The Taskforce initially focused on and reviewed existing work already underway to describe how the supply chain works, and to include vulnerability assessments. Building on this, the Taskforce agreed a series of recommendations to strengthen overall food security in Scotland. It identified three relevant themes where recommendations could support progress: business and supply chain support, future national food security structures and reserved issues to be raised with the UK Government.
Business and supply chain support
The Taskforce recognised that the range and magnitude of issues affecting the food and drink sector (not just arising because of the current conflict in Ukraine) are significant and widespread across it. It also recognised that there was a likelihood of continued turbulence, including links to climate change, and other possible impacts on the sector during this period of global uncertainty. This makes it all the more important that Government and industry work together, as they have through this Taskforce, to use all of the levers available to support the sector.
A key concern of industry, highlighted to the Taskforce, was that short-term cash-flow issues could hamper future choices made by individual businesses that could, otherwise, help the sector. Businesses could cut back on planned investment, (on automation for example) or farmers could consider it too expensive to grow crops.
The Taskforce acknowledged that the Scottish Government is already taking action to support improved cash flow. In March, it set out the Payments Strategy for 2022, which is aiming to ensure farmers, and crofters are paid as early as possible. The Scottish Government remains committed to delivering over 70% of payments by the end of December and over 95.24% of payments by the end of June 2023. This will provide financial security to all farmers and crofters. However, the option of earlier payments to farmers should be explored to ease cash flow concerns.
The Taskforce also acknowledged that local knowledge is key to identifying risks to the sector. It considered that the sector’s resilience could be strengthened further through access to supports, perhaps harnessed through a landing page or gateway, linking with existing business support platforms, similar to that produced in preparation for EU-Exit. Some of the information collated there could, for example, highlight best practice and help the sector to assess business productivity and implement immediate cash flow and/or cost saving measures.
The Farm Advisory Service, for example, provides specialist one-to-one advice for farm businesses. This can include specialist advice on resilience planning. It also hosts a series of regular events that provide advice on a range of relevant topics including livestock, crops and soils, environment and business finance. It is part of the Scottish Rural Development Programme, which is funded by the Scottish Government, providing information and resources aimed at increasing the profitability and sustainability of farms and crofts.
The Taskforce also considered specific issues including further detailed consideration of the retail and foodservice supply chain and the need to ensure that, against a backdrop of unprecedented cost rises, that domestic primary production and manufacturing remains viable and appropriate returns are passed fairly through the supply chain to help the survival of the whole sector.
The Taskforce noted the efforts being made by retailers to keep prices as low as possible for shoppers during a cost of living crisis, however, there is a growing concern about the viability of the food supply chain in Scotland and our future production capacity. The consumer interest, the economy and the retail sector all depend on a vibrant supply chain and so the Taskforce would encourage retailers to continue to ensure they get the right balance in supporting suppliers and protecting consumers as far as possible from increasing prices.
Also, the UK Government took "fair dealing" powers, in their Agriculture Act 2020, to regulate supply chains for agricultural products. So far, proposals have been brought forward in relation to using those powers in the dairy sector. The UK Department for Environment, Food and Rural Affairs, DEFRA, has also indicated an intention to publish a pig supply chain consultation.
The recommendations of the Group under this theme were shorter-term in focus. These were that:
- A single digital gateway should be created (building on existing business support platforms) to include available supports specific to the food and drink sector. This could encourage, for example, a greater use by business of farm, sea, food and drink business review teams like Scottish Manufacturing Advisory Service, Farm Advisory Service and the enterprise agencies. This, in turn, could help support businesses to manage volatility and risk and to make efficiencies and build their resilience to supply chain changes.
- Industry leaders also plan to encourage businesses, within their membership, to think even more about their business models, costs/think about the market, consider their resilience and to direct them to the single digital gateway.
- While recognising that pricing agreements between retailers and producers are commercially sensitive, and that the Scottish Government cannot intervene, the Scottish Government and Food Standards Scotland will seek to open engagement with the Groceries Code Adjudicator, in the first instance, and the Competition and Markets Authority. The intention would be to ask them what scope they have to seek assurance and assess whether current behaviours in the food supply chain are working in the long-term interests of consumer choice, food security and retailers. Such a review would provide important assurance to consumers and industry alike.
- To encourage the UK Government also to look at how the "fair dealing" powers in their Agriculture Act 2020 powers, and which the Scottish Government supports, might be used more broadly to ensure fair treatment of agricultural producers.
- That the Scottish Government and industry would continue to work together to support the sector recognising the ongoing global turbulence. Consideration will be given to the Taskforce meeting perhaps two more times this year, in a monitoring capacity. This would be to test in more detail – as necessary – issues that arise and also to monitor the delivery of agreed recommendations.
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