“The food and drink manufacturing sector employs over 40,000 people in the South West. Despite its relatively small size, in terms of employment, the sector provides a greater contribution to the region's GDP than found at the national level. Overall employment in the manufacture of food and drink is set to decline over the next few years as a result of technological development and automation in food processing and packaging. This development has increased demand for level 3 skills in supervisory and managerial occupations but progression into these roles from level 2 has generally been poor. In contrast, the number of small specialist manufacturers is expected to increase as niche markets, such as specialist cheeses and locally produced organic foods, are exploited and the level (and scope) of skills required for these jobs increase. Despite reductions in the number employed within the sector, higher level skills are becoming increasingly important to sustain productivity. In particular, the number of science and technology professionals, business associate professionals and sales occupations are all projected to increase in line with specialisation in production but diversification in job roles. In addition, it is estimated that a third of the existing workforce are aged over 45 and so demand for replacement is moderate." (ECOTEC, 2001)
The food and drink sector is a major UK industry whatever the definition. The industry’s contribution (manufacturing activity) to GDP has risen from less than £13 bn to around £19 bn in 2001. Employment (including some related jobs) is estimated at around 909,000 at the end of 2000 (around 512,000 if occupations exclusively in retailing are excluded).
It is somewhat difficult to estimate exactly the dimensions of a ‘food and drink’ sector for the South West industry, because it ranges from abbatoirs to seafishing, taking in milk delivery and restaurants on the way. The SWRDA definition suggests an industry employing 91,200 people (in 1997) (representing 11% of those employed in the sector across Great Britain), 5% of total employment in the region in around 2,650 firms (NOTE THESE STATS ARE DIFFERENT TO THOSE IN THE FIRST PARA OF THE INDUSTRY SECTION ABOVE – highlights the reported difficulty in defining the sector). The Skills Dialogue for the sector suggests employment of around 44,000 people in ‘Food, Drink and Tobacco’ using an IER estimate but excludes retail operations in this count. 54% are involved in land-based activities and 46% in manufacturing and processing.
What are the primary forces driving the industry – those which affect employment levels and skill needs? Examples are;
A range of common themes can be discerned:
The employment consequences of these changes are broadly:
Within food manufacture, the South West has a relative specialism in:
Potential changes include:
In the future innovative approaches are needed to enable owner managers and people working in small firms to have access to training. Computer based learning may play a significant role as it is often too difficult for small businesses to release staff for off-the job training. However, current access to technology and conversance with using it, is too limited.
The production / manufacturing sub-sector of the Food and Drink industry accounts for a substantial proportion of the UK’s exports, mostly in the form of value-added processed products (though the current strength of sterling has reduced commodity exports recently). Whilst employment is falling in agriculture and manufacturing as a consequence of technical innovation, it is increasing in the higher value-added and service side of the sector. This is also an area where employment is rising.
There needs to be better transference of technology, particularly to small and medium sized enterprises and the identification of processes from other manufacturing sectors, which may have value in the food sector. Better infrastructure is needed between primary research and the market and new ways of interacting with customers, for example, selling over the Internet and farmers markets where farmers can sell direct to consumers.
The South West has a solid base of large innovative Food and Drink manufacturers (with the likes of Cadbury Ltd in Bristol and Ginsters in Cornwall) which have seen increasing employment in recent years. These manufacturers are seeking to remain at the forefront of technology and innovation. Smaller Food and Drink companies may have greater difficulties in keeping up with the competition and need to increase their customer base by using internet shopping, or moving into organic produce and, where suitable, diversifying into new products and services. Help will also be required for suitable co-operative ventures to prevent further erosion of this sector on which the South West is reliant and enable producers to spread both the risk and cost of new ventures and take advantage of economies of scale. Such co-operatives are already evident in the region (e.g. Torridge Vale creamery in Devon) and may provide a template for other to follow. The RDA has a role to play in encouraging farmers to come together to form co-operatives and perhaps facilitate their creation, perhaps through initiatives like SWARD (South West Agricultural and Rural Development Project) which seeks to disseminate best practice and information on a variety of agricultural related subjects.
The longer term outlook may offer some new opportunities for the region as growth in agricultural biotechnology is likely to continue, driven by new environmental biotech. Advances in biomass and food preservation techniques are likely to be growth areas along with bioremediation of air, water soil etc. i.e. the use of living organisms to remove dangerous pollutants and hazardous waste. The applications of biotechnology in agriculture are many in number. Advances are likely, for instance in the engineering of new types of crops which are resistant to disease and pests or which can adapt to unfavourable land conditions. Other advances are possible in animal husbandry with the introduction of genetically modified animals that grow faster than normal livestock. There are also links from agri-biotech into pharmaceuticals with fields of research devoted to producing animals which themselves produce pharmaceutical products or medicines.
Definition: The food and drink sector is a large one which includes 47 individual activities as defined by the Standard Industrial Classification (SIC) codes. Broadly, the sector can be divided into two separate sub-sectors - land-based activities and food processing and manufacturing:
(i) the land-based sector
- agriculture (crops and livestock)
- the equine industry
- fisheries management
- fish farming
- game conservation
- horticultural production
Land based activities also include environmental conservation, countryside recreation, game conservation, the landscape industry and turf culture, but these activities are not clearly identifiable from the SIC codes available.
(ii) all types of manufacture and processing of food and drink products.
The sector therefore covers a wide range of diverse activities with varying requirements and pressures. The food and drink sector also has a number of important linkages to other sectors. For example, the food and drink industry is a major customer for the packaging industry (e.g. Pacific Packaging and Davis S. Smith in Bristol), while tourism is an important customer for food and drink in the region. While these activities are not directly discussed in this paper, the importance of these linkages should not be underestimated.
The characteristics of the food and drink sector in the South West are in large part determined by the region’s geography e.g. the diary sector benefits from its wetter, west coast location. Tourism is also an important driver for the food and drink sector with the region’s many seaside and rural locations boosting craft industries in niche sectors and speciality foods.
Key issues that need to be addressed to foster the development of the food and drink industry in the South West, identified through consultations and literature review can be divided into strengths, weaknesses, opportunities and threats:
The figure below summarises the overall competitive position of the food and drink sector in the South West:
|Well Structured Local Firms with Robust Strategies & Strong Rivalry|
|Resources or Factor Strengths, Physical and Human||• Highly fragmented industry, many small firms, limited interaction between them
• Intense competition usually on the basis of price and quality
|Sophisticated, Demanding Customers in Easy Reach with Increasing Requirements and Funds to Satisfy Them|
|• High quality environment for farming
• Weakness in IT, communications and management skills
|• Strong brand images (but many different local initiatives)
• Increasingly demanding customers, seeking higher quality
• Constant demand for new product development and improved production techniques
|Internationally Competitive: Supporting and Related Industries and Institutions|
|• Struggling to achieve price competitiveness in traditional markets
• Fragmented, widely dispersed industry discourages networking and joint action
• Strong HE/FE base with food and drink specialisms
|Summary: Sector has mixed prospects, facing continuing decline of agricultural sector and growth potential of the food processing sector. Sector must adapt to market changes by focusing on the development of higher value added food processing activities.|
Specific actions which the RDA could take as identified through the consultations are as follows: