Scottish Government

This document is also available in pdf format (119k)

CONTENTS

Introduction
Ways in which the Marketing Development Scheme could be used
The main principles of the Scheme
What financial help is available?
Who can apply?
How do I apply?
How will my application be assessed?
Figure 1: How to apply
Approvals and rejections
How do I claim grant?
Conditions applying to approved projects
Other important points
We aim to help
Annex: Feasibility studies
Further information

INTRODUCTION

1. This brochure explains the purpose of the Marketing Development Scheme, its conditions and how you can apply for grant. Please read it carefully before making an application.

2. The Scheme seeks to improve the efficiency of the UK food marketing chain by helping farmers, growers and processors improve their marketing and commercial expertise. It aims to help the industry develop efficient marketing structures and to encourage good marketing practice for both domestic and overseas markets.

3. The Scheme is run in Scotland by the Scottish Executive Environment and Rural Affairs Department, who will be pleased to help with any queries and to discuss possible applications. Separate arrangements apply in England, Wales and Northern Ireland. Contact addresses for the appropriate Department can be found on page 13.

4. On the following page you will find some examples of potentially eligible projects which illustrate the range of help available. However you should note that fish and fishery products are excluded from the Scheme.

This brochure is only a guide to the Scheme.
You are advised to refer to the Scheme Statutory Instrument (SI No. 1403) before making an application.
Copies are available from The Stationery Office.

WAYS IN WHICH THE MARKETING DEVELOPMENT SCHEME COULD BE USED

5. Potential projects (with the items which are eligible for grant in bold) might be:

• a trade association might need assistance to set up a market intelligence network for the benefit of the sector as a whole. This might require a feasibility study and perhaps some recruitment of members, together with assistance towards salary costs of new staff to manage the intelligence gathering and dissemination;
• a group of producers wishing to collaborate on their marketing might require a feasibility study to look at the needs of their customers and how these might be met, for example by developing a common logistics system (eg packaging design, shared storage and transport);
• a processor may wish to develop outlets for its products or by-products in order to improve the profitability of the enterprise.
  A feasibility study could identify new markets and any new processing methods needed. If the market concerned were overseas, the grant could assist with the salary of a new export manager for the venture. The study might also point to the need for greater co-ordination of supply to the plant. The scheme could help set up a group of producers jointly marketing their produce to the processor;
• a wholesaler might wish to organise the supply of its flowers and plants. An in-house feasibility study (not eligible for grant) might have shown that the best way forward would be to work with a specialist producer group. The Scheme could help with the establishment and key staff of the group and training its staff and directors;
• two producer groups might wish to merge to provide economies of scale or widen their product range. The Scheme could help with a feasibility study into the proposal and, assuming this supported the move, aid could be given to set up the new structure and to help with any consequential redundancy costs of management staff.
• a producer-marketing group might wish to incorporate the requirements of an independent quality assurance scheme in its produce specification. A feasibility study could help with identifying new markets for products which have undergone the quality assurance process. The Scheme could also help fund the costs of a new development manager to implement and oversee the quality assurance process.

THE MAIN PRINCIPLES OF THE SCHEME

6. The principles of the Scheme are that:

• it can assist certain kinds of non-capital and 'management' expenditure but excludes payments towards capital items;
• the project must represent a significant marketing development and have sufficient scale within the market concerned;
• the rate of grant will be 50% of the eligible expenditure;
• there will be an upper limit of 150,000 grant per project;
• the principle of 'additionality' will apply in all cases and be one of the key criteria in considering applications. This means that grant will only be paid on a project if it is clearly shown that it would not take place without the award of financial assistance;
• projects require the prior approval of the Department before any expenditure is incurred. No expenditure or commitment to expenditure on the items for which grant is sought can take place until the application has been given written approval;
• it is cash-limited and the items to be approved may be restricted by the amount of money available;
• it is competitive and not all eligible projects may receive grant;
• where Government assistance is already being received for certain elements of a project (eg through Scottish Enterprise or Highlands and Islands Enterprise), these items cannot be 'double-funded' under the Marketing Development Scheme. However, other private sector assistance will not prejudice support under this Scheme.

WHAT FINANCIAL HELP IS AVAILABLE?

7. The Scheme is in two phases and 50% grant is available towards the following costs.

Phase I
feasibility studies and market research, including -

• studies supporting proposals for new marketing projects;
• market research including the collection and collation of market intelligence.

The ground that a feasibility study should cover is detailed in the Annex. SEERAD are happy to provide any additional advice you may require.

Phase II
the costs of establishment, expansion or merger of producer groups, including -

• the legal and accountancy costs of group establishment, expansion or merger;
• the costs of the redundancy of key management staff as a result of any merger; and
• the costs of recruitment, including expenditure on advertising;

the salaries of the key staff of a project, including -

• the costs of recruitment, including the preparation of advertising material (all appointments being aided under the Scheme must be advertised in at least one national publication);
• the salary, National Insurance and company pension costs of the key staff needed to implement the project. This may be of a part-time/full-time or seasonal nature. In addition, this item may include professional indemnity insurance premiums for those staff where this is normally expected, and managing or marketing agents' fees if the agents are not employees of the applicant, and
• the costs of long-distance travel and related accommodation connected with the project, other than the provision and use of company cars;

training for directors and key staff members, including -

• training needs surveys;
• relevant training courses on marketing, business planning, financial management, directors' responsibilities, quality management systems and languages;

the fees of outside directors, excluding National Insurance and pension costs.

