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6. Identifying issues for further debate or policy development

The analysis reported in earlier sections of this report shows that food and drink touch the lives of everybody in Scotland; some because they work in the industry, all because they are consumers. For the former, issues such as business competitiveness and employment opportunities are viewed as important. For consumers, the availability and affordability of food and drink is important, but concerns are also raised about the health and environmental impacts of certain products and services. Cutting across these perspectives is a shared view that greater reliance on local production and consumption could perhaps address many other issues.

In some cases, there are tensions between a desire to maximise economic gains and consumer choice against the need to mitigate the negative impacts of some production and consumption habits. For example, responses to the Discussion highlighted a need to balance the value-added and employment generated by food and drink manufacturing against the social costs of obesity and alcohol abuse. A further tension was evident in the responses between the need to pursue efficiency and maintain agri-food chain competitiveness and potential environmental costs.

Reconciling the different perspectives of "what" food and drink should be produced and consumed and "how" it should be produced and consumed may not be easy. Any National Food Policy will have to be "multi-faceted" in seeking to simultaneously address concerns as varied as economic efficiency, market failure/public goods (notably those concerned with the environment and public health), distributional equity and security of supplies. Moreover, it will need to achieve a greater degree of co-ordination than is currently displayed across separate but related policy areas such as agriculture, fishing, health, education and environment.

However, in addition to providing insights into issues and stakeholder perspectives, responses to the Discussion also provided implicit and explicit suggestions for policy options to address the concerns identified. That is, many responses offered clear pointers for policy directions whilst others were less direct but could be used to infer implicit policy ideas. Both cases are included here as valuable contributions to the on-going process of debating and developing a National Food Policy. Given the number of different topics covered and the different perspectives offered by different types of respondents, it is unsurprising that a large number of policy suggestions may be identified. However, following a standard classification system often deployed in policy analysis, the various options may be grouped into three broad categories for reporting purposes ⁶. Although more sophisticated typologies can be used to categorise policy instruments, a simple three-way classification serves to illustrate the main points - even though it is acknowledged that the categories are not necessarily mutually exclusive nor comprehensive in their coverage of individual policy options.

6.1 Categories of policy options

Information provision. One approach to remedying apparent problems is through the improved provision of information to food and drink consumers and producers, to raise awareness of issues and to facilitate better decision making. For consumers, this might take the form of publicity campaigns and food labelling (both in the retail and catering sectors), to highlight (especially) the health, economic and environmental impacts of different purchasing decisions, patterns, and habits. In addition, consultation responses placed particular emphasis on the key role of both adult and school education in raising basic understanding of food issues - from primary production through to food and drink consumption, and enhancing practical skills in food purchasing, preparation and eating. Similarly, for producers, business advice and benchmarking services could raise awareness of food issues - and of marketing opportunities - whilst appropriate training packages could improve business performance.

Incentive/facilitation. The ability to react to awareness of food and drink issues may be limited by household or business circumstances - either budget constraints or local practicalities. In such cases, public funding may offer a means of helping consumption and production patterns to adjust to achieve desired outcomes. For example, tax (dis)incentives, grants and subsidies can be offered to businesses and low-income households or communities, to encourage product and process innovation or self-help programmes and healthier diets. The latter may also be encouraged directly through meals offered in public institutions such as schools and hospitals. Equally, public funding in the form of soft loans, grants or direct subsidies can be used to overcome local supply-chain problems of inadequate processing or retailing capacity, or indeed to encourage grow-your-own initiatives. In addition, public funding has a key role to play in furthering understanding of social, environmental and economic impacts of food production and consumption both through research & development (R&D). Again, it will be important that public funding activities in support of enterprise development, especially that involving infrastructural services and facilities, follow a collaborative and integrated approach so that the maximum benefit is derived from such support.

Regulation. Amongst consumer interests, there is a desire for tighter regulation of food and drink products and processes, to enhance protection of both human and environmental health. Notable examples include targeting food safety and food packaging worries, but also the format and usage of food and drink advertising - particularly for younger audiences. Among business interests, there is a general desire to reduce regulatory hurdles to improve competitiveness and boost employment opportunities. For example, to help (especially smaller) firms to gain easier access to markets - including public sector institutions and exports - whilst also seeking regulatory protection for a level playing field with imports and other parts of the supply-chain. Finally, the point has been stressed within the discussion by business interests that any changes in regulation in Scotland should not unduly complicate business competition with other parts of the UK or Europe.

A brief discussion of policy options identified for each of the broad topics is presented below, grouped by Strategic Objective. For ease of illustration, Table 6-1 offers a one-page overview of the main items.

6.2 Summary

Whilst an agreed vision of a sustainable food and drink system has perhaps yet to be reached, the information provided by responses to the Discussion Paper represents a significant contribution to the process of identifying such a vision and will help to shape the manner in which Scottish food and drink production and consumption choices will be framed by a future National Food Policy.

6.3 Example policy options for each broad topic area and by Strategic Objective

The following sub-sections offer a brief description of selected example policy options for each broad topic under each Strategic Objective. The relative importance of each topic and emphasis placed on particular policy demands is reported in earlier parts of the report, notably the Tables in Section 4.

6.3.1 Wealthier & Fairer

Labour market - skills, jobs. The food and drink sector is a source of significant employment in Scotland. However, the nature of many jobs and their level of remuneration relative to alternatives available elsewhere in the economy means that filling jobs with appropriately skilled labour can be problematic. Policy responses include encouragement for training and education programmes to improve productivity, develop appropriately skilled and knowledgeable staff, plus more flexible access to casual staff.

Product market - exports. For certain product categories - including beef, lamb and shellfish - the Scottish market is too small to sustain significant domestic production. Consequently, access to wider markets - whether in the UK or beyond - is important. This reflects the need for a small, open economy to maintain trade links. Practical policy responses include encouragement for export-oriented enterprises through advice, training and (possibly) grant aid, plus endeavouring to minimise domestic and foreign regulatory hurdles (such as those arising from animal disease outbreaks).

Product market - public sector. Although much smaller than the private market, public sector institutions do purchase significant food volumes for in-house catering and retail functions. As such, they can act as an exemplar for promoting both local supply chains and healthy consumption habits. Although account needs to be taken of value for money and competition issues, policy responses might include examination of tendering procedures and criteria to encourage smaller, local and more quality-oriented suppliers to bid for contracts.

Table 6-1: Summary of suggested example policy options for each Strategic Objective

Product market - direct sales. As an alternative to using conventional retail outlets, direct sales offer the opportunity for primary or secondary producers to capture a greater share of added value by interacting directly with consumers. This might be through face-to-face contact and producers' own outlets ( e.g. on site shop, market stall) or increasingly through web or mail order systems. Policy support might include advice and training on direct sales techniques and facilities, plus funding for capital investments.

Product market - supermarkets. The major multiples account for the dominant share of food sales in Scotland, reflecting the significant advantages that they offer to consumers in terms of convenience and range of products available. However, some respondents have concerns about the effect of large scale retailers on the structure of supply chains - squeezing out small and/or local producers and rival retail outlets - and on choice within product categories - favouring limited high volume products rather than many, smaller volume items. Aspects of competition policy are reserved, but domestic policy responses could include exhortations for dialogue and closer co-operation between supermarkets and local interests.

Prices - consumer. Although the proportion of household expenditure accounted for by food has declined in recent decades, it remains significant for a segment of low-income consumers. This has been exacerbated by recent trends on international commodity markets, but can also be exacerbated at a local level by limited choice of food outlets - the notion of food deserts. Policy responses may focus on increasing effective purchasing power, either by increasing the availability of affordable food ( e.g. grow your own initiatives, increased local competition) and/or enhancing target consumers' income through benefit transfers (which could include rationing-type approaches, such as food stamps).

