Martin Collison

An Agri-Food Sector Plan for Greater Lincolnshire

A modern industry in a changing World

30th June 2014

Collison& Associates Limited

Questions to address:

What are the prospects for agri-food in the context of a globalised economy and growing World population?

How important is agri-food to Greater Lincolnshire's economy?

What are the strengths and weaknesses of the Greater Lincolnshire agri-food sector?

How can we grow and strengthen the agri-food sector in Greater Lincolnshire?

Putting food

security into

context

Increased demand

45% by 2030 (IEA)

Energy

WaterIncreased demand

30% by 2030

(IFPRI)

FoodIncreased demand

50% by 2030

(FAO)

Climate

Change

1. Increasing population

2. Increasing

urbanisation

3. The rightful goal to

alleviate poverty

4. Climate Change

Professor Sir John Beddington

alerted us to… the “Perfect Storm…”

The Global Food Challenge

• Global population projected to grow 36% by 2050

• Land is being lost to urbanisation & due to climate change– Resources are becoming more limited and expensive: globally 75%

of freshwater is used for agriculture, under 2% in the UK

– Nutrients in short supply and expensive

• Climate change– UK will be affected, but other areas at more risk e.g. Spain

• Increasing wealth and changing diets– Global ‘middle class’ will treble over the period 2000-’30 to 3bn,

more consumers with choice will demand more added value foods

– Potential to export food products or knowledge & IP

Pressure to increase yield & output in

areas suited to production (e.g. Lincolnshire)

Global Challenge and OpportunityThe global challenge is very complex & includes the following issues:

• Demand: rising population & wealth, dietary change, health impacts of food choices, animal welfare, QA systems (UK global leader), by product use for food, energy, nutrient recovery

• Trade – growth in trade is a long term trend in the food sector, food and drink and/or technology and inputs

• Supply – where will food supplies come from, what will be supplied, who will be supplying it

• Sustainability – energy, water, waste, land use change, climate change and environmental footprints

These challenges demand improved skills, applied research, innovation, enhanced data capture and processing capability to deliver Sustainable Intensification or ‘More Knowledge per Hectare’ (Prof. Allan Buckwell et al, 2014)

Constraints on World Ag Production

40% too dry 21% too wet 21% too cold 6% terrain too rough 2% unsuitable soil

The jury is out, but climate change may make it even more challenging & parts of the World, such as Lincolnshire, with good soil & climate will grow in importance

Grain Yields Around the World

Modern Efficient Production e.g. Yield is Critical- we have fed the World by increasing yield

• Remember global population 2050 +36%

• FAO concluded $83bn needs to be invested annually in LDCs to feed the 2050 World - yield growth is the most important focus

• If we don’t increase yield we convert more natural land to agriculture with big impacts on carbon emissions & biodiversity

Factor 1990 2000 2010 20 year trend

Population Bn 5.27 6.06 6.89 +31%

Crop area MHa 601 587 618 +3%

Average Yield t/ha 3.0 3.3 3.8 +28%

Output million tonnes 1,803 1,941 2,379 +32%

Sample of crops: Barley, Maize, Oilseed Rape, Rice & Wheat (FAO 2011)

Lincolnshire & the UK

Importance of Food in the UK Economy

The Inverted IcebergFood sector GVA £92bn

Catering23%

Food Retail 26%

Food processing & wholesale 37%

Other e.g. input suppliers4%

Agriculture & fishing 10%

For Every £1 of GVA in agriculture there is:

A further £4 in food processing and logistics

&

A further £5 in food retail & catering

Defra (2013) Agriculture in the UK 2012

The Food Chain in Greater Lincolnshire

The food chain is more important in Greater Lincolnshire than the UK economy as a whole

The Greater Lincolnshire Agri-food sector has:

• 101,000 employees (24% of the workforce), of whom:– 56,000 are in the supply chain;

– 45,000 in retail & catering;

• A GVA of £3.4bn (21% of the economy)– £2.6bn in the supply chain

– £0.8bn in retail & catering;

• 10% of total English agricultural output (7% of the UK total) and a GVA of over £0.45bn

NB – data for all part of the food chain is not routinely produced at county/unitary level and the figures are thus best estimates based on collated data from the census, DEFRA, SSC and industry sources

Brands & Big Business50+UK or global leaders (UK HQ, major plant, R&D or £50m+ turnover):

