The EU continues to be a key market for Scotland’s food and drink exports
Fergus Ewing, Cabinet Secretary for Rural Economy, on the threat Brexit poses to Scotland's food and drink sector
Fergus Ewing - image credit: David Anderson
Scotland’s food and drink is internationally renowned and has long been a standout sector within our economy. The industry is worth around £14 billion to Scotland’s economy each year, it accounts for one in five manufacturing jobs, and around 115,400 people are employed in the sector in one of the 18,850 food and drink businesses we have here in Scotland.
Plainly put, the contribution the food and drink sector makes to our economy and our place in the world is vital.
In 2016, total food and drink exports to the EU were worth £2.3 billion to the Scottish economy, accounting for 41 per cent of our total overseas food and drink exports.
£1 billion worth – or 69 per cent – of our overseas food exports in 2016 went to the EU, while 94 per cent of the UK’s beef exports, 88 per cent of sheep meat exports, 79 per cent of Scottish seafood exports, 75 per cent of pig meat exports and 31 per cent of Scotch whisky go to the EU.
In the first nine months of 2017, overseas Scottish food and drink exports were worth £4.3 billion, an increase of almost £500 million compared to the same period in 2016. Food exports were valued at about £1.2 billion, increasing by 20 per cent – around £200 million more than the same period in 2016 – while exports to Europe were worth £806 million after an increase of 18 per cent – £126 million.
Food and drink exports as a whole are approximately four times more important to the Scottish economy than for the UK as a whole, and with more than 40 per cent of our produce heading to the EU, it is clear that Scotland’s continued place in the single market is vital to the strength and success of the sector and the future of our economy.
While we can celebrate the success we had in 2017, and welcome the continued growth in exports, we must also acknowledge the consequences that continued Brexit uncertainty is having – and will have in the coming months and years – on the food and drink industry and on the Scottish economy.
To echo the words of James Withers, chief executive of Food and Drink Scotland, who told the Scotsman in May 2017, “Every time a UK minister says no [Brexit trade] deal is better than a bad deal, alarm bells ring in the food industry”, the reality is our food and drink sector needs urgent clarity on our trading relationship with the EU to prepare for the future.
For our part, the Scottish Government will continue to work with industry and partners to develop new and existing markets in line with the industry-led Ambition 2030 strategy.
Collectively, we will focus on key markets, boost innovation, address skills needs and support local producers to realise ambitious plans to double the value of the industry to £30 billion by 2030.
However, with no clarity on our future trading relationship with Europe, we need urgent answers from UK ministers.
As the ‘Scotland’s Place in Europe: People, Jobs and Investment’ analysis paper found, leaving the single market and customs union will significantly weaken our economy compared to continuing EU membership. However, the sector won’t just be affected by our trading relationship with Europe, the paper also highlights the vital importance of EU migration to Scotland.
The paper found each additional EU citizen working in Scotland contributes £10,400 in government revenue, and therefore, the significance of EU migrant workers to Scotland’s food and drink sector, and to our economy, cannot be underestimated.
To support the delivery of Ambition 2030, Scotland will need to retain the ability to recruit the skilled and unskilled labour required to support seasonal and long-term workforce requirements and skills gaps – this includes retaining access to EU migrant workers.
EU migrants make up around three per cent of those employed in the rural economy, with around 10,000 people directly employed, across the whole of Scotland, in the food and drink growth sector and thousands more support public services such as hospitals and schools in our remote and rural communities.
Any moves to limit migration, therefore, has the potential to seriously harm our rural and remote communities and will have a major impact on the future success of our food and drink industry.
A recent survey of its members by the Scottish Association of Meat Wholesalers found that 52 per cent of the unskilled workforce, 44 per cent of the skilled workforce and 16 per cent of supervisory and management staff are non-UK EU nationals, while Food Standards Scotland reports that 98 per cent of their official veterinarians are EU nationals.
In Grampian, 70 per cent of workers in seafood processing are from the European Economic Area (EEA) – much higher than any other part of the UK – while a recent survey of Scotland-based seafood processing businesses found that around 58 per cent of employees are from the non-UK EEA.
The report found that 86 per cent of all employees in the processing sector worked on permanent contracts and of these, the majority were from non-UK EEA countries, largely coming from Poland, Lithuania and Latvia, demonstrating how dependent the sector is on EEA workers.
This study shows how highly dependent the Scottish seafood processing sector is on EEA workers, and raises concerns from processors that Brexit could threaten their businesses’ survival.
With the majority of EEA employees working on permanent contracts, and likely to be living here on a long-term basis, processors are rightly concerned for the future and the potential loss of skilled and experienced food-processing employees.
Furthermore, this study backs up recent analysis which found EU nationals contribute more than £4.4 billion a year to our economy and shows exactly why we value the contribution they make in communities across Scotland.
The Scottish Government very much values the contribution of EU migrants to our economy and society. Retaining unhindered access to this reliable workforce is of particular importance, given the distinct demographic pressures we face, and is key to reducing any potential future labour shortages.
With three per cent of our workforce dependent upon EU migrants, it is clear that any restrictions on free movement of labour would have a significant and detrimental effect on the sector – potentially reducing the size of the industry and reducing domestic produce in favour of imports.
The Scottish Government has consistently called for urgent clarity from the UK Government over our future relationship with the EU. We will continue to show EU nationals that they are welcome here and call for free movement of people, which is clearly in the best interests of Scotland and the UK as a whole.
I am clear that retaining access to this pool of talent via membership of the single market is essential to meet the needs of rural businesses and is a priority in safeguarding the continued success, stability and sustainability of our rural economy.
With a new poll showing high public support for onshore wind, the UK Government's hostility to renewables looks ever more confusing
A majority of Conservative voters also backed new onshore wind developments
The investment, split over 2017-18 and 2018-19, will be used to construct and upgrade farm buildings and to improve infrastructure
Concern over challenges faced by rural communities have been long-running, but with Brexit on the horizon, new ones have emerged
Vodafone explores some of the ways IoT is significantly improving public sector service delivery
Vodafone today announced the commencement of trials of the world’s first air traffic control drone tracking and safety technology.