Positive Response to SAOS Proposals to Align Farming Policy with Supply Chains

SAOS received positive responses from both the Scottish and UK Governments to proposals for stronger alignment of farming and supply chain policy and strategy after the UK leaves the EU. If adopted, co-operation, collaboration and innovation would be incentivised in farming and supply chains, helping to improve market responsiveness and increase competitiveness. The proposals were sent to Scottish Government ministers Fergus Ewing MSP, Cabinet Secretary for the Rural Economy and Connectivity; Mike Russell MSP, Minister for UK Negotiations on Scotland’s Place in Europe; David Mundell MP, Secretary of State for Scotland; and George Eustice MP, Minister of State at the Department for Environment, Food and Rural Affairs.

James Graham, SAOS Chief Executive, said: “The prospect of a new agriculture policy provides an excellent opportunity to correct some of the things that we feel have constrained the expansion of co-operation across more of Scotland’s farming. It is clear in the responses from government Ministers, and in follow-up discussions, that our vision of better-organised farmers working together to meet the supply chain and drive farm innovation is being fully considered, along with the policy measures that would generate the kind of changes that are required.” Some of the most important proposals are detailed below. The full text of SAOS’ submission to the Scottish Government can be viewed here: Leaving the EU – Submission of Views to Scottish Government .

Incentivising Innovation and Co-operation
SAOS has proposed that agriculture policy should provide for funding to Producer Organisations across all sectors of agriculture to support innovation programmes. This method of stimulating innovation has been used to good effect in the fruit and vegetable sectors, leading to the introduction of new farming systems and supply chain processes. Approved ‘operational programmes’ designed by each PO attract grant at a rate of either 50%, or equivalent to 4.1%, of the value of marketed produce. James Graham states: “This sets a precedent and exemplar for how to channel and target grant funds to agriculture in future.”

A Legal Right for Farmers to Negotiate Collectively
A legally-backed obligation should be introduced on large scale buyers of farm crops and livestock to recognise the right of farmers to negotiate terms collectively with them, when organised in appropriate forms of producer organisation or co-operative. The possibility of farmers collectively and co-operatively negotiating with buyers has been denied in important sectors where there is imbalance in negotiating positions, closing off opportunities for fairer terms and increased transparency. According to James Graham: “The absence of a legally-backed obligation is acting as a constraint to supply chain improvements. This might be achieved by extending the role of the Groceries Code Adjudicator to the trading relationships between farmers and large scale buyers, backed by powers to review and impose sanction where poor practice is found to be evident.”

Link Capital Grants with Supply Chain Improvement
An obligation to engage in supply chain improvement programmes including the primary sector should be a condition of all grant awards where Scottish primary produce is to be used in the resulting plant and processes. James Graham continues: “This would enhance the alignment of strategy amongst the primary and food manufacturing sectors. Every supply chain improvement programme we have facilitated has yielded commercial benefits for all involved. We need to encourage more.” The current SRDP Food Processing, Marketing and Co-operation Grant scheme enables critically important investment to proceed, helping to mitigate investment risk and reduce investment pay-back times.

Co-operate for Farm Resilience
Expert knowledge and facilitation should be available to continue innovation for greater farming resilience through co-operation. According to James Graham: “Agricultural co-operation delivers opportunities for risk management and enhanced farm resilience in a wide variety of ways. Within a single co-op, farmers may currently access ‘futures’ contracts (in some products), participate in long-term customer contracts, accumulate mutually held funds to use in volatile price cycles, participate in supply chain improvement programmes, identify and develop new markets, manage harvest risks, introduce innovation on farm, forward purchase inputs and diversify. Through co-operation, we have the foundations on which to build more sophisticated risk management systems.”