Doubling the turnover of the red meat industry is the new vision to create a £30bn food and drink sector by 2030 according to James Withers, chief executive of Scotland Food and Drink, revealed in an exclusive interview with Farmers Journal Scotland. The industry-led vision will be key to informing business and Government decisions and spending plans, as the industry strives to reach this ambitious target.

Vision

“When setting the ambition, we effectively looked at the decade that had gone. Remember, before 2007 Scotland didn’t have an agri-food strategy.” said Withers.

“Since then we have been growing 5-6% per year. So if we continue on that trajectory we should be at a turnover of £30bn by 2030. But it’s not just turnover, we need responsible and profitable growth. Our last strategy from 2007 didn’t even mention profitability: it’s now at the heart of the plan.”

Farming is key

While the food and drink sector has seen growth over the last decade, farm incomes have been left lagging, with little increase in profitability. James assures that rectifying this is vital for a successful sector.

“Our plan includes farmgate profit, along with processing and manufacturing. Farm income is key to this, which is an area we have seen the least progress on over the last decade. If we have just turnover and not profit it won’t be a successful plan. There must be net growth in farm incomes,” he asserts.

Moreover, farming businesses’ health does not just lie in the accounts, he believes: “One of the most valuable measurements, which isn’t often looked at, isn’t pounds and pence, but confidence. In a beef and sheep situation, particularly hill, we don’t have that confidence right now.”

Red meat plan

The red meat sector is the biggest player in Scottish farming. The national cattle herd is drifting down and ewe numbers are vulnerable to Brexit implications, but the former NFU Scotland CEO is resolute in driving the industry forward, so it can play its part in hitting the £30bn turnover target.

“This vision has a view to double turnover in the red meat sector by 2030,” James says. “It’s not about volume, but about value. Whisky is a good model for success. We need to search for increased value markets. We are a niche player in the world beef market. We should be hunting for markets which drive this value and forget about commodity.”

Sheep sector

How the sheep sector will see increases in the future looks challenging. Many sheep farmers are looking to secure their current flock, let alone grow their enterprise. Nevertheless, this is recognised at Scotland Food and Drink.

“It’s fair to say that the economics of the sheep sector and hill sheep in particular aren’t good. We have to work on the assumption that what is happening is not right. We have vast differences in performance between farms and few other industries would tolerate this,” said the former NFU Scotland chief executive.

“The support system has protected this gap, this is not simply a case of geography, where you are, or the climate.”

Building the farming industry

Farmers will need to play their part in hitting the ambitious targets in the food and drink vision. Part of this will come from on-farm changes, according to James. He explained the opportunities for the sector.

“More flow of information down the supply chain. Regulatory bitter pills for things like EID should be used to an advantage.

“We have to use this information to go back to the farm gate. We sit on a heap of world-class research within our institutes, which is not properly utilised.”

Brexit support changes

The UK leaving the EU will offer a chance to look again at the way farming is supported and regulated. This is a massive opportunity, according to James. He is clear that a brand new system should be made – a break from the past. James wants to say goodbye to support models that minimise redistribution, with more focus on rewarding farming behaviour.

“Future support systems should look at benchmarking, performance-recording, continuous improvement, collaborative supply chains and co-op groups. Livestock farmers can use animal health benchmarking, or working with your local vet on long-term planning.”

“We need to encourage the right kind of behaviour on farms. If farmers don’t want to get involved that’s fine, but that shouldn’t be encouraged.”

This view extends beyond the farming sector, with James asking: “Why shouldn’t processors be asked to create a collaborative supply chain if they get grant money from the Government?”

Venison optimism

With challenge to profitability for hill sheep, some are looking at venison to provide a profitable enterprise. James believes there are opportunities and challenges in the sector.

“The current scale is too small to meet demand. We need 400 deer farms to get a start in meeting demand. Venison demand is rising and will continue to rise. The cull of red deer in the hills is likely to reduce, or become static at best. If we don’t raise production it will come from New Zealand and Poland, so there is a real opportunity here.”

However, James is clear on some of the obstacles ahead. “You need a critical mass on this to get levy and promotion. One of the challenges for venison is there is no levy. Even taking support payments out of the equation, the profitability still looks very good. The major hurdle is set-up costs and fencing. The stockmanship skills required are not too dissimilar to other forms of livestock.”

