Scottish Government

" healthier, wealthier and smarter with production making communities stronger and consumption respecting the local and global environment"

Introduction

The Purpose of the Scottish Government is to create a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth. Any vision of Scotland's future prosperity must include a well-nourished population and profitable food industry. After all, food is everyone's business - it's one of the few things that none of us can do without. By creating the right environment for competitiveness and growth the Food Industry, as businesses and individuals, can work with Government in building a dynamic and growing economy in Scotland.

Contributing to this is the development of a national food and drink policy for Scotland which will help ensure a more joined-up approach to food in Scotland, covering every part of the food chain from land to plate. This is the first time we will have had a national food and drink policy for Scotland and it is important to set a common agenda. It will provide a long-term direction and vision for the industry, realising the full potential of Scotland's food for the benefit of everyone. This process began with the discussion document Choosing the Right Ingredients: the Future of Food in Scotland and is continuing with the maximum engagement of all interests. (For the latest about the discussion go to www.scotland.gov.uk/food.) Food has an important part to play in creating a wealthier Scotland, providing many jobs with one in five people in Scottish manufacturing work in food and drink businesses. The national food and drink policy will take into account all aspects of food from health and education to the economy and tourism, making healthier food more accessible to all in Scotland and consider how more local suppliers may be encouraged to bid for public contracts.

The Food Processing, Marketing and Co-operation Grant Scheme, funded through the Scottish Rural Development Programme, will assist in meeting the vision for food and drink in Scotland.

Vision

The agreed vision for food and drink in Scotland is that it should make the nation healthier, wealthier and smarter with production making communities stronger and consumption respecting the local and global environment.

The Government's vision is also that economic development should raise the quality of life of the Scottish people through increasing economic opportunities for all, on a socially and environmentally sustainable basis.

A healthier Scotland will result from changing individual behaviour and attitudes about diet and food choices; from improving the nutritional quality, safety and freshness of food and drink on offer in institutions and the catering sector; to supporting Scottish food and drink manufacturers and retailers to take the initiative in driving forward consumer demand for more affordable, healthier food and drink options. Communities across Scotland will enjoy better access to affordable, safe, healthy and fresh seasonal food.

A wealthier and fairer Scotland will result from the sustainable economic growth of the food and drink industry through greater co-operation and collaboration from primary production to final market, ensuring the long-term viability of primary producers, and increasing export markets for Scottish produce.

A safer and stronger Scotland will result from a thriving food and drink industry where local communities will flourish and become better places to live through improved access to amenities and services.

A greener Scotland will result from reducing the environmental impact of food and drink production, processing, manufacturing and consumption by encouraging responsible behaviour throughout the supply chain through reduced emissions, unnecessary use of raw materials, waste, packaging, energy and water use.

A smarter Scotland will result from a highly-skilled and innovative food and drink industry with consumers that are better informed about where their food comes from, how it was grown and the wider health, environmental, social and economic benefits of the choices they make.

These guidance notes are intended to provide an overview of the overarching priorities, the application process and the areas of expenditure which can be supported. However, they will not be able to deal with every situation or provide exhaustive commentary. Further guidance can be sought by e-mailing pmgenquiries@scotland.gsi.gov.uk or contacting 0131 244 4762.

Food Processing, Marketing and Co-operation Grant Assistance

There will be three elements to potential support under the Food Processing, Marketing and Co-operation Grant Scheme.

• An on farm/near farm scheme will be delivered through the Rural Priorities element of Rural Development Contracts ( RDC) providing support for land managers, farmers and small rural businesses directly linked to production units to develop new, and improve existing, food processing projects.

Projects will fall within the Rural Priorities Scheme assessment process if they meet all of the following criteria:

a. Have an existing Farm Business Registration Number

b. Do not have separate accounts for farm and processing business

c. Indicative turnover is less than £150,000 for the processing element.

Information on Rural Development Contracts-Rural Priorities can be found at www.scotland.gov.uk/srdp on the Scottish Government website.

Applications from other rural and urban businesses involved in the processing of agricultural produce, covered by Annex 1 of the European Treaty, into food products will not be treated as part of Rural Development Contracts but will apply under the separate national Processing, Marketing and Co-operation Grant Scheme. Information can be found at www.scotland.gov.uk/food.

