The head of Scotland Food and Drink is helping the sector weather the storms of global trade uncertainty
Don’t be surprised if Iain Baxter has a marked spring in his step as he strolls from his nearby office to meet and greet the swelling ranks of foodie producers and consumers, gastronomes and epicureans at the Royal Highland Show.
The chief executive of Scotland Food and Drink, the trade body, Baxter has good reason to be cheerful as he surveys the bustling food and drinks stalls all around the Ingliston showground.
For despite the global headwinds with which the industry has had to contend of late, he claims our national larder has since moved beyond seeing ‘green shoots’ of recovery and is now spying welcome signs of ‘saplings’. These headwinds might have been upgraded to gale force by President Donald Trump’s wilful disruption of global trade through the imposition of tariffs and the subsequent uncertainty these caused, but Baxter expresses a renewed confidence that the saplings are sufficiently robust to withstand those headwinds and thrive in the sunnier climes created by the hat-trick of trade deals signed by the UK Government over recent weeks.
Fortunately, Baxter’s prescience meant that he had identified a need to strengthen the industry’s resilience prior to Trump’s second term in office.
“The wider and deeper your sector is – food and drink is Scotland’s biggest employer (129,000 people) and is worth £16bn to the economy – the more resilient you become, so pushing for international growth and opening new markets is important because then you get greater resilience against individual market shocks,” he said.
“We are trying to broaden what we sell to the world so that we are not fully reliant on individual sectors. Much of the policy work we do seeks to create an environment that breeds resilience through having fewer obstacles to growth and a more by the hat-trick of trade deals signed by the UK Government over recent weeks.
And, according to Baxter, the industry is benefiting from a marked improvement in engagement from Westminster with regular discussions with the Department of Business and Trade and Defra (Department for Environment, Food & Rural Affairs), while maintaining a daily dialogue with Holyrood.
Levers for Growth and Sustainability
Scotland Food & Drink is set to launch Levers for Growth and Sustainability, a policy document identifying the need for investment in rural infrastructure and better grid, road and network connectivity for the industry’s rurally-based businesses.
And Baxter welcomes the Scottish Government’s latest Programme for Government which contains additional support for food and drink manufacturers and emphasises the importance of support for capital projects and skills development.
“One of the major issues the industry faces is a shortage of people and a shortage of skills and anything we can do to work with government to help get the right skills into the industry will be welcome,” he said.
“Access to the labour market has been made more difficult of late, so we’re keen that we’re able to source the right people to do the job.”
While expressing contentment with demand for Scottish food and drink – research reveals that people want to buy more Scottish produce (including four out of five Scots) and the industry enjoys a formidable international reputation – Baxter suggests that the industry’s challenges reside in the supply side, through labour, infrastructure and business support.
“We need to make sure we’ve got the supply chain to meet the demand we have for Scottish food and drink,” he said.
“To that end, we want to see local planning regulations eased, while we welcome the fact that the PfG contains a focus on investment in exporting, where we reckon there’s a £4bn market opportunity for growth in the medium term for Scottish food and drink.”
The big issue in my in-box is where are we going to get growth from? What does it look like? And is it sustainable in terms of margin?
– Ian Baxter
Scotland Food and Drink Numbers
- Scotland’s biggest employer: the industry is worth £16bn, representing more than 20 per cent growth in a decade
- £5.3bn gross value added, representing 12.5 per cent growth in a decade
- 17,500 registered enterprises, representing 10 per cent of all registered businesses in Scotland
- Scotland’s third largest sector employer: 129,000 in agriculture, fishing, aquaculture, and manufacturing
- Exports of Scottish food drink valued at £8.1bn, £6.2bn of Scotch whisky
- +200% in food exports in the last decade
- +40% in sales of Scottish brands in the UK
Whisky and salmon currently account for 90 per cent of Scottish food and drink exports, with salmon accounting for nearly £1bn. Yet while demand for salmon remains strong globally, the question mark raised by Trump’s imposition of tariffs has led to a degree of uncertainty around the exporting market for whisky.
“When you’re in a highly volatile and unpredictable environment then that’s the worst possible situation because you can’t plan – and not just long-term planning like capital investments, but short-term planning becomes virtually impossible, so the tariffs have been highly disruptive,” said Baxter.
“That said, the prospects of a trade deal with the US that at least brings some stability to the situation is good news, and we welcome the fact that Westminster is sticking by its commitment not to compromise on our food standards.”
UK trade deals
He views the UK trade deal with India as a massive positive, noting that it has been in the pipeline since he was a young man working in the whisky industry.
“That deal alone is looking at a potential extra £1bn in sales – an extra 12-14,000 jobs – which could be a really big thing for the whisky industry. Meanwhile, there appears to be some scope for relaxing export controls on pork into China, which is another potential opportunity for us, because that has been a market that we haven’t really been able to operate in for a number of years now.”
And regarding the trade deal with the EU, Baxter makes the point that France is a massively important market for whisky and salmon and that Scotland Food & Drink has been involved in discussions around the sanitary and phytosanitary controls deal.
“Anything that reduces trade friction with the EU will be a huge benefit to us because although we’re still performing relatively well in the EU, for smaller producers and producers of fresh produce, anything that can be done to ease those Brexit-related problems would be a huge benefit,” he said.
Economic growth
Aside from global geopolitical and economic uncertainty, Baxter identifies input costs and the constant pressure on margins as two issues presently exercising the minds of those at Scottish Food & Drink. Other issues include the availability of workers, the cost of living and food security.
“The big issue in my in-box is where are we going to get growth from? What does it look like? And is it sustainable in terms of margin?” he said.
“How do we increase the share of Scottish food and drink people eat in Scotland, in the wider UK and globally? On our own doorstep, potentially our single biggest market opportunity is ‘over the wall’ in England where there is a huge growth opportunity in London.
“One of the things I am keen we do is to market the industry as a heavily attractive investable sector, because that is something we have suffered from a little in the past.”
Baxter is keen to emphasise that we should never forget just how important the food and drink sector is to Scotland’s economy and how important it is to rural communities.
“When you look at the government’s high importance growth sectors, food and drink is second only to energy,” he said.
“We are that important and we are a hotbed for growing our future workforce. I am a living example of that – my time in the whisky industry gave me a genuinely global career across many different disciplines – so we cannot afford to lose sight of the attractiveness of food and drink and its importance.”