Prices - producer. Although competition and low consumer prices are generally welcomed, prices to primary and (to a less extent) secondary producers are often raised as a problem issue, potentially undermining the viability of domestic production. However, the scope for direct intervention on prices is restricted, meaning that policy responses are typically limited to exhortations for co-operation between different parts of the supply-chain, and/or encouragement for the development of alternative supply-chains ( e.g. direct marketing) with a reliance on the UK competition authorities to identify and address any market imperfections.

Fishing Industry. The fishing industry represents a significant number of jobs, both directly in the catching sector but also in the processing and supply sectors. However, trading conditions are difficult due to on-going concerns about fish stocks and the imposition of various constraints under the Common Fisheries Policy. Domestic policy responses are constrained by CFP objectives and mechanisms, but could include continued provision of advice and training to improve business performance, coupled with targeted support to achieve sustainable practices.

Farming industry. As a major user of land, the farming sector is highly visible, generating a number of externalities that contribute to enjoyment of the countryside for residents and visitors. It is also a significant employer in its own right and provides a high proportion of raw produce used by the Scottish food-processing sector. However, recent reforms to the Common Agricultural Policy and changes in international trading conditions have highlighted the vulnerability of many farms, raising concerns about maintenance of sectoral infrastructure and output volumes. Policy responses are constrained by CAP objectives of greater market orientation, but could include continued provision of advice and training to improve business performance, coupled with targeted support to sustain particular farming practices, including those associated with small-scale farming, particularly in remoter areas.

Processing capacity in Scotland. Whilst primary production is common in many parts of Scotland, further processing is often less. Consequently, increasing the capacity to add-value could contribute to domestic economic development. Policy responses could include encouragement for capital investment programmes, although attention needs to be paid to economies of scope and scale in modern supply-chains.

Drinks industry. The drinks industry is a significant part of the overall food and drink sector in Scotland, with a very high international profile for value-added brands ( i.e. whisky) and making a significant contribution to tourism activity. Policy support includes encouragement for export operations, but also acknowledgement of linkages to the malting barley supply industry.

Tourism. Linkages between the food and tourism sectors take two main forms. First, food consumption - whether via retail or catering outlets - represents part of the visitor experience and therefore an opportunity to add value and enhance the attractiveness of Scottish destinations. Second, as a by-product (externality) of food production, features such as farmed landscapes, fishing harbours and production facilities ( e.g. distilleries, smokehouses) can represent tourist attractions in their own right. Policy encouragement of such linkages might promote formal collaboration between sectors and/or support for maintaining externalities (in the face of possibly declining primary production).

R&D. Each of the Strategic Objectives imply a need for continued innovation to improve the economic, social and environmental performance of the food sector. For example, to enhance productive efficiency, to decrease reliance on unhealthy ingredients, improve nutritional intakes and to reduce greenhouse gas emissions. Practical policy responses include clear strategic guidance on R&D objectives together with appropriate funding.

Local food & local economies. There is increasing interest in the potential for shorter supply chains to contribute to local economic development. Although care needs to be taken to avoid the economic restrictiveness of imposed self-sufficiency, opportunities to rearrange supply chains and retain added value do merit investigation. Policy responses could include advice, training and funding for collaborative and community initiatives.

Fairtrade. In recognition of the importance of agricultural production and export markets to many developing countries, the concept of Fairtrade has gained some acceptance amongst domestic consumers. Some attempts have been made to extend the concept to domestic primary producers and this issue was apparent in several of the discussion responses. Policy responses are perhaps limited to acknowledgement of the issues - although market access for overseas producers may be perceived as harming domestic producer interests.

6.3.2 Smarter

Education in schools. Raising awareness of food issues - including production, health and environmental impacts - could help to modify consumption patterns. One way to achieve this could be to increase children's exposure to food issues through formal education at school, both through practical food preparation ( i.e. home economics) and more general teaching about food cultures, histories and production techniques. This could be delivered as a topic in its own right and/or perhaps through the use of food case studies in other subjects. Finding space within an already crowded curriculum will need to be addressed.

