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5.3.1.2.4 Cooperation for development of new products, processes and technologies in the agriculture and food sector and in the forestry sector

CO-OPERATION (Tier 3)

Article 20(b)(iv)

Measure Code (124)

Rationale for Intervention

A Forward Strategy for Scottish Agriculture: Next Steps identifies that Scottish food producers, food processors, retailers and the food service sector should work together to identify, inform and meet market demand, drawing on business advice and sharing resources and experience to control costs and increase incomes. The Scottish Forestry Strategy highlights the need to promote local co-operation and clusters to secure new markets and increase the business potential of woodland-related activity. This measure provides support for such actions in order to improve co-operation among producers, processors and others in the supply chain in order to identify or access new markets and add value locally.

Objectives

The measure will:

• 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 and forestry 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 and non-food products industries.

Scope and Actions

Support will be provided to promote co-operation between primary producers, the processing industry and third parties. The measure will encourage innovation and new product development, adding value, co-operation to exploit new markets and shorten the supply chain by linking producers with processors. Support will be directed to two or more producers, processors and a third party (possibly in the science sector) who are involved in co-operation within the supply chain. The new products, processes and technologies must not displace existing products or businesses within the Scottish land-based sectors. However, where there are significant opportunities for co-operation on a strategic basis, a single body may be responsible for delivering the outcomes.

The sectors of basic agricultural production which will be covered by the measure will be products covered by Annex I to the Treaty except fishery products. Forestry products will also be covered. It is expected that the following sectors will benefit from aid for processing and marketing: red meat (in particular beef, lamb and venison); pig meat; milk and milk products; eggs; poultry; cereals; oil producing crops; fruit and vegetables (including potatoes); wood and timber products. This list is not exhaustive as support may be delivered to new and innovative products including 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 product supply chain) should be involved in the project. However where there are 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 support co-operation, collaboration and development within the supply chain. Specific areas include product development, market research, development of marketing plans, organisation and development of a sector and facilitating vertical integration.

State Aid

Confirmation that the co-operation measures will respect State aid procedures and material compatibility, in particular aid ceilings of total public support under Articles 87 to 89 of the Treaty.

Evidence that investment measures support is targeted on clearly-defined objectives reflecting needs and structural disadvantage

A Forward Strategy for Scottish Agriculture: Next Steps expresses a vision of a prosperous and sustainable farming industry, one of Scotland's success stories, which benefits all the people of Scotland. It should be focused on producing food and other products for the market inter alia. Actions intended to help achieve this vision include improving the availability and use of market information by farm businesses to help identify market opportunities, target profitable areas, encourage innovation and promote local processing and marketing in line with the Scottish Food and Drink Strategy.

The Strategy's goal in relation to food production and marketing is that Scottish food producers, food processors, retailers and the food service sector should work together to identify, inform and meet market demand, drawing on business advice and sharing resources and experience to control costs and increase incomes.

Business development is one of the seven key themes of the Scottish Forestry Strategy, contributing to the outcome of competitive and innovative businesses that support economic growth. The Strategy identifies increased co-operation as a key opportunity to stimulate innovation, reduce costs and improve the economic sustainability of the forestry sector, which has been subject to a sustained period of downward price pressure.

The integrated structure of the delivery mechanism of Rural Development Contracts will enable regional funding priorities to be identified and ensure measures are prioritised, dependant on local needs.

Description of the requirements and targets with regard to the overall performance of the enterprises

The Scottish Executive will use a number of criteria to establish that a satisfactory level of economic benefit, predominantly for primary producers, will result from investments supported under this measure. These will be taken into consideration during the assessment and selection of applications and will include: the range of businesses involved in the enterprise; the increased level of co-operation and the benefits that delivers; the volume of raw material to be used and the benefits to the primary sector and value to be added and retained by the primary sector.

Primary production sectors and types of investments (tangible-intangible)

All primary agriculture production sectors listed in Annex 1 to the Treaty are eligible, as well as forestry products. Projects will include intangible 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 outlets 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. Where capital assistance is required assistance will be considered through the Processing & Marketing Grant Scheme.

Types and size of the beneficiary enterprise

Support shall be limited to the levels set out within State Aid guidelines for the particular co-operation activity.

Designation of the standards for which a period of grace can be granted to micro enterprise in order to comply with newly introduced Community standard

Micro enterprises must meet the Community standards in a period not exceeding 36 months from the date which the Community standard becomes mandatory.

Type of support and aid intensities

Within the limits imposed by SME Block Exemption, the current draft General Block Exemption, the draft R & D & I Block Exemption and the Agriculture guidelines.

Aid can also be delivered to projects by the Enterprise network in Scotland and by Local Authorities, however the total cumulative aid will not breach the maximum rates allowable.

Financing

Total Public Support for Measure 124: 23.4 M Euro
Total EU Contribution for Measure 124: 6.2 M Euro

*As per guidance, the proxy for Gross Value Added is to be profit (revenue minus costs). The baseline value for this result indicator will be established once information on revenue and costs in supported enterprises becomes available.
# Impact indicators will be estimated based on output and result indicators

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