Support will also be provided to promote co-operation in the food chain between primary producers in the agriculture industry, the processing industry and third parties. This measure will encourage innovation and new product development, adding value, co-operation to exploit new markets and shorten the food supply chain by linking producers with processors. Support will be directed to two or more producers, processors or third parties (e.g. the science or research sector) who are involved in co-operation within the food chain, however, support could be delivered to one body or element of the chain where there are clear benefits or a strategic approach to the food sector. The new products, processes and technologies must not displace existing products or businesses within the Scottish food sector. Information can be found at www.scotland.gov.uk/food.

As part of the application process you will need to complete a Land & Business Change Form, available from the SDRP website - http://www.scotland.gov.uk/Resource/Doc/915/0058864.pdf , to apply for Business Reference Number ( BRN) and Main Location Code ( MLC). The BRN and MLC are required to access to SRDPIT system to enable us to register your application and make payments. The BRN and MLC will be familiar to you if you are a Farmer or Land Manager and if so you should either use your existing BRN and MLC or complete the appropriate sections of the Land & Business Change Form. If you are not a Farmer or Land manager or your project is subject to a separate business venture not associated with farming or land management then you should use the FMPC guidance to complete the abridged version of the Land & Business Change Form. Please note that when applying for a new BRN and MLC the Head Office contact details or main location for the business should be used.

What Help is Available

Process

All applications will be assessed by a Scottish National Food Project Assessment Committee ( NFPAC), made up of representatives of the public sector and wider food industry who will make recommendations on the award of assistance. The NFPAC will meet up to 4 times per year and applicants will be informed of the closure dates for assessment of applications. Applications can be submitted at any point while the scheme is open.

Contacts

E-mail pmgenquiries@scotland.gsi.gov.ukor phone 0131 244 4762 (there is also a food mail box at www.scotland.gov.uk/food).

Customer Care

This section sets out our commitments to customer care, defines the standards of service that we will offer and the part that you can play. We see customer care as a partnership between the Scottish Government and our customers. Working together will ensure that we can meet each other's expectations and help shape the way that we deliver services to you.

Levels of service you can expect

We believe that you have the right to expect an effective and efficient service and we are committed to providing the best possible service within the resources that we have available.

How we will treat you

We will:

• be polite and treat you with courtesy, fairness, honesty and respect;
• introduce ourselves when we meet;
• listen to you carefully and use Plain English when we speak or write to you; and
• explain our decisions and the reasons for them.

We expect you to treat our staff with respect and be as helpful as you can.

How we will respond when you contact us

We will:

• answer your telephone calls promptly and if the person you need to speak to is not there, pass you to someone who can help or, get someone to call you back;
• give you the opportunity to hold private discussions with us and take account of any special facilities you may need to do this;
• take any messages with care and pass them on without delay;
• give you a full answer to your telephone enquiry immediately or within 5 working days. If providing the answer will take longer than this we will let you know who is dealing with your enquiry and the date by which we hope to give you an answer; and
• give you a full answer to your email or letter within 14 working days. If providing the answer will take longer than this we will let you know who is dealing with your enquiry and the date by which we hope to give you an answer.

We expect you to keep to agreed appointments or let us know as soon as possible if you need to change the arrangements.

What we will do with the information you give us

We will:

• respect the requirements of the current legislation: The Data Protection Act 1998; The Freedom of Information Act 2002; and The Environmental Information (Scotland) Regulations 2004;
• let you know if we get a request for information we hold about you and keep you informed about the information which we have given in response to the enquiry; and
• publish information on the grants we pay you.

How we will provide information

We will provide clearly written and accurate information about the grants that we offer. We will provide paper copies if you need them. You will also be able to download copies from our website at www.scotland.gov.uk/food.

How you can get information to us

You can e-mail documentation to us at pmgenquiries@scotland.gsi.gov.uk or write to us at:

Visiting you

If we have made an appointment with you we will do our best to arrive promptly and will identify ourselves when we arrive. Sometimes we will visit your property, but may not be able to tell you in advance because of the rules that govern how we pay grants. When we visit you we will explain what we need to do when we arrive at your property. We will do our best to cause you as little inconvenience as possible.

