Business Case – Establishment of a New Sustainable Aquaculture Innovation Function (SAIC)

2. The Strategic Case

Part A- Strategic Context

Aquaculture is a strategically significant industry for Scotland, underpinning economic growth, rural and coastal employment and the nation’s global reputation for high- quality seafood. The latest Marine Economic Statistics available show that the aquaculture sector contributed £468 million in gross value added to the Scottish economy in 2023 and producers directly employed 2,200 people^[2]. The latest Scottish Fish Farm Production Survey reported that in 2024 salmon farming achieved a production value of over £1.3 billion. Scottish Salmon is the UK’s most valuable food export and 2018 figures recognised that approximately 12,000 people were involved in Scottish aquaculture production and the associated supply chain.

2.1 Organisational overview

Established in 2014, the SAIC (legacy project under UoS) has been hosted as a Scottish Funding Council (SFC) funded project by the University of Stirling (UoS) and is dedicated to advancing aquaculture – finfish, shellfish, and seaweed – through innovation and collaboration.

The SAIC’s (legacy project under UoS) mission has been to transform the sector by enabling sustainable growth and delivering innovation excellence with a focus on reducing environmental impact and advancing climate resilience while enhancing economic performance and increasing production efficiency.

Supported by an advisory board drawn from the sector, an independent Science Panel and a committed staff team, the Sustainable Aquaculture Innovation Centre

functions within the structure of UoS. The Centre benefits from the University’s corporate resources and governance including with regard to finance, legal affairs, HR and Health & Safety. The SAIC (legacy project under UoS) staff team are employed by UoS and the University manages all funding for SAIC (legacy project under UoS) from SFC and other partners.

SAIC (legacy project under UoS) has provided an independent voice for the sector, offering science-based insight and fostering knowledge exchange making an important contribution to the wider “team Scotland” on aquaculture issues e.g. supporting Scotland’s national effort to participate in AquaNor in Trondheim, Norway.

In 2022 the SFC commenced an evaluation process of all innovation centres in order to establish the centres as long-term innovation infrastructure. Following the review, and despite strong advice from Marine Directorate as to the great value of SAIC to the sector, the SFC confirmed its decision that SAIC (legacy project under UoS) did not meet the SFC threshold for infrastructure investment and would not be funded by SFC as part of its programme beyond the end of Phase 2 (end July 2024). Instead, a package of £1.5m transitional funding was jointly agreed by the SFC and Marine Directorate to sustain operations to 31^st March 2026 in order to provide time for the development of long-term arrangements.

The purpose of this business case is to develop new arrangements that enable the long-term sustainment of aquaculture innovation support as has been delivered by SAIC (legacy project under UoS); arrangements which help to maximise the productivity of Scotland’s marine resources. The Scottish Government is working with the sector, Crown Estate Scotland, SAIC (legacy project under UoS) and other partners including Highlands and Islands Enterprise (HIE) and the University of Stirling to develop proposals for long term support for aquaculture innovation. This includes consideration of governance arrangements, funding and key deliverables.

2.2 Business Strategy and Aims

SAIC (legacy project under UoS) works to reduce the environmental footprint and increase the economic impact of aquaculture in Scotland. Key aims include:

• connecting businesses and academics to identify shared challenges and interests bringing organisations together to collaborate research and innovation projects.
• funding and supporting commercially relevant, collaborative research, and shares the knowledge gained from these projects right across the sector.

SAIC Independent Scientific Panel

SAIC maintains the SAIC Independent Scientific Panel (SISP), which is an international group of eminent scientists who help to ensure that research is world-leading, in line with the Scottish Government, HIE and SFC’s ambitions for Scotland to remain globally competitive, attractive, and respected. SISP members provide vital independent, science-led expertise that allows SAIC to act as Scotland’s approachable, authoritative, and trusted hub of aquaculture innovation. (A slimmed down SISP functioning as a Project Funding Panel is currently in place as a cost saving measure.)

The SISP membership draws on independent academic expertise in a wide range of relevant disciplines to provide advice on key and emerging issues, review all project applications and reports as part of the project approval and monitoring process. The contribution of SISP is highly valued and in one of the key factors which distinguishes SAIC from a simple grant management body.

