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4 Overview and Mapping of the Food Supply Chain
4.1 Food Supply Chain Overview
Food is essential to the continuation of human and economic life. As one of the world's most developed economies, Scotland is wholly dependent on a highly complex domestic and international food supply chain to deliver food to the hospitality sector, retailers for subsequent purchase, preparation and consumption by members of the public. It is therefore essential to maintain the flow of sufficient quantities of suitable foodstuffs, in a timely manner and at affordable prices, to the shelves of retail and wholesale facilities in order to maintain human health and public order.
In addition to the impact on individual members of the public from disrupting their food supply, the Scottish economy has the potential to be badly damaged by such disruptions. This disruption would take two forms: (i) an interruption in the flow of money generated through economic activities, and (ii) an interruption in the normal activities of public life. Agriculture, fishing, food processing, packaging, transport, distribution, food retail and hospitality sectors are all major employers, resulting in over 350,000 people in Scotland working in the food supply chain as a whole, including one in five of all people in the vital manufacturing sector. In addition to causing short term disruption in supply, Scotland's world class reputation as a reliable source of high quality food products, including red meat, whisky, white and farmed fish, and bakery products, has the potential to be seriously damaged in the event of a disruption to the food supply chain.
The food supply chain is a major feature of the Scottish economy with the food manufacturing sub-sector accounting for 22% of the total Scottish manufacturing base and generating a turnover of £7.4bn per year. This is in comparison to the sector across the UK that represents 15% of manufacturing and turns over £70bn/year. The sector in Scotland is therefore of greater importance to overall manufacturing than across the UK as a whole.
In Scotland the food manufacturing sector alone employs 49,000 people directly across over 1,000 businesses. Although outside the scope of this project, it is worth noting that a significant sub-set of this is the spirit/scotch whisky industry. It directly employs over 8,900 people and generates a turnover of £2.5bn/year and is the fourth largest UK export by value. The food and drink production and processing supply chain employs a total of 122,000 people, which is 5% of the total Scottish workforce and Scotland is the world's fifth largest exporter of premium food and drink. Food and drink manufacturing contributed gross value added of £3bn in 2006 from a turnover of £7.4bn. Whisky manufacture contributes £2.5bn of the overall turnover and £1.4bn of the GVA. 3
Agriculture and fishing directly employ 72,000 people across Scotland and generate a turnover of more than £2bn/year. The red meat industry is a key element of this with a £1.4bn annual turnover and creates direct and indirect employment for in the region of 40,000 people. 4 Hospitality (hotels, restaurants and bars) employs over 148,000 people out of a total of 218,000 employed in the entire Scottish tourism sector. Hospitality contributes £2.7bn of the £4.2bn spent on tourism in Scotland annually. 5 The food and drink industry in Scotland comprises in excess of 16,000 companies, ranging from famous global brands to small, speciality firms. It should however, be noted that small companies are the norm within the supply chain and only 1% of food supply chain businesses have more than 200 employees. 6
The Scottish Government has a National Food and Drink Policy which aims to promote Scotland's sustainable economic growth by ensuring that the Scottish Government's focus in relation to food and drink addresses quality, health and well-being, and environmental sustainability, recognising the need for access to affordable food for all.
4.2 Overview of Major Food Supply Chain Components
Almost all components of the food supply chain exist within the business community, rather than under public sector control, and are therefore subject to considerable variation in scale and approach. There is an extensive dependence on imported goods directly relating to the food supply chain, particularly cereals, fruit and vegetables along with other major products that impact the sector, particularly agri-chemicals and petroleum fuels and the supply chain for these is particularly complex.
4.2.1 Agriculture
Farming is the mainstay of Scotland's rural economy. It employs 67,000 people in Scotland, consumes £2 billion of resources and delivers £2.6 billion of outputs. It is particularly vital in areas of low population density where there are few other sources of employment and a decline in the strength of the agricultural economy could lead to further rural depopulation. Agricultural suppliers play a critical role in the economic well-being of many rural towns and villages and are critical in supporting farmers through the provision of fertilizers, seed stocks, agri-chemicals and machinery. Major suppliers include Harbro and WCF Ltd. The National Farmers Union Scotland is the main representative body for this sector.
4.2.2 Fishing and Aquaculture
Fishing and the farming of fish and shellfish, particularly farmed salmon, are critical to Scotland's coastal economy, particularly in the western and northern isles. Scotland is the largest producer of farmed salmon in the EU and the third largest producer in the world, behind Norway and Chile. The value of fish exports (including aquaculture) from Scotland is in excess of £420 million per year, accounting for 60 per cent of all food exports. The Scottish Fisherman's Federation, Scottish Whitefish Producers Association, Association of Scottish Shellfish Growers and the Scottish Salmon Producers Organisation are the sector's main representative bodies.
4.2.3 Livestock Markets
Livestock markets play a vital role in the link between the farmer and the consumer. Scotland's major livestock markets play a pivotal role and, as was seen during the recent Foot & Mouth outbreaks, are both vulnerable to disruption and are a vulnerability in themselves to Scotland's food supply chain. The Institute of Auctioneers and Appraisers in Scotland is the representative trade body for this sector.
4.2.4 Livestock and General Hauliers
The ability to move livestock, foodstuffs and processed foods by road between nodes in the food supply chain is clearly critical in ensuring the provision of food to retailer's shelves. Each year over 12 million tonnes of livestock/animal products are transported in Scotland along with over 21 million tonnes of other foodstuffs. Hauliers also play a critical role in the import and export of food and they move over 12 million tonnes of livestock and food in and out of Scotland each year. Recent interruptions in the supply of diesel and landslides closing important road routes have demonstrated potential vulnerabilities to this link in the chain. The Road Haulage Association in Scotland is the main representative trade body for this sector.
4.2.5 Primary and Secondary Processing & Packaging
The processing of agricultural and fish products into materials for further use or final consumption is a critical component in the food supply chain and a major contribtor to the Scottish economy. The sector employs 50,000 people in Scotland, most notably in Glasgow, Lanarkshire and the Grampian areas, and generates sales of over £7 billion. The industry is an important partner to farms, buying two-thirds of all agricultural produce. The Scottish Food & Drink Federation and Scotland Food & Drink are the main representative bodies.
4.2.6 Warehousing and Distribution
Cold War-era Government maintained stockpiles of critical foodstuffs and 'Intervention' warehouses storing overproduction stockpiles that once provided contingencies to cope with interruptions in the food supply chain, these are now largely a thing of the past. Food warehousing and distribution networks now utilise the 'just in time' approach used elsewhere in the commercial sector. Those food storage warehouses that do remain, particularly granaries, climate-controlled vegetable stores, chilled meat maturation warehouses and the distribution centres supporting food retailers and wholesalers are however, amongst the most critical resources that will be required to help mitigate the impact of an interruption to Scotland's food supply chain. There is no sole representative body for this diverse sector however, bodies such as the UK Warehousing Association (Scotland) provide sources for specialist information on their areas of expertise.
4.2.7 Wholesalers & Retailers
Food wholesalers and retailers provide the component of the food supply chain that members of the public most frequently interact with. Their storage facilities, distribution networks and retail outlets are critical in ensuring the maintenance of Scotland's food supplies and, in terms of timeliness, is the sector where a disruption in supply would have a rapid impact on the general public. Although the sector is large and diverse, it is dominated by wholesalers such as 3663, JB Foods and Brakes (who sell into the catering trade eg hotels, hospitals, prisons, cafes etc), the major supermarket chains and chains of smaller food retailers. Of particular note are Scottish based chains, including the Scotmid Cooperative (whose supply chain is managed by the National Cooperative Society based in Manchester), Farmfoods and CJ Lang & Sons Ltd who are distributors for the SPAR stores in Scotland. The main representative bodies are, for larger companies, the Scottish Retail Consortium and, for smaller retailers, the Scottish Grocers Federation.
4.2.8 Catering & Hospitality Businesses
The hospitality sector is wholly dependent on a reliable food supply chain. Its diversity ranges from lone traders operating B&B accommodation through to large hotels chains and from 'burger vans' to world-class restaurants. Visit Scotland maintains excellent links across this sector and trade bodies, including the Institute of Hospitality and the Scottish Licensed Trade Association, provide a means of communicating with this sector.
4.2.9 Domestic Consumers
The final link in almost all food supply chains is the domestic consumer. This element is subject to the greatest variation and the weakest Government control. All households across Scotland store, prepare, cook and consume foodstuffs. They are dependant on electricity and gas supplies for refrigeration, cooking, heating and lighting and on water supplies for food preparation and hygiene. Failure of any one of these utilities will have an immediate impact on the general public and, if the breakdown is prolonged or widespread, immediately threatens health and public order. Communication with this group is provided through the mass media, TV and radio and procedures are well established within Government civil contingency plans, in particular by the National Steering Committee on Warning & Informing the Public ( NSCWIP), for making use of these means to provide information, advice and direction.
4.3 Overview of Indirect Food Supply Chain Components
In addition to the direct components of the food supply chain, there is a range of critical indirect components that have the potential to impact normal operations within the food supply chain.
4.3.1 Gas, Electricity and Water Suppliers
All links in the food supply chain are highly dependent on reliable gas, electricity and water supplies. Prolonged interruptions in supply would impact all the way from farmers being unable to mechanically milk dairy cattle and poultry asphyxiating in rearing houses when forced-air ventilation fails, through manufacturers being unable to process foodstuffs into consumables, frozen and refrigerated items becoming unfit for consumption, retailers being unable to operate point of sales tills, through to domestic consumers being unable to prepare their food at home.