Processing Applications

Before we can begin processing your proposal, it must be valid and you must be eligible to submit the proposal. It must contain all the information we need and include all relevant supporting documents.

We will:

• acknowledge receipt of your proposal by e-mail or letter within 14 days of receipt;
• give you a reference for the proposal;
• contact you to tell you if we need more information;
• return any hard copies of your proposal or any other documents if they are incomplete, inaccurate, or ineligible; and
• inform you if any electronic versions of your proposal or any other documents are incomplete, inaccurate, or ineligible.

We expect you to have read and understood the rules of the scheme although we will explain these to you if you contact us. You must complete the application form clearly and accurately and ensure that you send us all relevant documentation. You must contact us if you do not get an acknowledgement of receipt.

Awards

Once a valid proposal and supporting documents has been received, it will be considered for funding by our National Food Project Assessment Committee ( NFPAC).

After the NFPAC meeting we will inform you of their decision.

If successful we aim to issue an award letter to you within 14 days. If we cannot do this we will inform you of the reasons for the delay.

We expect you to accept or reject an offer of grant within 1 month of us making the offer. We will not enter into negotiations over the detail of the offer during this period.

Processing Claims and Making Payments

Before we can begin processing your claim it must contain all the information we need and include all relevant supporting documents. We aim to make your grant payment within 6 weeks of receipt.

We expect you to submit your claim on time or we may not be able to process it and issue a payment within the agreed timescales.

How to Make Appeals or Complaints

Sometimes things go wrong, but we will do our best to resolve matters to everyone's satisfaction.

If you need to complain or appeal:

Should you have a complaint about any aspect of the administration of the scheme, or wish to appeal against the non-selection of your project for assistance, in the first instance please make your complaint or appeal in writing to:

Any appeal will be heard in the first instance by the NFPAC and you will be informed of their decision within 14 days of their meeting. If you are not content with their decision two independent adjudicators will be asked for a view on the case. The adjudicators will normally be drawn from the Scottish Government and an appropriate sector within the food industry. You will be consulted on the appointment of the adjudicators.

Scottish Public Services Ombudsman

You, or a representative authorised by you to complain on your behalf, may also ask the Scottish Public Services Ombudsman for your complaint to be investigated. Your complaint must be submitted within 12 months after the day on which you first had notice of the matter.

telephone: 0800 377 7330
fax: 0800 377 7331
text: 0790 049 4372
e-mail: ask@spso.org.uk

Inspections/Verification

You may be subject to an on the spot inspection to verify the progress or completion of the activity/product which has been supported.

You will be required to provide evidence that the work has been undertaken and the expenditure made through the production of invoices and evidence of payment. You may also be required, through regular monitoring forms, to provide details of the project and the benefits which the funding has delivered.

Processing and Marketing Support

The Agriculture Processing and Marketing Grants element of the Scheme responds to this strategic need by providing assistance to develop food processing facilities to ensure that more value is retained by both farmers and growers and to support the development of a successful and prosperous food processing industry. The measure encourages innovation and new product development, adding value and co-operation to exploit new markets and can shorten the food supply chain by linking producers with processors. The scheme encourages the food processing industry to deliver a secure outlet for Scotland's primary agricultural sector which in turn supports the development of employment opportunities in rural communities.

Objectives

The objectives of the scheme will meet the overall strategic objectives for food in Scotland and as such will be subject to change with the development of a National Food and Drink Policy for Scotland. However, in general, the objectives of the scheme will be to:

• guide production in line with foreseeable market trends and encourage the development of new products or outlets for primary products;
• strengthen local supply chains through support for processing and marketing of locally produced food, other agricultural and forestry outputs;
• share resources and experience to control costs and increase incomes;
• increase co-operation among operators in the food sector;
• improve or rationalise marketing channels or processing procedures;
• improve the profitability, efficiency and transparency of the supply chain;
• improve the presentation and preparation of products or achieve the better use or elimination of by-products or waste;
• assist with treatment and disposal of waste;
• apply new technologies and/or innovation;
• improve quality beyond normal accepted standard; and
• support consumer education.

