EAT, DRINK AND BE MERRY AS FOOD SECTOR GROWS

Ask a farmer how things are – and be braced for a long list of woes. But this week brings some upbeat and hopeful news.

Figures just out show Scotland’s food and drink sector generated a record annual turnover of more than £14 billion in 2014. Food manufacturing in Scotland increased at nearly twice the rate of the UK average over the six year 2008-2014 period, scoring a rise of 43 per cent.

The sector’s increasing importance is too often overlooked in appraisals of Scotland’s economy. It employs 45,600, accounts for more than 18 per cent of Scottish manufacturing value added and 18 per cent of total manufacturing turnover. And it shows every sign of resilience despite the uncertainties over Brexit and signs of slowing growth elsewhere.

The industry spans agriculture, fishing and aquaculture, food manufacturing and drink manufacturing. The newly-published data is contained in a briefing from the office of the chief economic adviser and is published on the Scottish government website.

And later this week the authoritative Bank of Scotland annual survey of the food and drink sector shows an uplift in business confidence and growth expectations compared with twelve months ago.

The survey, conducted in the wake of the UK-wide referendum vote to leave the EU, is set to show that show that despite a year of turmoil and uncertainties, Scotland’s food and drink sector expects to increase employment, investment, exports and research and development spending in the period ahead.

The survey, due for release tomorrow, is set to show that firms expect to increase their turnover by 24 per cent over the next five years compared to an average of 19 per cent in last year’s survey. Among large firms surveyed the figure is set to be higher.

On investment intentions, job creation and research and development, the survey responses indicate growth. And on exports, more than two thirds of all respondents say that they are investing or planning to engage new international customers over the next five years.

Meanwhile the newly published data, contained in a briefing from the Office of the Chief Economic Adviser, shows the sector making good progress towards its 2017 turnover target of £16.5 billion.

It says turnover in the food and drink growth sector stood at £14.4 billion in 2014, up from £14 billion in 2013 – representing an increase of 2.8 per cent over the year (nominal terms).

Gross Value Added in the food and drink growth sector stood at £5.3 billion in 2014, up by 5.1 per cent on 2013.

Says Rural Economy Secretary Fergus Ewing, “The food and drink sector continues to be one of our most successful and that success shows no sign of slowing down.

“The industry is vital to Scotland – it creates jobs and wealth, impacts on health and sustainability, and helps attract people to the country by promoting our food and drink around the globe.

“This record turnover means that the sector is making good progress towards meeting the 2017 target of £16.5 billion, which has been set by Scotland Food and Drink.”

Scotland Food and Drink chief executive James Withers added, “These are great figures and testament to a transformation in food and drink activity in Scotland over the last few years.

“The sector is not without challenges and uncertainty, but for a sector whose growth was stagnant a few years ago, this has been a major turnaround. The Scottish industry is now being recognised internationally for how it has embraced collaboration to grow, forging a stronger global reputation for our products.”

However, ministers would be the first to admit that the overall outlook is not without challenges. Many firms in the sector continue to be concerned over price volatility as the fall in sterling has raised the price of imported raw materials. Coping with the complex logistics of exporting remains a concern for many SMEs – and all this before detailed Brexit negotiations have yet to begin.

Overall, however, the signals point to a positive response to the post-referendum uncertainties ahead. And the sector should continue to provide uplift in an otherwise difficult year for Scotland’s economy.

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