RDC(3) FD - P9
Rural Development Sub Committee
Inquiry into the Production and Promotion of Welsh Food
Response from Menter a Busnes.
Consultation Questions
Challenges and Opportunities
1. What are the main challenges for the Welsh Agri Food sector over the coming years?
Balance between the environment and production
The ultimate challenge for the industry will be striking the right balance between food production and safeguarding the environment. We are increasingly aware of how some farming practices can have an adverse effect on the environment and of the need to ensure that no further damage takes place. We are equally aware of the need to improve farm incomes in order to safeguard thousands of farming families and the rural communities where they live. Whilst farm incomes have improved during 2008, the effects of the deepening recession are likely to be detrimental. Increased global pressures for food production are likely to play an increasing role in the equation.
Food security
With 960m people worldwide being classified as undernourished, the world debate on securing adequate levels of food production is gaining momentum. It is also a growing concern within the UK.
Several factors are contributing to this situation, including:
Single farm payment - resulting in less intensive production
Increase in land utilised for bio-fuel/biomass production
The weak pound - resulting in greater dependency on home grown produce
Reduced imports of e.g. New Zealand lamb (world production has decreased)
Increasing world population
Development of global economies
(list not exhaustive)
There are several indicators within the industry in Wales that this is becoming a problem e.g. abattoirs and large scale processors are showing increasing concerns about sourcing enough animals and meat for their plants - which has an adverse effect on efficiency.
Efficiency
We are possibly fairly saturated in terms of larger scale processors in Wales and as mentioned it is essential they are working to capacity in order to be efficient.
We’ve also got a large number of small producers in Wales that are concentrating largely on niche and speciality markets. These are also very likely to be hit by the recession whereby consumers will pay increased attention to price.
We believe the main challenge for Wales in terms of the food industry is encouraging the growth of a good number of small producers to medium scale to build a sustainable business sector that can capitalise on the opportunities presented by the UK markets.
Labelling, Branding and Marketing
There seems to be a growing trend of increased demand for local produce - both with small retailers and supermarkets and even with wholesalers. Food producers and processors need to be able to capitalise on this trend. They need assistance with brand development and promotion that adds value in the mind of the customer.
Consumers are also confused by product descriptions and branding e.g. Wiltshire Cured ham could easily be sourced from another county - but gives the impression of a British product. This is just one example.
We also believe that there are too many logos on food products which adds to customer confusion.
The True Taste Awards have been very successful in raising awareness of some excellent producers within the food industry, but the True Taste logo has probably lost ground over the past couple of years with consumers in terms of what it represents. There needs to be investment in promoting the True Taste logo amongst consumers.
There is a danger that during times of hardship companies will skimp on the marketing budget and it is therefore important that they have advice on effective marketing. Greater collaboration with marketing and distribution should be encouraged. WAG should keep a good industry overview and ensure that the marketing of Welsh produce generally is effective and sustained - to give a framework for individual companies to work within.
Retail
Producers are increasingly concerned about the buying power of the supermarkets and how they dictate the cost of some raw materials - e.g. milk. Many feel the need for an appointed food ombudsman to safeguard the interest of the smaller producer. During the recession producers are more worried about amalgamations of buyers and possible monopolies.
2. What are the opportunities for the Agri Food sector?
We believe that there are plenty of opportunities for the sector to increase its market share. Some general comments would include:
Research shows (e.g. the many faces of organic survey) that 'fresh’ and 'local’ are major selling points for consumers. When customers were asked: "How important are the following labels/phrases when selecting foods and beverages on a scale of 1-7?” 'Fresh’ was top of the list with 76%; 'natural’ was 4th (32%); 'origin of ingredients’ was 5th (28%); 'locally grown’ was 6th; whereby organic was only 13th (15%).
Wales is in an ideal position to capitalise on such beliefs.
However, there needs to be caution with some products that perhaps don’t want to over emphasise the local - but rather their area of origin e.g. Cambrian Mountain lamb sell a 'sense of place’ but want to sell their product much further afield. Their initial contract was with Co-operative stores in Wales, but when the product was introduced to stores in England - it’s really taken off.