Scope and Actions

The schemes will operate on a competitive basis. Each eligible application will be subject to detailed appraisal and then assessed in comparison with others, in order to determine those projects which best meet the objectives of the scheme and represent best value for money. This approach will provide an effective stimulus for well considered, high quality and innovative proposals.

The sectors of basic agricultural production eligible for assistance will be products covered by Annex 1 the European Treaty except fishery products. It is expected that the following sectors will benefit from aid for processing and marketing: red meat (in particular beef, lamb and venison); pigmeat; milk and milk products; eggs; poultry; cereals; fruit and vegetables (including potatoes). This list is not exhaustive as support may be delivered to new and innovative food products which involve the processing of newly developed crops, etc. Assistance will also be delivered to the processing and production of drink products where they involve Annex 1 products e.g. fruit drinks. Projects which involve Annex 1 inputs but result in non Annex 1 outputs may have assistance limited to the element of the project which involves the processing of agricultural products.

Priorities for Grant Aid

In selecting projects, consideration will be given to whether the application is aligned with food and drink policy and whether it:

• demonstrates that grant is needed in order for the project to proceed (this assessment will include whether by supporting the project the timescale for delivery is shortened or the project enhanced);
• complies with appropriate standards regarding the environment, hygiene and animal welfare;
• shows that an adequate and lasting share of the benefits of the project will accrue to primary producers;
• demonstrates the economic viability of the project and the business; and
• provides sufficient evidence that normal market outlets can be found.

Criteria to demonstrate economic viability - Applicants will need to demonstrate that they are financially viable. The assessment of the economic viability of the applicant will be made by the Scottish Government on the basis of 3 years of annual accounts, where these are available. Where the assessment indicates that the business is not viable, grant aid may not be awarded. Applicants will also have to explain why the project could not proceed without grant support and must indicate how the project can be expected to be profitable.

Requirement to comply with minimum standards regarding environment, hygiene and animal welfare - All applicants will be required to declare that they will comply with the requirements of national and EU legislation on the environment, hygiene and animal welfare as minimum standards. The Scottish Government will seek expert advice, where required, on these aspects during the assessment of applications and will confirm compliance with relevant national and EU standards before awards of grants are made. Compliance will be ensured through the normal inspection regimes during the lifetime of projects.

Assessment of normal market outlets - As part of the procedure for assessing and selecting projects, the Scottish Government will, where necessary, seek expert technical advice that normal market outlets exist for the products concerned. All applicants for support will be required to provide detailed information on the market outlets they have identified for their products; such information may range from the results of feasibility studies to letters of intent and contracts with new or established customers. This project-specific information, and information on the market in general for the product in question, will be used to establish the existence of a normal, viable market outlet. If such an outlet is not available, grant aid will not be awarded.

In conducting individual assessments of whether adequate market outlets exist, account will be taken of market trends such as the growth in food service, which places different demands on the nature and packaging of products, increasing segmentation and consumer choice in the market, technological developments, greater emphasis on traceability and local sourcing and consumer demand. The detailed assessment of market outlets will thus be made on a case by case basis for each individual project:

Beneficiaries

Eligible beneficiaries will include individuals, groups of primary producers and companies.

Eligible Costs

Support will be awarded to provide assistance towards tangible costs. Eligible costs will include the erection of new buildings, the refurbishment of old buildings, the purchase of new (and second-hand where permissible) equipment, waste treatment minimisation and disposal (including technology to turn waste into energy), computer hardware and software and directly related general costs such as architects', engineers' and consultants' fees (to a combined maximum of 11% of total eligible costs).

Support will be available towards costs of intangible projects. Eligible costs will include feasibility studies, product development, the development of websites (but not the operation costs), and consumer education. There may also be the opportunity for some limited support towards the branding and design work however applicants should be aware that State aids guidelines preclude assistance towards the promotion of a region or a brand.

