Brexit already affecting his members and believes that due to market uncertainty only one in 10 of them are preparing for the UK’s exit from the EU.

“Until the deal is done and the Government can let us know what is happening, businesses can’t react; they’re not investing or making decisions.”

In the meantime, the costs of imported raw materials have increased and businesses are struggling with the apprenticeship levy.

Staffing

For food and drink manufacturers, the number of staff from EU member states is much higher in Scotland than the “standardly quoted” 30%, Dave says. “In farming there is a need for seasonal labour. In food manufacturing you need labour all year round and people of all skill levels with science and technology, engineering and administrative backgrounds. You need people who are prepared to live and work here for years not months,” he explains, adding that SFDF welcomes the UK Government’s announcement that it will provide a system for people already in the UK as well as those who arrive in future.

Customs and tariffs

The rules surrounding customs and tariffs for manufactured food and drink produce are highly complex. It is well known that third countries (those that are not members of the EU) exporting fresh meat and dairy to the EU are heavily tariffed. In addition, according to Dave, complications relating to customs and other non-tariff barriers will have to be resolved too. These include food hygiene checks at the border; animal health and phytosanitary certifications; new staff to carry out such checks and the appointment of experts at key points of export and entry, which leads to a cost and time delay.

“There is a lot of talk about doing things electronically away from the border but as far as we would understand it, primary production still needs to be checked and there are real concerns about the impact on the viability of exports as the value is in fresh produce,” Dave clarifies.

Lessons from the sector

Despite the foreseeable hurdles, Dave still believes there are positive prospects for Scottish agriculture from Brexit.

“It is a potential opportunity for adjustment, which I would hope Scottish farmers are trying to work out how they will take forward. My advice is to make sure you’re talking to your customer and understand what they need.