HOW MUCH MONEY IS AVAILABLE?

Some illustrative examples of eligible groups and projects are given on pages 3-4 of this brochure.

8. The Scheme is open to applications from a wide range of those involved in agricultural, horticultural or food marketing, excluding fish and fishery products, including:

• groups involving collaborating producers, or involving producers collaborating with others in the food chain;
• individual farmers or growers (see paras 9 and 10 below);
• food processors or manufacturers with a turnover of less than 100 million (see para 11 below);
• trade associations or industry bodies.

9. You must be able to show that your proposal represents a significant marketing development and that the turnover of the project will represent a significant share of the relevant market. If you are a producer group, you will need to show that your members are prepared to commit their produce fully to the project.

10. All applicants must be a separate legal entity, including co-operatives, joint ventures, partnerships and public or private limited companies.

11. Food processors or manufacturers are eligible if their company turnover is less than 100 million. For companies which are part of a larger corporate group, this turnover figure applies to the group. This limit is intended to ensure that the grant goes to projects which most need the help.

HOW DO I APPLY?

12. See Figure 1. In all cases we recommend that you speak to the Department before submitting an application. We will be pleased to give advice on eligibility, the criteria of the Scheme, etc. It is important to note that no expenditure can be incurred on items on which you intend to claim grant before formal written approval has been obtained from the Department.

13. First read carefully the conditions set out in paragraphs 8 -11 to ensure that both your organisation and your project are likely to be eligible.

14. If you are applying for grant towards training costs or the fees of outside directors, then you need submit only a reasoned case.
This should set out what you aim to do, the reasons for the action proposed and the benefits of such action to your marketing operation. It also needs to cover details of your business (type, turnover, membership and produce) and the market you supply.

15. For items other than training costs or the fees of outside directors, you must first put forward a case for all the items on which you are seeking grant. This will normally mean submitting a comprehensive feasibility study clearly setting out the objectives of the project, the means by which the objectives will be met and the reasons why action is required. The study must be accompanied by a three-year business plan and cash flow. The Annex gives further details on feasibility studies.

16. We strongly recommend that your study be carried out by a suitably qualified consultant. If you wish this can be done in-house and paid by yourself. However, if you do not have the means to do so, then a grant of 50% could be available towards the cost of the study. Applications for this grant should be submitted on Form MDS 1 in advance of any work being started.

17. To apply for all items of grant other than feasibility studies, use Form MDS 2. Only one form should normally be submitted for all of these items.

HOW WILL MY APPLICATION BE ASSESSED?

18. The approval of any application is at the discretion of SEERAD, consistent with the general principles set out in paragraph 7. The Department's decision will take account of the merits of the case and the value for money of the proposal. Advice may be sought from the Department's specialist divisions and elsewhere on a commercial-in-confidence basis. The following will also be taken into account.

• commitment: producer groups applying for grant need to show that their members are prepared to commit their produce to the project, usually a key element in the success of such ventures. Groups should aim to achieve 100% commitment;
• proliferation: SEERAD will normally give priority to the development of existing marketing structures. Where applications are received for a new activity (eg a new producer group), you will need to show that this activity will not unnecessarily fragment the marketing effort in the sector concerned. SEERAD will take into account previous activity and grant assistance in the sector.

19. Applications for grant towards a feasibility study will be considered as they are received. However, grants for Phase II assistance will be considered in a tranche together with other applications. Tranches will be held twice a year with closing dates on 31 January and 31 July.

APPROVALS AND REJECTIONS

20. A letter will be sent to you giving SEERAD's decision on your application. If the application is approved, two completed copies of Form MDS 3 will be sent with the letter. This form will show clearly the items that we can support and the grant approved for each item, along with any special conditions. You will be asked to sign one copy of the form and return it to SEERAD.

21. Given that this is a competitive and popular Scheme, which is cash limited, not all applications will receive grant. If your application is unsuccessful then you will receive a letter explaining the reasons. It may be because some items are ineligible or it may just be that the tranche is oversubscribed and other projects better meet the aims of the Scheme. In certain cases the Department may offer grant to only some of the items applied for and, again an explanation will be given.

HOW DO I CLAIM GRANT?