Fruit and veg vision

The fruit and vegetable sector in Scotland has been quietly building its base, with increased supply over the last 10 years. James is keen to point out how the sector will benefit from a renewed focus on healthy eating.

“One debate which will define a lot of narrative in Scotland over the next few years is health,” he said. “Scotland’s comparatively woeful health record will focus minds, which puts our fruit and veg sector in a great place. Their growth cuts across a wider issue. We might be in the middle of a January detox, but all year round it’s the healthy option which flies off the shelf. We also have provision of fruit and veg in schools too.

“It’s a relatively small sector which has had enough focus. There is some great work, such as that the Kettle Produce is doing with suppliers. One third of the UK’s soft fruit is grown in Scotland. We are just in the middle of a consultation on how to drive the sector forward, so anyone with views should get involved.”

Red meat processing plants

With the recent closure of the Orkney abattoir, along with a new facility planned in Aberdeenshire. Scotland’s red meat processing sector is changing. It has a key part to play in delivering the vision.

“A more diverse processing sector would only be a good thing. But we don’t want to undermine the economic health of the current processing sector. The local processing issue has been complex for years. We have seen new abattoirs come and go,” said James. “We definitely need to look at the secondary processing for added value. We need to do more secondary processing here in Scotland. I look to the pig sector as an area for growth particularly.”

Exporting to the world

Scotland Food and Drink is quite clear that the future of the sector is not just in feeding the home market. James urges farmers to look at different sectors for inspiration.

“Look at the salmon sector, that also has huge farming challenges. It has a broad spectrum of markets, however, we don’t have this on the red meat side. This is no fault of a lot of people. But we have a whole generation in the meat trade who were brought up in a non-exporting world. This must change.”

Canadian opportunities

On where to export, James offers this advice: “Canada is really interesting as one of the eight key markets we are looking at. It is a great opportunity for red meat. Across North America there is an instinctive connection with Scottish heritage.

“Looking to the Far East, the opportunities are niche and small high-end products. We don’t need a China strategy, we need a three-city strategy. This can be transformational, but we can’t get product into China yet, so we need a base in Hong Kong. We have put investment out there.”

Our products

Scottish products are competing in a global market. Many competitors will be offering similar standards of production at lower costs, however, James is resolute that Scottish food and drink can compete, but the sector needs to keep improving.

“Our product is good enough and chefs tell me that here and overseas. There is an instinctive draw for Scotland. But we have to strive to continue to improve. We need to improve consistency. Every other country is investing and is ambitious. We need to be learning and agreeing to improve. Do we have a strong enough culture in this?

“There is a growing global middle class, so this town is big enough for everyone. We shouldn’t be shy or intimidated by what countries like Ireland and New Zealand are doing. I regularly meet with both countries. Ireland is much more of a commodity player compared with us. Look at its dairy, it’s about volume solutions as opposed to value. The key to profitability will be driving sales at home as well as overseas.”

Food trends

The food and drink sector is changing, with new fads and consumer demand occurring regularly. For Scotland to hit its ambitious 2030 target, focusing on consumer needs is vital, according to James.

“Health is the one trend which is here to stay, and so is the luxury end of the market.” believes James. “There is no reason why we can’t go for the top-end market. The opportunities are there.”

But not all food fads might fit the Scottish sector. James feels that carbon-focused brands might be tricky to nail down.

“I find the carbon debate difficult. The science appears to change on a weekly basis. Food miles versus grass-based systems, versus other systems. For certain, markets like Japan are critical. But it’s just one part of the jigsaw. Heritage has a bigger part to play.”

On-farm changes

It’s not all about getting more from the market, according to James. He thinks that farmers should do more to help themselves within the farm gate.

“The game-changer is what happens on farms as much as on the shelf. We look across the world at who is doing this well. Look to Ireland with the Irish Farmers Journal’s BETTER Farm programme, for example. Good lessons on beef profitability. We need to talk about margin, as opposed to price.

“Take a look at the QMS profitability figures, where there is a staggering gap between the top third and bottom third. Focusing on farm changes will deliver more than market premiumisation.”