Adult education. Whilst education in schools may raise children's awareness of food issues, parallel efforts may be needed to achieve the same amongst the adult population. Although adult education classes will have a role to play, since adults are less of a captive audience than school pupils, recourse may be required to the more diffuse provision of information through general publicity campaigns and support to employers for in-house training. Involving parents in school projects might also be possible.

Food labelling. Promotion of healthy consumption patterns rests on consumer awareness of issues, but also their timely access to relevant information. Food labelling is an obvious mechanism to deliver this if it provides information on food content, origin and recommendations for its consumption. Labelling also has potential marketing advantages by signalling more clearly the provenance of food to particular consumer segments. Policy responses essentially revolve around encouragement and/or regulatory controls for enhanced and consistent labelling on retail products and for those provided through catering services.

Traceability. Driven mainly by the food safety issue in the wake of disease outbreaks, but also by rising consumer interest in the local/environmental/mode of production/provenance of some food products, the ability to trace the origin and pathway to consumption of food is of increasing importance. Policy responses include enabling and enforcing efficient forms of traceability along the supply-chain (including catering outlets). This links to food labelling, but has more direct implications for primary and secondary producers.

Food Chain Collaboration. Given the length and complexity of many modern supply chains, addressing some of the issues identified in the consultation is beyond the ability of individual firms working in isolation. Rather a collaborative, partnership approach is required to identify, design and implement improvements. Policy support for this includes exhortations to co-operate, including dissemination of evidence on the benefits of good collaborative practice, plus the provision of advice and training and funding for appropriate R&D activities.

Animal welfare. Consumer surveys suggest that concern for animal welfare is increasing, and this has underpinned legislative moves to raise minimum standards across various forms of livestock production. However, it appears that preferences revealed by consumers' actual purchasing patterns do not match the preferences stated in such surveys, leading to domestic produce being displaced by (cheaper) imports subject to less stringent standards. Policy responses might include a relaxation of domestic standards, negotiation to impose similar standards on imported produce or attempting to raise consumer awareness and appreciation of domestic standards.

6.3.3 Healthier

Food and drink advertising. Concerns about unhealthy consumption habits, especially amongst children and young adults, extend to the potential influence of food and drink advertising and promotion. As with tobacco advertising, policy responses might include restricting the format and permitted availability of advertising space, or restrictions on promotions and advertising associated with schools

Health promotion. In tandem with formal education programmes, awareness of health issues associated with food may also be increased through more general promotional campaigns delivered through a variety of mechanisms. This includes publicity/information provision through the media and health professionals, but also utilising public and private employers to deliver messages.

Food safety. Modern consumers can reasonably expect a high degree of safety when eating food. However, maintenance and enhancement of such standards requires on-going regulatory controls together with advice and training for those handling food. Whilst the emphasis tends to be on businesses, there is also a role for the provision of information and training of consumers to improve their awareness of food safety issues.

Diet and nutrition. Dietary and nutritional standards across the Scottish population rank very highly as an area of concern. Addressing this through policy actions represents a challenge, with a combination of approaches likely to be needed. These include various ways of enhancing consumer awareness and increasing access to healthier products, particularly for disadvantaged sections of society.

Public establishment meals. As public institutions serving vulnerable groups in society - children and the sick - schools and hospitals are potentially well placed to encourage healthy food consumption patterns whilst pupils and patients are in their care. Policy responses might include promoting healthy options and/or restricting the availability of other choices - although an appreciation of consumer behaviour will be needed to underpin such schemes. Funding implications will need to be addressed.