Types and Size of the Beneficiary Enterprise

Support shall be limited to micro, small and medium sized enterprises within the meaning of Commission Recommendation 2003/361/ EC. For enterprises that are not covered by Article 2(1) of that recommendation with fewer than 750 employees or with a turnover of less than EUR 200 million the maximum aid intensity is halved. Where large companies are outwith this classification assistance may be applicable under the Regional Aid Guidelines if the location of the project is within an assisted area. Further details on assisted areas can be found at www.rsascotland.gov.uk/rsa

The maximum rate of total aid will be up to 50% of total eligible cost in convergence areas and up to 40% in non convergence areas.

"Assistance will be delivered to resources to ensure co-operation and collaboration in the food chain by bringing disparate elements together to ensure a successful and profitable outcome"

Food Co-operation Support

Rationale for Intervention

Business support can assist farm diversification and development and incentivise local and national food chains more effectively. The development of food businesses will depend on identifying and exploiting a range of business and market opportunities. Support is intended to focus on business development to ensure that it meets the requirements of the reformed CAP regime by maximising market orientation, adding value and the provision of public benefits.

The Food Co-operation element of the scheme will respond to this strategic need by providing assistance towards the resource to develop co-operation and collaboration within the food chain. The measure encourages innovation and new product development, adding value and co-operation to exploit new markets and it shortens the food supply chain by linking producers with processors. The scheme therefore helps to deliver a secure outlet for Scotland's primary agricultural sector. Assistance will be delivered to resources to ensure co-operation and collaboration in the food chain by bringing disparate elements together to ensure a successful and profitable outcome. Grant assistance will help to secure development which might not otherwise take place or to accelerate developments which would take place at a later date.

Objectives

The objectives of the schemes will be to:

• link producers and processors with market opportunities;
• guide production in line with foreseeable market trends and encourage the development of new products or outlets for agricultural products;
• improve or rationalise marketing channels or processing procedures;
• improve the profitability, efficiency and transparency of the supply chain;
• disseminate new technologies and/or innovation;
• support consumer education and market development; and
• provide overall strategic guidance to the food industry.

Scope and Actions

The scheme will operate on a competitive basis. Each eligible application will be subject to detailed appraisal and then assessed in comparison with others. This will enable determination of those projects which best meet the objectives of the scheme, national and regional priorities, and which represent best value for money. This approach will provide an effective stimulus for well considered, high quality and innovative proposals.

The sectors of basic agricultural production eligible for assistance will be products covered by Annex 1 of the European Treaty except fishery products. It is expected that the following sectors will benefit from aid for co-operation and collaboration: red meat (in particular beef, lamb and farmed venison); pigmeat; milk and milk products; eggs; poultry; cereals; fruit and vegetables (including potatoes). This list is not exhaustive as support may be delivered to new and innovative food products which involve the processing of newly developed crops. Assistance will also be delivered to the processing and production of drink products where they involve Annex 1 products, e.g. fruit drinks.

Beneficiaries

Applications will be open to individuals, groups of primary producers or companies. Two or more producers, processors and/or third parties (within or connected to the food supply chain) should be involved in the project. However, where there is significant opportunities for co-operation on a strategic basis, a single body may be responsible for delivering the outcomes.

Eligible Costs

Support will be available towards resources to assist co-operation, collaboration and development within the food chain. Specific areas such as product development, market research, development of marketing plans, organisation and development of a sector and facilitating vertical integration will be considered.

This list is not meant to be exhaustive and only provides an indication of the types of projects which could be supported.

Support should not replace normal business costs and should be project based and time limited.

All primary agriculture production sectors listed in Annex 1 of the European Treaty are eligible. Projects will include support towards resources which will encourage co-operation and collaboration to ensure the development of new market opportunities. Examples of projects are the development of marketing plans, a reorganisation of business to exploit a market opportunity, costs of collaboration work between producers and processors and the development costs of a new product where a known market outlet exists. Costs will be exclusive to where new co-operation and collaboration is taking place and will not replace existing costs in respect of current business practices. Further examples of the type of projects which could be supported are provided later in this document.

Where capital assistance is required assistance will be considered through the Processing and Marketing element of the scheme.

Please note that all proposals for support towards co-operation activity will require in the first instance to provide a feasibility study. The feasibility study will determine whether the wider co-operation activity will be supported.