22. Complete Form MDS 4. Please note that it is the applicant's responsibility to submit claims on time and that grant cannot be paid until we receive a claim form and supporting documents. Providing that we receive a completed form and all Scheme conditions are met, grant will be paid as follows:

• studies, surveys and research: on submission of a claim form and two copies of the study, together with a receipted invoice or a certificate from a chartered accountant or other suitably qualified person. The findings of a study will not prejudice its eligibility for grant. No more than one payment per study will be made. Claims must be made within 6 months of the approval of the study.
• salary of key staff: on receipt of a claim form and a certificate from a chartered accountant or other suitably qualified person. The period of payment of aid will be calculated from the date of appointment, or from six months after approval of the application for this aid, whichever is the earlier (see para 23). Claims must be made quarterly in arrears.
• all other items: on submission of a claim form and receipted invoices or a certificate from a chartered accountant or other suitably qualified person. Claims must be made quarterly in arrears.

CONDITIONS APPLYING TO APPROVED PROJECTS

Completion of projects

23. The Scheme is intended to provide pump-priming finance, and projects should be complete within four years from the date of approval. This means that all claims for approved items of a project should be submitted by the end of the fourth year from the date of approval.

24. It should be noted that the Department adheres strictly to the conditions of grant and will only pay on those items on which an award has been made.

Financial records

25. In order to safeguard public funds, you must keep records of all financial transactions connected with your project. SEERAD will require an annual report on the project, outlining the progress made in achieving its objectives. This must include, in all cases except those purely for training and outside directors, an update of the business plan and cash flow together with a copy of the latest audited accounts and a declaration that the Scheme's conditions have been met. The report and accounts should be submitted as soon as practicable after each anniversary of the date of approval.

Access by SEERAD representatives

26. Any authorised representative of SEERAD must be allowed access to the project's records at any reasonable time.

Change to the project

27. You must notify SEERAD immediately, in writing, if you are considering making any changes to an approved project.

OTHER IMPORTANT POINTS

Penalties

28. The Agriculture Act 1993 makes it an offence to give false or misleading statements in order to obtain grant. The penalty for this is a fine, up to six months imprisonment, or both. The Department may also revoke approval and recover grant monies previously paid if any of the Scheme conditions are broken. It may also withhold payment of the grant if the annual report or accounts are overdue.

European Union requirements

29. There are EU restrictions on aid that can be given in some sectors and to certain businesses. SEERAD will assess applications for compatibility with these requirements.

Scheme confidentiality

30. All commercial information received from applicants will be treated in confidence. However, SEERAD will publish general information about the progress of the Scheme (numbers of cases, approval, etc.) and also examples of good marketing practice, whilst protecting participants' commercial confidentiality.

WE AIM TO HELP

31. We have the following targets for dealing with applications and claims for payment:

• feasibility studies: decisions within five weeks of receiving a completed application;
• other items: projects will normally be considered for award in two tranches (with applications closing at the end of January and July each year) and applicants advised of the outcome following consideration;
• claims: within four weeks of receipt.

32. The decision or payment may be delayed if we need to obtain further information from the applicant or if an application is incorrectly completed.

33. We are happy to discuss ideas or applications, and to visit applicants or potential applicants. If you have any query or concern please do not hesitate to contact us.

34. Similarly, if you have any comments or complaints about the administration of the Scheme, SEERAD would be pleased to hear from you.

You should be aware that you, or a representative authorised by you to complain on your behalf, may also ask the Scottish Public Services Ombudsman to investigate any complaint you may have on the administration of the Scheme. Your representative may be an MSP, local councillor or any other person you consider suitable to represent your interests. Your complaint must be submitted to the Scottish Public Services Ombudsman, 23 Walker Street, Edinburgh EH3 7HX within 12 months of the day on which you first had notice of the matter which is the subject of the complaint.

ANNEX

FEASIBILITY STUDIES

When completed, a feasibility study must show at least the following:

• a description of the market at which the proposal is targeted, including in particular the actual or potential customers of the applicant and their requirements. It must also show the applicant's current share of the relevant market and the share anticipated at the conclusion of the project;
• details of the action to be taken under the proposal, including all items for which grant will be sought;
• why the action is needed in the sector concerned;
• an explanation of the benefits of the proposal, particularly in the long term;
• in the case of a proposed new product group or business organisation, why existing structures cannot be utilised;
• a three-year forward business plan for the proposal, showing how it will be implemented and funded;
• a three-year forward cash flow for the proposal;
• a clear recommendation on the likely viability of the proposal.

FURTHER INFORMATION

For copies of forms or additional information, please contact:

Miss Louise Stewart
Scottish Executive Environment and Rural Affairs Department
Room 259
Pentland House
Edinburgh EH14 1TY

Tel: 0131-244 6294 Fax: 0131-244 3110
e-mail: louise.stewart@scotland.gsi.gov.uk

For marketing projects outwith Scotland please contact the appropriate office as follows:

NAWAD
Branch B, General Agricultural Policy Division
Crown Buildings
Cathays Park
Cardiff
CF1 3NQ

Tel: 0222 825130

DARDNI
Potatoes Plant Health & Marketing Division
Dundonald House
Upper Newtownards Road
Belfast
BT4 3SB

Tel: 0232 524477

DEFRA
Marketing Consumers & Competition
10 Whitehall Place (East)
London
SWIA 2HH

Tel: 020-7270 8533