2 Sisters Food Group

Doubleday Group Househam Sprayers Moy Park Tayto Group

ACST Logistics Fastnet Fish Ltd HSH Coldstores Norbert Dentressangle

TH Clements and Sons

Bakkavor Fowler Welch Icelandic Group UK Openfield Tong Peal Engineering

Bernard Matthews Freshlinc Logistics Kerry Group Plc Paragon Print & Packaging

Total Produce Plc

Branston Freshtime Prepared Vegetables

Limagrain UK Pipers Crisps Ultimate Packaging

Chandlers Farm Equipment

Frontier Lincolnshire Co-operative

Princes Prepared Foods

Univeg UK

Cherry Valley Georg Bateman & Son

Lincolnshire Field Products

Produce World Woldmarsh

Country Style Foods Gleadell Agriculture M&W Mack QV Foods Yara

Dalehead Foods Greencore McCain Foods (GB) Sleaford Quality Foods

Yearsley Group

Daniels Group Holbeach MarshCo-operative

Morrisons (fish processing)

Staples Vegetables Youngs Seafood

High value jobs – estimated GVA per employee in the food chain

Sector Estimated GVA per employee £(DEFRA 2013)

Agriculture 30,500 (GLLEP)18,000 (UK)

Food processors 65,000

Food wholesalers 47,000

Haulage 40,000

Catering 16,600

Food retail 20,900

NB Nationally 28% of road haulage relates to the food chain (DfT freight statistics)

UK Food Sector TrajectoryGrowth:• GVA dominated by 3 sectors: food processing; food retail & catering

• But the largest increase in GVA in the last 7 years has been in agriculture where GVA has grown 75% since 2006

• Food processing GVA has also grown by 20%

• Food retailing has grown & catering after a fall (2008-10) has recovered strongly & its GVA will exceed food retailing this year

• UK food exports have grown for 9 consecutive years (‘04-’13), now worth over £18bn (up over 70% since 2004)

• New product development in the food sector was the highest ever in 2012 with 8,500 new UK product launches

• R&D spending is increasing in the UK and globally as business and governments respond to growing food demand

Key trends are more highly processed foods, eating out & trade

Lincolnshire response

Lincolnshire Food Sector Strengths & WeaknessesStrengths Weaknesses

Scale and critical mass Lack of strategic plan for the sector – the sector plan tries to address this

Strong agricultural base Reliant on migrant labour, local skills gaps and not attracting UK young people

Soils and climate Freight transit times poor and unreliable

UK HQ of many major companies Under-developed R&D base & high levelskills provision for the size of industry

Skills cluster in the industry creates a dynamic labour market

UK: low levels of investment in automation compared to D, NL etc.

Low business property costs Water supply challenges may affect production potential

UK’s largest port, strong logistics sector Food grade industrial space is limited

Cluster of other support businesses e.g.packaging

Some clusters based on historic strengths which are now less significant

GLLEP Agri-food Sector Plan Vision

The Greater Lincolnshire agri-food sector will double its contribution to the economy by 2030 through an ambitious programme of investment in productive capacity, skills & knowledge to drive an increase in high value added sales to UK and export markets

By 2020:

• Reinforce its position as the national centre for commercial investment in high value agri-food production in sectors including fresh produce, fish and poultry;

• Adopt new technology & skills to deliver new product development, productivity & sustainability gains with a target to increase per employee GVA +25% by 2020;

• Grow sector output by 30% through import substitution and export led growth.

By 2030:

• Double sector output & GVA by focusing on high value added food & drink;

• Increase employment by over 10% & GVA per employee by over 75% by increasing the use of technology & higher level skills;

• Exploit direct motorway links to the Midlands, London and the South East to replace 10% of UK manufactured food imports with Lincolnshire produce;

• Treble exports of food and drink from the GLLEP area by building on the area’s ports to service priority markets in Northern Europe and emerging economies.

GLLEP Agri-food Sector Plan

Priority Actions

1. Develop industry representation, map the industry & engage larger employers

2. Build on clusters where the GLLEP area is nationally very strong to facilitate growth (fresh produce, fish, poultry)

3. Develop a sector skills plan (through the Lincolnshire & Rutland ESB) & secure additional applied research funding with GLLEP agri-food companies

4. Develop & implement a 25year water plan & Centre for Water Management –2015/16 following some current research work supported by the LEP

5. Build an economic case for investment in strategic transport infrastructure – LEP

wide process starting later in 2014 and building on the work all LEPs are doing on growth plans

6. Promote exports & inward investment into the agri-food sector in the GLLEP area – part of LEP wide process for key sectors

Back to our ‘Questions to Address’, suggested answers:

What are the prospects for agri-food in the context of a globalised economy and growing World population?

Increased demand

Changing diets and more wealthy consumers

But major resource constraints

How important is agri-food to Greater Lincolnshire's economy?

Largest employment sector and GVA contributor

High value jobs and growing

What are the strengths & weaknesses of the Greater Lincolnshire sector?

Depth and breadth of the commercial sector

But needs more support for R&D, skill training and infrastructure investment

How can we grow & strengthen the agri-food sector in Greater Lincolnshire?

Ensure policies responds to industry support needs

Invest in skills, applied R&D, water and transport infrastructure

Focus on UK and export markets and encourage inward investment

Questions & Discussion

Thank you