Types and Size of the Beneficiary Enterprise

Support shall be limited to micro, small and medium sized enterprises within the meaning of Commission Recommendation 2003/361/ EC. For enterprises that are not covered by Article 2(1) of that recommendation with fewer than 750 employees or with a turnover of less than EUR 200 million the maximum aid intensity is halved. Where large companies are outwith this classification assistance may be applicable under the Regional Aid Guidelines if the location of the project is within an assisted area. Further details on assisted areas can be found at www.rsascotland.gov.uk/rsa.

Type of Support and Aid Intensities

The maximum rate of total aid will be in line with the specific State aid guidelines for the particular activity however in general terms assistance will be up to 50% of costs.

Priorities for Grant Aid

In selecting projects, consideration will be given to whether the application is aligned with food and drink policy and whether it:

• demonstrates that grant is needed in order for the project to proceed (This assessment will include whether by supporting the project the timescale for delivery is shortened or the project enhanced);
• complies with appropriate standards regarding the environment, hygiene and animal welfare;
• shows that an adequate and lasting share of the benefits of the project will accrue to primary producers;
• demonstrates the economic viability of the project and the business; and
• provides sufficient evidence that normal market outlets can be found.

Criteria to demonstrate economic viability - Applicants will need to demonstrate that they are financially viable. The assessment of the economic viability of the applicant will be made by the Scottish Government on the basis of 3 years of annual accounts, where these are available. Where a number of businesses are involved a view will be taken of the economic viability across all the total enterprise. Where the assessment indicates that the business is not viable, grant aid will not be awarded. Applicants will also have to explain why the project could not proceed without grant support and must indicate how the project can be expected to be profitable.

Requirement to comply with minimum standards regarding environment, hygiene and animal welfare - All applicants will be required to declare that they will comply with the requirements of national and EU legislation on the environment, hygiene and animal welfare as minimum standards. The Scottish Government will seek expert advice, where required, on these aspects during the assessment of applications and will confirm compliance with relevant national and EU standards before awards of grant are made. Compliance will be ensured through the normal inspection regimes during the lifetime of projects.

Assessment of normal market outlets - As part of the procedure for assessing and selecting projects, the Scottish Government will, where necessary, seek expert technical advice that normal market outlets exist for the products concerned. All applicants for support will be required to provide detailed information on the market outlets they have identified for their products; such information may range from the results of feasibility studies to letters of intent and contracts with new or established customers. This project-specific information, and information on the market in general for the product in question, will be used to establish the existence of a normal, viable market outlet. If such an outlet is not available, grant aid will not be awarded.

Project Examples

Distribution

Issue: Some small food companies cannot afford, or do not have access to, efficient and cost-effective channels of distribution to fulfil available market opportunities. While it may be possible to have small quantities delivered, this is at a disproportionate cost to the value of the product.

Potential solutions:

• develop a new route to market through establishing a dedicated trading company and developing a supply chain network;
• a group of companies purchase/lease appropriate premises/van to jointly share the risks and costs of distribution; and
• a group of distribution companies look at ways of working together more efficiently and effectively to consolidate loads and widen their reach.

Benefits:

• companies gain access to markets which they were unable to access alone, reduced distribution costs; and
• sales growth, greater product penetration, wider availability of Scottish produce.

Market Access

Issue: Companies may be unable to access a market directly on their own, due to a lack of scale, or the potential customer being unwilling to increase the number of suppliers or be actively reducing the number of suppliers.

Potential solutions:

A group of companies work together to:

• offer a portfolio of complementary products;
• develop a range of products to market jointly;
• achieve economies of scale;
• establish a joint trading company;
• respond quicker to market signals;
• develop supply chain links and local food opportunities throughout the chain; and
• work with other existing suppliers to broaden their product offering.

Benefits:

• companies gain access to markets which they were unable to access alone; and
• sales growth, greater product penetration, wider availability of Scottish produce._

Quality, Efficiency, Improved Resource Utilisation

Opportunity: Looking at the performance of the chain as a whole, rather than at individual components, offers opportunities to improve the overall quality of the product, ensuring that it meets the needs of the customer, while at the same time reducing the levels of waste. Improving resource utilisation throughout the supply chain through the establishment of business rings (similar to machinery rings) can also lead to significant cost reductions, maximise efficiency and ensure effective capital usage.