Perhaps the definition of 'local’ needs to be clearly explained to the customer (e.g. some supermarkets quote within 30 miles radius). But this could work against Welsh producers, as the majority of chimney pots are in other parts of the UK.
More should be done to emphasis the good animal husbandry and welfare status of Welsh producers. We don’t do enough to promote our environmentally friendly practices and greener issues generally.
A major opportunity would be to get the service sector to use more Welsh produce. Public procurement of Welsh produce has reduced. Perhaps some of the industry focus, contacts and influence that once existed within the Agri Food Department has been lost with the formation of Value Wales?? Programmes like the 'Supplier Development Service’ offer a good opportunity to remedy the situation.
We feel that the organic sector is fairly saturated at the moment and that further converts shouldn’t be encouraged, but that efforts be made to secure the incomes of those who have already gained organic status.
3a. What effect is the current economic climate having on the sector and how will this impact on Welsh produce in the future?
The weak pound is currently benefiting the agriculture industry in the short-term. The major concern at the moment facing meat producers in particular is that a continued depression will force consumers to source cheaper food products and reduced spend on meat, which is considered an expensive item. Therefore it is important that marketing campaigns emphasise value for money and nutritional benefits.
Many small producers/processors in Wales concentrate on niche and speciality products - which are quite often viewed as luxuries. Again, these products are likely to suffer during periods of recession.
Producers in Wales have notoriously low levels of investment in research and development and innovation. There is a danger that this will be reduced further during periods of recession. It is essential that the WAG invest in research and development and innovation for the industry and that they assist companies with such processes.
3b. How should the Welsh Assembly Government be responding to this?
Assist with procurement processes to ensure that maximum opportunities for Welsh produce and producers to compete for public sector contracts.
Strengthen the links between WAG Agri Food Department and Value Wales processes.
Increased investment in research, development, innovation and marketing.
Maintain a positive outlook for the sector and steer towards a strong position for when we come out of recession.
Offer specific practical assistance to companies to help them through the recession - in particular marketing advice and mentoring, and collaboration measures for distribution and reducing costs.
Increase the marketing budget of the WAG Agri Food Department considerably.
Introduce measures to assist existing establishments with issues such as:
raising standards and quality of dining experience
sourcing of Welsh products for menus
promoting traceability of produce
Measures to increase availability and distribution of Welsh products within and outside of Wales.
Set ambitious goals for the industry, aim high with an emphasis on quality and give the whole industry a steer. The industry needs a strategic approach.
Conduct Futures exercises and consider the options for the development of the food industry in Wales.
4a. How effective have Welsh Assembly Government Policies and initiatives been in stimulating the growth of the Agri Food Sector in Wales?
A great deal of good work has been undertaken over the last 10 years. Wales is viewed by other regions in the UK as being an area of best practice in delivering support for the sector.
During the Objective 1 programme we believe that the Agri Food Partnership and WAG established a good strategic approach to developing the sector in Wales. Farming Connect established itself as an effective brand and umbrella body in a short space of time and again adopted a good strategic perspective of how to develop the industry.
An all-Wales approach ensured clarity of provision for the industry and reduced duplication of services.
Individual elements such as the demonstration farms, local co-ordinators and development centres have contributed much towards developing quality of produce and understanding and interest of primary producers in the food chain process.
Unfortunately under the current RDP programme some of the strategic steer previously offered by the WAG has been lost. Whilst accepting that Axes 3 and 4 should offer measures that tackle 'local’ issues there seems to be a plethora of small projects in the food sector that could potentially give rise to duplication. Perhaps the WAG Agri Food Department should have offered more strategic advice when they were being developed. In view of what’s happened and in view of the fact that new measures and services are being offered in any case it is essential that the WAG undertake a mapping exercise to gain a comprehensive understanding of what support and development services are being delivered to the sector - and this information obviously needs to be disseminated industry wide.