SAIC Consortium

The SAIC Consortium is a collaborative body of over 350 businesses and organisations, from SMEs to large multinationals and from cutting-edge new research institutions to Scotland’s oldest universities. SAIC’s database of consortium members is the largest collection of up-to-date contacts and intelligence on aquaculture organisations across the UK and holds considerable value to its custodians.

The SAIC Consortium allows academics and industry professionals to interact, with a guiding hand from SAIC, to generate collaboration opportunities. Consortium members benefit from engagement with SAIC regarding new funding opportunities and sector news. SAIC connects Consortium members where there is potential for future collaboration and uses those connections to build and strengthen collaborative research consortia, bringing together a wide range of project partners to submit successful funding applications to other funders (e.g. SIF, BBSRC, NERC) to leverage third-party funding. This creates a return on investment for funders, driving further applied research into, and out of, Scotland’s research base and fulfilling industry demand for innovative solutions.

The consortium is, alongside the SISP, a key way in which SAIC delivers value over and above its grant management function.

SAIC is unique in Scotland and the UK, possessing specialist aquaculture expertise alongside capabilities in securing and managing funding, managing project partnerships and knowledge exchange. The knowledge exchange work undertaken by SAIC enables efficient dissemination of learning generated through the innovation projects supported and is a central feature of how SAIC generates value. While the delivery of projects brings direct value to participants the exchange of learning enables the wider sector to apply knowledge in additional relevant contexts, further collaborate and drive additional impact and return on investment.

Current Business Plan

SAIC (legacy project under UoS)’s previous 5-year plan was completed in 2024 and work is currently being pursued against a more tightly focussed and transitional plan to end 31^st March 2026.

During the current transitional period, SAIC’s key activities are:

• Management of a programme of applied research projects from multiple funding streams, including processing financial claims, ensuring delivery is on track, supporting collaborations between the companies involved, reviewing final outputs from the collaborative research projects, and ensuring knowledge dissemination across the sector and partners. SAIC’s expertise in this area currently extends across 102 projects, of which 26 will continue beyond the end of Phase 2.
• Maintaining close dialogue with companies in the SAIC Consortium with a view to:

a. Understanding industry challenges through a new industry technical advisory group;

b. Identifying opportunities to access SG, UK or EU funding to support relevant applied projects;

c. Encouraging valuable networking, including providing cluster-builder support to Scottish SMEs who can contribute to realising the outcomes of improved fish health under the Farmed Fish Health Framework.

• Running a direct collaborative funding call, securing industry co-investment, focused on the agreed top priority of improving fish health in light of climate change impacts on farming conditions; and funding and managing the resulting projects in close collaboration with contributing industry partners. The timing and availability of public sector funding that align with the timetable included in this business plan are critical.
• Staying closely connected to the UK and EU funding landscape to support Scottish businesses and universities in applying for third-party funding. To date, SAIC has secured £20.1m of external funding from UK and EU vehicles. SAIC support includes signposting to relevant opportunities, reviewing funding applications, aligning proposed projects with industry need, offering guidance to enhance the chances of success, and allocating staff time in-kind for Knowledge Exchange activities.
• Contributing strategic policy input into the Scottish Government’s Marine Directorate’s models for a future SAIC entity purpose, structure, budget etc, to begin from 1 April 2026.

The new entity will be required as a condition of funding to develop, as a priority early action, a new 5-year operating plan. This plan will ensure delivery of the outputs agreed in the funding agreement while anticipating opportunities for growth and subsequent operations beyond the initial funding agreement.

2.3 Strategic needs

The coordination of aquaculture innovation is a strategic need if the Scottish aquaculture sector is to remain productive and internationally competitive in the face of biological challenges, climate change and increasingly complex stakeholder expectations. SAIC acts as a neutral coordinating body across government, regulators, industry and academia, aligning innovation activity with national policy goals.

Global market share for Scottish producers of Atlantic salmon has declined in the last decade with many international producers increasing production at faster rates than Scotland. Many international competitors are well supported by national innovation infrastructure and a failure on the part of Scotland to secure innovation coordination and funding risks further loss of market share as competitors develop production more rapidly and effectively. While international ownership structures do mean that innovations developed elsewhere are eventually deployed in Scotland, they can require modification to meet Scottish conditions and delay in deployment leads to a disadvantage for Scottish production.