Potential benefits:

• agreed product specification, resulting in fewer rejections and improved product quality;
• improved information flow resulting in better product forecasting, matching of production with demand, more efficient stock management, less product wastage, targeted new product development, shorter lead times; and
• shared investment in new techniques and equipment that could not be afforded individually, targeted where it is most needed.

Continuity and Consistency of Supply

Issue: Increasing constraints on the availability of certain raw materials may encourage companies to establish more long term collaborative relationships to achieve a consistent, sustainable supply. An additional driver is the push towards local sourcing of raw materials.

Potential benefits:

Working collaboratively:

• brings producers closer to the consumer, allowing them to focus production more directly to consumer demand and requirements;
• provides producers with the stability of a long term customer and reduces price fluctuation and uncertainty;
• provides processors with continuity of supply;
• provides customers/consumers with the products they want; and
• potentially provides greater margins for all parts of the chain.

Adding Value

Opportunity: Adding value can be achieved in several ways, including quality improvement, new product development, range extension and developing a brand identity. It is vital to ensure that the product is based on a consistent, informed product specification. To maintain the value requires commitment from all partners within the supply chain, building on a consumer/market focused approach.

Potential benefits:

• adds value to what may previously have been a commodity product, resulting in greater product profit margins;
• encourages market focused new product development activity;
• stimulates effective partnership working to deliver the components that make up the end product;
• generates new ideas and added value marketing concepts; and
• cross sector collaboration, technical support and services.

Opportunity: Primary producers or processors can work together to address common efficiency or service provision issues across the horizontal level. Examples may include sharing of technical or NPD resources amongst processors. This can also be implemented vertically throughout the chain.

Potential benefits:

• cost issues addressed across the sector, improving efficiency;
• access to specialist skills and services that some producers or processors could not afford on their own;
• increased added value and NPD opportunities; and
• responsiveness of sector to respond quicker to market signals.

Funding examples

A number of small-scale food processors producing a range of complementary products, are finding it difficult as individual businesses to access and service the potential markets available to them, due to the small quantities involved and disproportionate transport costs. Following the preparation of a Feasibility Study and Business Plan, the businesses form a dedicated marketing company to collaboratively sell and distribute their products. Assistance under Scheme is available to fund the Consultancy costs to undertake the role of a marketing manager to develop new markets which the participants were unable to access on their own, together with organising a joint distribution service.

A number of food processors in a remote area of Scotland or Island situation, are faced with prohibitive transport costs to their markets in Central Scotland and England, due to the small volumes produced by the individual businesses. _A Feasibility Study could demonstrate that by working together, with joint loads and shared transport, distribution costs could be significantly reduced.

A meat processor wishes to improve the quality of its finished products, and achieve a more consistent product quality. With assistance to fund consultancy costs to undertake the role of a Quality Product Manager to liaise with the primary producers supplying the abattoir on all aspects of animal husbandry and finishing systems, to ensure that the livestock delivered to the lairage are of a known and consistent specification. With this information, the Manager also works with the buyers of the Company's supermarket customers to meet their exact requirements, reducing wastage and increasing product utilisation.

A Local Authority wishes to increase its public procurement of locally produced foods for schools within its area. A Feasibility Study could identify potential suppliers and the range of produce available, together with the collaborative structures required to ensure a consistent supply. Thereafter, with help under the scheme, consultancy costs could be supported to implement the recommendations of the Study and co-ordinate all the activities between the links in the new supply chain.

A number of cheese producers could jointly commission a Feasibility Study to consider the supply chain for their products, with the aim of improving efficiency, removing unnecessary costs and identifying where value is added. With this information, and assistance under the scheme, the businesses could jointly appoint a consultant to look at their individual supply marketing chains, removing those stages which add cost, but not value, and providing transparency with clearly defined communication channels.

SCOTTISH GOVERNMENT

FOOD AND DRINK INDUSTRY DIVISION