Under the Objective 1 programme, the Agri Food Partnership previously mentioned was the vehicle for assisting project applications and for ensuring that approved bids were offering something additional that was also in keeping with the Farming Connect model. With the new European measures we are unsure how (if) such processes are undertaken. I think such processes need to be clarified.
WAG policy has assisted the industry to develop considerably over recent years and we’ve seen great increase in technical transfer, production and promotion.
We also believe it is important to pay attention to the softer indicators such as:
attitudes towards enterprise
attitudes towards careers within the agri food sector
capacity building
developing management and entrepreneurial skills
The WAG should invest more in these elements for the long term benefit of the industry.
4b. Which initiatives have been effective or ineffective and why?
The Agrisgôp approach of using Action Learning within the farming industry has been a revolutionary approach. Using the expertise of Ashridge Management College and Menter a Busnes’ industry knowledge and engagement processes - the project has enjoyed considerable success. Several successful group initiatives have been formed and the hidden benefits of improved management skills and decision making is an additional bonus. The project was highlighted as an example of good practice at the Henley Action Learning Conference last year and a book outlining the project’s approach is currently being written.
We’ve heard positive comments regarding the Mid Wales Agri Food Partnership, and how this group has led to a co-ordinated approach to support for the sector and partnership working within the public sector.
The True Marketing Business Mentoring programme has provided individual food producers with access to food industry professionals that can offer guidance with business development and to help build confidence. Alongside this the True Marketing workshop programme, has enabled the sector to develop professional marketing skills to help establish more viable businesses and to grow.
True Taste has been a promotional vehicle that has given the industry confidence in itself. Good level of awareness within the trade of the True Taste but more investment needed to promote to consumers.
Whilst the True Taste Awards have been very successful there is an obvious lack of indigenous producers reaping rewards and a large number of winners are recent incomers. We need to establish the reasons for this:
Is it because of the lack of indigenous contenders, or lack of confidence or shying away from the limelight?
Is there enough being done in Wales to promote food production/processing as a career option for young people?
PMG has provided substantial support for the sector, with 1300 SMEs in the industry. There is an on-going need for flexible support particularly for investment in marketing and innovation.
5. Have the Welsh Assembly Government initiatives to increase awareness of Welsh produce both domestically and overseas been effective? What evidence do you have?
WAG initiatives such as True Taste exhibition stand within key trade events in the UK have been very effective. The perception of trade buyers of the Welsh food and drink sector has been greatly enhanced by this activity. This is evidenced by a range of positive comments received from trade buyers over the years. We are competing with other regions in the UK and Europe, so it is imperative that support is maintained for this sector. More work is required to raise the level of consumer awareness.
It is Important that we have access to European funds for the whole food sector made available through the WAG, therefore Convergence Funds should be able to assist the whole of the food industry.
We have a lack of products with PGI and PDO status which limits the amount of products that public funds can promote. More needs to be done to establish PGI and PDO status for Welsh products.
6. Has enough been done to encourage integration between different elements of the food supply chain?
Farming Connect has certainly sparked greater interest amongst producers to be interested in further elements of the supply chain - e.g. joint marketing ventures through Agrisgôp, development centres, demonstration farms, etc.
Generally speaking there’s room to do a lot more. Many primary producers are not involved at all in the rest of the supply chain and are just selling their products as commodities.
Supply chain efficiency measures within the RDP are likely to lead to increased integration in coming years.
7. Do you have any examples of good practice in Wales?
FMDD regional teams, working with producers at a local level and main access to range of support
Food Technology Centres in Wales
Branding and Marketing Workshops
True Taste Trade Exhibition stand at key trade events
BLAS café at consumer events
FMDD Trade Development programmes
Local Authority Food Officers such as Pembrokeshire County Council
Trade Development Group that includes representatives from the private sector and the Welsh Assembly.
Many examples of good practice of co-operative work developed by the Agrisgôp project and of adding value to primary producers e.g. Cambrian Mountains.
Local facilitator role within Farming Connect