As the impacts of climate change become greater the need for innovation in the face of biological challenges arising from changing seas will be more profound and bring greater benefit in sustaining existing and developing future production.

Alignment with Scottish Government Strategies

SAIC’s current and future operation aligns with, and supports delivery of, multiple Scottish Government strategies including the Blue Economy Vision and the Vision for Sustainable Aquaculture (Annex A) by generating evidence, de-risking innovation, supporting adoption of best practice, and facilitating collaboration across industry regulators and researchers.

By focusing on development in this way, Scotland will continue to be recognised and will develop further its prominence as a centre of aquaculture innovation excellence, creating opportunities for inward investment. A collaborative approach between Scotland and international partners will enable new approaches and technology to be adopted in Scotland while helping secure opportunities to increase the export of intellectual property products, technologies and expertise in aquaculture.

The development of Scottish aquaculture has been driven by innovation, with advances across a wide range of disciplines including animal husbandry, nutrition, genetics and engineering, supporting the growth of the sector to this point. Innovation will be fundamental in ensuring aquaculture has meet the challenges facing the sector.

Rural Affairs & Island Committee interlinkages with SAIC

The Scottish Parliament’s Rural Affairs and Islands (RAI) Committee has consistently emphasised the need for:

• Stronger environmental protection and biodiversity safeguards in aquaculture
• Improved transparency, monitoring and data availability
• More robust evidence to support regulation and policy decisions
• Increased public trust and community confidence
• Better coordination between regulators, industry, science and communities,
• A shift from reactive management towards preventative, system wide improvement.

Innovation is central to delivering in relation to a number of the recommendations made the RAI Committee following its inquiry into salmon farming. This includes efforts to improve fish health and welfare, reduce mortalities and address challenges arising from climate change. SAIC can act as a key delivery mechanism for these ambitions by providing the infrastructure, coordination and evidence base required to translate recommendations into practical change.

Part B: The case for change

The arrangements which supported SAIC (legacy project under UoS) from establishment to 2024 have now ended and SAIC is operating on a transitional basis which will end on 31^st March 2026. UoS has indicated that it does not have an appetite to extend the project for any significant period, even if SFC were supportive.

However, the coordination of innovation activity is essential in securing value for money and efficiency. There is no opportunity to extend the status quo and, if outputs are to be maintained, governance and funding arrangements for the strategic support of aquaculture innovation must change.

2.4 Key objectives

The overarching objective is to ensure that Scottish aquaculture continues to have effective innovation support, enabling applied research projects that help the sustainable development of the sector. Ensuring the long-term delivery of SAIC’s outputs and the value it drives while avoiding a hiatus in innovation support, at a key time when research and development have a key role in managing challenges to the sector is seen as essential by stakeholders across industry and academia.

Sustaining activity currently delivered by SAIC that supports the realisation of the Scottish Government vision (both for sustainable aquaculture and the blue economy) through enabling applied research and innovation projects of direct relevance to the Scottish aquaculture sector is the Scottish Government’s highest project priority.

The Scottish Government places particular value on SAIC’s effectiveness in instigating, facilitating and nurturing genuine collaboration across industry, academic and government partners; and SAIC’s successful leveraging of significant funding from industry and other third-party partners.

SAIC’s contribution, as part of a ‘Team Scotland’ approach, to specific high profile/international aquaculture events that provide opportunities to help realise Scottish Government objectives and promote Scotland internationally, with the aim of growing trade, investment, influence and networks is also highly valued.

2.5 Existing arrangements

SAIC (legacy project under UoS) operates as an externally funded project within the UoS and where the University holds responsibility for all financial and governance matters relating to its operation.

The SAIC Consortium is a collaborative body of over 350 businesses and organisations and allows academics and industry professionals to interact, with an ability to generate collaboration opportunities.

The Project Funding Panel is a slimmed-down SISP which is operational during the current transition phase and provides a reduced range of inputs but allows for a cost saving.

SAIC currently has a staff team of six individuals, four of whom are employees of UoS and two of whom are independent contractors. There is one post currently vacant.