6.3.4 Safer and stronger

External factors affecting food supply. The biological underpinnings of food production make it susceptible to random variations in factors such as weather conditions or the incidence of pests and diseases. This can be exacerbated by the reactions of international markets to fluctuations in available supplies, plus changes in demand arising from global economic development ( e.g. China) and policy signals ( e.g. biofuels). Consequently, domestic supply chains are subject to factors outwith local control. Policy responses at the firm level might include encouragement for flexible production systems and the adoption of risk management, but also approaches to security of supply at the national level.

Capacity for food production. Interest in this topic stems mainly from increasing global concern over food security given pressures such as climate change and rising demand. Policy responses could include renewed attention to domestic self-sufficiency, although storage, trade, demand management and increased purchasing power from greater economic prosperity are perhaps more important.

Access to food. By itself, raising awareness of health issues associated with food will not deliver desired benefits if consumers are denied access to appropriate food products. This is a potential problem for some groups of consumers facing restricted food choices due to either limited income and/or physical access to food supplies ( i.e. food deserts). Policy responses may focus on increasing effective purchasing power, either by increasing the availability of affordable food ( e.g. grow your own initiative, increased local competition) and/or enhancing target consumers' income through benefit transfers (which could include rationing-type approaches, such as food stamps). Sustained funding for community initiatives which provide access to good quality food for disadvantaged groups may also be appropriate.

Local food & local communities. There is increasing interest in the potential for shorter supply chains to contribute to local economic development. Although care needs to be taken to avoid the economic restrictiveness of imposed self-sufficiency, opportunities to rearrange supply chains and retain added value do merit investigation. Policy responses could include advice, training and funding for collaborative and community initiatives.

6.3.5 Greener

Organic production. Although it remains a niche market, sales of organic food are increasing year-on-year and offer a choice to consumers as well as an opportunity for producers. At present, some product categories are largely imported and therefore there is scope to develop the domestic supply chain. Policy response could include (continued) support for organic primary production but also perhaps more support for processing and marketing.

Food waste. Estimates of the proportion of food disposed of rather than consumed are worryingly high, with waste occurring at every stage of the supply chain. This suggests that there is significant scope for cost-savings to both producers and consumers, with associated benefits in reduced environmental impacts. Policy responses might include advice and training, but also a review of regulatory controls relating to food packaging and storage.

Food packaging. Increasing concern over the environmental impacts of food packaging has prompted interest in reducing it. Policy responses might include support for R&D into alternative packaging, to reduce its usage and/or the scope for reuse and recycling.

Local food & food miles. Whilst care has to be taken to account for all local production, processing and consumption impacts relative to those of "imported" products, shorter food supply chains may offer the potential for reduced environmental impacts through reduced transportation of final products. Policy responses may include R&D to clarify the relative environmental merits of alternative supply chain arrangements, but also advice and encouragement for local initiatives.

Food miles (other). Whilst care has to be taken to account for all local production, processing and consumption impacts relative to those of "imported" products, shorter food supply chains may offer the potential for reduced environmental impacts through reduced transportation of final products. Policy responses may include R&D to clarify the relative environmental merits of alternative supply chain arrangements, but also advice and encouragement for local initiatives.

Environmentally friendly food production. Modern food supply chains have a number of undesirable environmental impacts, both locally through their influence on air and water quality or biodiversity, plus globally through their energy-intensive nature and emission of greenhouse gases. Reducing such impacts whilst maintaining food output is acknowledged as desirable but challenging. Policy responses include support for R&D into new production techniques, plus advice, incentives and regulatory controls to encourage the adoption of best practice.

Grow your own. Primary food production occurs at many different scales, from large agri-businesses through family firms to private gardens/allotments. Historically, the latter have represented a significant source of domestic food supplies and interest in them is increasing again. This reflects leisure activities, but also concerns amongst some consumers about commercial produce and security of supply. It also represents one way of increasing access to healthy food for low-income consumers faced with few alternative supply options. Given the wealth of private sector activity in the provision of information in this sector, policy responses might reasonably be restricted to encouraging the release of land for small scale grow your own activities.

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