Trade, skills and innovation have ‘untapped export potential,’ says FDF report

By Will Chu

- Last updated on GMT

In 2017 there were just over 9,000 active food and drink manufacturers in the UK. ©iStock
In 2017 there were just over 9,000 active food and drink manufacturers in the UK. ©iStock
Improving the UK's efforts in trade, skills development and innovation are key recommendations in a Food and Drink Federation (FDF) - commissioned report that outlines ways to boost the country’s 2.2% share of the global food and drink export market.

The report, commissioned by the Food and Drink Federation (FDF), details the challenges the industry faces, not only in the economic climate but also how exiting the EU may threaten the industry’s future productivity.

“The issues facing the food and drink industry are complex, but if we find the right solutions there is great reward - not just for our sector and the wider economy,”​ said Ian Wright, director general at FDF.

“We believe a new sector deal, working in partnership with the government and the ‘farm-to-fork’ supply chain, will harness this potential.”

The report, produced by consultants Grant Thornton, recommended a series of actions and areas of support that focuses on three core areas: trade, skills and innovation.

Trade

FDF’s report recognised that between 2006 and 2015 global food exports had a combined annual growth rate of 7%. During the same period UK food and drink exports grew by 4%.

EU nations Ireland, France, the Netherlands and Germany were noted as key trading partners and the European Economic Area (EEA) remains the market with the greatest perceived potential for the industry.

China, India and the UAE are seen as the top three markets that businesses surveyed would like to target.

The report looked to reduce the UK’s current trade deficit, particularly in fruit and vegetables as the UK does not have the climate to ensure production of the diverse range of products.

Meat too operates on a trade deficit as consumption outstrips domestic supply, followed by tea and coffee, which cannot grow in the UK’s temperate climate.

“Given this position and the recent devaluation of the pound, some industry leaders questioned whether the UK needs to look into more detail at import substitution and understand if this presents an opportunity to drive further growth,”​ the report added.

Survey responses from 19 organisations found that 93% of them currently engaged in exports – an increase of 14% from the 2011 Grant Thornton study.

Who are Bord Bia?

Bord Bia is an Irish specialist agency that promotes Irish food and horticulture produce both abroad and in Ireland.

Representing Irish producers and their customers across the world, the agency has its own certification of Irish food products, represented by a logo.

Bord Bia represents a range of small and large producers and the agency's activities include promoting and certifying farmers' markets.

The EEA also remained the market with the greatest perceived potential for the industry – 69% of survey respondents stated that it had high or very high potential for the food and drink manufacturing sector.

The report recommended talks to set the terms of the UK’s future trading relationship with the EU, establishing WTO tariff schedules and maintaining seamless access to the full range of EU trade agreements.

“As we head for a future outside the Common Agricultural Policy, it is clear from the report’s findings that food and drink manufacturers are increasingly focused on expanding into new markets.”

“One of the main obstacles highlighted by those manufacturers looking to export to untapped markets was the need to identify a distributor in the local market. This and other specialist export support is more readily available to food and drink manufacturers in rival European nations,” it added.

“To take advantage of new opportunities created as we leave the EU, Government should look to Bord Bia as inspiration in creating a specialist export organisation that will turbocharge sales of UK food and drink globally and fulfill the industry’s export potential.”

Skills

In developing skills for the future, the report highlights the need to work with education providers across the UK to increase availability of food and drink manufacturing specific apprenticeship training.

Here the report’s survey respondents, made up of SMEs, scale-ups and large, globally recognised, organisations, identified the Apprenticeship Levy –a means to fund the UK Government’s promise of three million new apprentices by 2020— as a potential pipeline of talent.

A third of respondents citing apprenticeships as the means of filling the potential gap left by EU workers in light of the EU Exit.

“It is critical that the sector has the supply of highly qualified people it needs, not just now but in the future,”​ the report stated.

“It is an area in which the UK can perhaps learn from its European counterparts, with France and Spain both cited by industry leaders as providing an effective supply of talent in the sector.”

Innovation

Further survey results, gathered from 37 respondents also highlighted how businesses in the sector were entering partnerships in order to encourage innovation as an area of great export potential.

Based on the survey it was apparent that nine in 10 businesses were involved in new product development (89%).

However, innovation was not restricted to this area with automation, particularly the role of robotics, supply chain improvements and convenience trends identified as areas of growth.

In terms of supporting innovation, the report found that just over half (54%) of respondents had accessed R&D tax credits in order to support innovation.

“Although this is positive, the view from industry leaders was that while tax credits were beneficial, they were not the whole answer in terms of how industry can be best supported to innovate,”​ the report stated.

“The perception was that Government needs to better understand the range of factors that affect business investment decisions so that suitable support can be designed and implemented.”

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good studies

Posted by Dr V K Tiwari,

good to study

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