UoS holds a grant from SFC for the delivery of agreed outcomes and this grant is made up of funding from SFC intended to support a transition from phase 2 of the innovation centre programme and a contribution from Scottish Government Marine Directorate. This funding and arrangement is set to run to 31^st March 2026.

Following agreement of a transitional period business case SAIC has pursued a more tightly defined work programme than it historically delivered (set out above at Current Business Plan). The current work programme is focussed on supporting and promoting innovation in fish health management and securing improved productivity, performance, survival and production of high-quality and marketable fish.

Through its hosting of the Consortium, project coordination, thought leadership and knowledge exchange.

SAIC (legacy project under UoS)’s breadth of operations are unique in the aquaculture sector in offering:

• Sector engagement and intelligence through the consortium
• Project partnership formation and support
• Grant management
• Knowledge exchange and thought leadership
• “Team Scotland” capability

2.6 Strategic risks

A coordinated, well-governed aquaculture innovation function is essential for maintaining sector resilience, competitiveness and climate readiness. Failure to deliver the preferred option or delivering an organisation that does not meet the strategic need creates material risk for the sector and for public value. Strategic risks fall into these categories: non-delivery, delivering the wrong thing and operational delivery risk.

Strategic risk of non-delivery:

If the Scottish Government and partners are unable to establish a functional independent SAIC entity by 1 April 2026, then there will be a hiatus in innovation support, knowledge exchange and project delivery resulting in:

• Deterioration in fish health, welfare and survival rates due to lack of R&D continuity
• limited ability to mitigate climate-driven biological pressures
• reduced economic performance due to increased production losses
• a failure to keep pace with international competitors
• inability to realise SG’s Vision for Sustainable Aquaculture and Blue Economy outcomes
• reputational risk to SG, CES and sector partners

Mitigations

• Cleal transition programme with defined governance milestones (company formation, board appointment, recruitment)
• Back-to-back grant agreement enabling uninterrupted funding flow
• Early performance and financial reporting framework to ensure continuity of delivery

Strategic risk of delivering the wrong thing:

If the new organisation’s design, governance or operating model does not match the strategic requirements of the sector (e.g., insufficient independence, misaligned priorities, inadequate scientific governance or over-narrow focus, then the organisation could fail to deliver meaningful sector-wide value resulting in:

• weakened trust from stakeholders, particularly where concerns about past hosting arrangements persist
• failure to meet needs of all subsectors (finfish, shellfish, seaweed), limiting public benefit
• restricted ability to leverage external funding or attract strong project partners
• poor alignment with SG and CES priorities, reducing long-term sustainability

Mitigations

• Company Limited by Guarantee structure ensuring independence and multi-stakeholder governance
• Mandatory Independent Scientific Panels and Stakeholder Engagement Panel to maintain strategic and scientific integrity
• KPI framework ensuring funded activity aligns with national priorities (fish health, climate resilience, environmental footprint reduction

Operational delivery risk (timeframe, capacity, partnership complexity)

If the transition is not delivered within the tight timeframe or if partnership and staffing arrangements are not effectively coordinated, then operational readiness may be compromised resulting in:

• Delays in project funding calls and new programme delivery
• Loss of key staff and institutional knowledge
• Reduced capacity to service governance, reporting and stakeholder needs
• Fragmentation of project partnerships and loss of confidence in SG/CES processes

Mitigations

• Structured programme management within SG, with defined roles (SRO, project management, engagement with SG specialists in finance, legal procurement, VAT, subsidy control and comms matters)
• Early appointment of Senior Leader and retention of existing SAIC staff to preserve capability
• Contracting of specialist HR, IT and financial services to ensure operational functionality from day one
• Continuous SG-CES-SAIC coordination, with early identification and escalation of risks

Taken together the strategic risks centre on:

a. Not delivering an operational entity on time

b. Delivering an entity that lacks the required independence, capability, or scope

c. Challenges of delivering within compressed transition window involving multiple partners

The mitigations embedded in this business case, including clear governance structure, early establishment actions, multi-layer oversight and a robust KPI and reporting regime, substantially reduce these risks and provide confidence that the preferred option is deliverable and strategically sound.