Whilst some critical infrastructure has back up generators, most of these would start to fail within 1-2 days as their fuel supplies were consumed. As petroleum fuel storage, pumping and retail sites are also dependant to a large degree on reliable electricity supplies, the impact of a large-scale failure in supply would be immediate and severe. Recent experiences in California and Central Europe have demonstrated that the domestic gas and electricity supply networks in developed countries are not as robust as previously assumed. Extensive research, including that conducted by the National Infrastructure Security Coordination Centre, has already been done in this area and is therefore outside the scope of further examination in this project.
4.3.2 Petroleum Fuel Distributors and Retailers
Recent nationwide fuel protests, industrial action at Grangemouth and conflict in oil producing regions has demonstrated that there is a significant likelihood and severe consequence to interruption of the petroleum supply network. As all logistic links in the food supply chain are almost exclusively dependent on road haulage, the diesel supply infrastructure is critical to its continued operation. Extensive research and planning, including the development of the Downstream Oil Emergency Response Plan, has also already been done in this area. The impact of disruption in this area is specifically examined in one of the project's scenarios.
4.3.3 Telecommunications and IT Services
The Scottish economy is also dependent on the continued operation of its telecommunications and IT services infrastructure. This infrastructure is particularly vulnerable to deliberate attack and would to a large extent also be an immediate victim of a prolonged and widespread failure in the electricity supply. Extensive research, including that conducted by the National Infrastructure Security Coordination Centre, has also already been done in this area and is therefore outside the scope of further examination in this project.
4.3.4 Transport Infrastructure
The food supply chain is highly dependant on the continued availability of the road, rail and ferry network and, to a lesser extent, rail and aviation services. Scotland's food supply chain is particularly vulnerable to disruption by prolonged severe weather events to a relatively small number of transport links most notably: cross-border routes; M8, A90 and A9 roads; and bridges over the River Forth. Transport Scotland is the Government agency responsible for ensuring the continued availability of this infrastructure and would be critical to maintaining its continued operation, along with other important stakeholders including Caledonian MacBrayne and Northlink Ferries. Island communities are particularly vulnerable to transport infrastructure problems disrupting the food supply chain and therefore the impact of such disruption is specifically examined in one of the project's scenarios.
4.3 Food Supply Chains 7
The first objective of the project as specified by the Project Steering Group was to provide a detailed mapping of the food supply chain in Scotland. This would allow RABS-Food to have a full understanding of the component parts of the food supply chain, its inter-relationships and dependencies. It would also provide a list of key contacts that could be called upon to provide information or support should a disruption in the food supply chain require management by RABS-Food.
4.3.1 Task 2 - Determine the Food Supply Chains to be Mapped
The Project Steering Group and the Project Team discussed the approach and methodology at the kick-off meeting. This included agreeing what supply chains were to be mapped. This list was subsequently validated and agreed by RABS-Food as follows:
- Dairy Products
- Soft Fruit
- Potatoes
- Fruit & Vegetables (excluding Soft Fruit & Potatoes)
- Milling Wheat
- Sugar, Rice and Other Cereals
- Red Meat
- Poultry Meat
- Pig Meat
- Eggs
- Farmed Fish & Farmed Shellfish
- Wild Fish and Wild Caught Shellfish
4.3.2 Tasks 3, 4 and 12 - Map and Validate the Food Supply Chains
Over a period of months the Project Team gathered evidence to determine the components of each supply chain, what inter-relationships existed and the key inputs that impacted the food supply chain. This information was subsequently validated by the Project Team, subject matter experts in AEA and SAC and then externally validated by the members of RABS-Food.
The scale of data captured was of such a scale that early on it was identified that a pictorial method of representing the data would be necessary. This approach was agreed by the Project Steering Group and RABS-Food at the meeting on 30 th October 2008.
A web based GIS tool was developed to fulfil this requirement and will be hosted by AEA on the Internet for a period of 2 years after the submission of this report. After this period elapses the timeliness of the data will have reduced and its quality will therefore decline accordingly. RERAD is requested to determine what they wish to do to maintain this facility after this period expires.
The food supply chain mapping diagrams can be found in Appendix 2 of this report. Contact and location information relating to components of the food supply chains can be found in Appendix 3 of this report.
4.3.3 Tasks 13 and 14 - Identification of Key Contacts and Organisations
Throughout the project the Project Team identified a series of contacts, both within the food supply chain and external to it, which would be key to managing major disruptions to the food supply chain. This list and their contact details can be found in Appendix 1 of this report.
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