Trends, Issues & Drivers and their Significance for the Northwest Region

Future sustainable growth in the food and drink sector will be determined by the ability of businesses to meet changing market demands and opportunities.  Growth will also be influenced by changes in other factors. A particular issue is the reduction in the historic level of CAP subsidies for agricultural businesses.  It is recognised that some trends are contrary to others, for example increasing automation has led to a change of emphasis from craft skills to high technology skills.

The trends, issues and drivers identified present a large number of opportunities and challenges to the food and drink sector in the Northwest.  Clearly it is important to focus on those opportunities and challenges which are most relevant and where the greatest impacts can be made.  Doing so will make best use of the resources available to facilitate change.  In determining the strategic priorities there is a need for balance to reflect the diverse nature of both the region and the food and drink sector.

The supporting facts and figures will be found in either the Key Facts and Figures section or in Annex 1.

Changes in Consumer Demands

 

The changing demands provide opportunities for companies of all sizes which are focussed on providing premium foods especially those with a strong regional identity.  The Northwest can build on the strong local brands which have already been established.  There is an opportunity to increase organic food production in the region to meet demand more effectively.  There is a particular opportunity for companies providing food from the strong multicultural base in the region to become mainstream food companies.  

For food companies supplying the high volume end of the market the challenge will be to move to more flexible production methods with increased automation.  It is important for them to increase their flexibility to cope with increasing the product diversity required to react to the changes in consumer demands.  The Northwest has a significant number of such companies and there is an opportunity to embed them within the region by encouraging them to carry out their R&D and process innovation activities in the Northwest.

Consumer demands linked to the implications of health and globalisation need to inform and drive the whole of the food supply chain in the Northwest.

Health Aspects of Food

There is clear opportunity to improve the health of the population of the Northwest through better food and nutrition as the region has some of the highest levels of diet related ill health in the country, with resulting economic and social impacts.  Achieving the health dividend presents an opportunity for the food sector.  More specifically this will involve improving access to healthier foods, eg in schools, other settings and for disadvantaged and vulnerable groups, improving education and awareness of nutritional values, improving food safety, eg HACCP and in particular traceability, and improving health and safety in the workplace, eg food processing and agriculture.  Community food projects have a role to play in ensuring supply of foods for a healthy diet, particularly to disadvantaged areas and communities.

Biotechnology, biomedical science, new product development and other innovation expertise in the region could be used to develop food with positive health benefits.

Wider issues such as clearer labelling and food hygiene are best dealt with at a national level, although it is important that the Northwest participates in the development of new policies and the dissemination of best practice.

 

Demand for more Premium Food
Increased readiness of a significant segment of population to purchase premium food (including healthier convenience foods and foods with positive health benefits)

Provision of a better quality tourism product

Again the changing demands provide opportunities for companies of all sizes which are focussed on providing premium foods including those with a strong regional identity.  The Northwest can build on the strong local brands which have already been established.  For food companies supplying the high volume end of the market the challenge will be to move to more flexible production methods with increased automation.

There is a clear opportunity for cooperation with the growing tourism sector in the region to produce more tailored foods to match the different tourism “product” in the five sub-regions of the Northwest.  This will improve the awareness of the quality food which is available across the region and increase the sales of quality food from local sources.  There is also an opportunity to improve food exports by targeting the countries of origin of visitors to the Northwest.

 

Food Offering Good Value for Money

The emphasis will need to be on supply chain development to take out costs so as to maintain or grow the market share of producers within the Northwest.  There is a strong link to improving the health of the population through better food, so good value for money must also take into account the health aspects of food and there must also be an increase in awareness of the benefits of eating healthier food.

The size of the public sector in and accessible to the Northwest provides opportunities for food companies, building on the current public procurement initiative.  This should enable food businesses of all sizes to compete and to provide both value for money and sustainability.

 

Globalisation

The regional strength in food processing should lead to the positive rationalisation of the larger food companies in the region with the aid of pro-active business support.  There should be an emphasis on adding value which will come from encouraging innovation in products, processes and business models.  It is vital to encourage the future growth of companies in the region rather than elsewhere.  This is made easier when the decision making and R&D activities of the company take place in the Northwest.  It is also important that smaller companies understand and exploit the opportunities presented by a global market place and that they also take into account the threats.

The Northwest already has some strong exporters of food and more companies in the sector with export potential should be encouraged to look at the opportunities.  These include exporting products, processes and services to new growth markets.  The multicultural strengths of the region should be used to identify particular countries with export opportunities and synergy with the Northwest.

 

Multicultural Society

The multicultural spread within the population of the Northwest not only provides both demand for a wide variety of food but also the opportunity to develop new enterprises for novel products and food service operations.  The impact of recent EU expansion has had a major effect on the multicultural spread of the Northwest.

 

Technology Development

The emphasis on technology development should focus on the strengths within the region in automation/robotics, general manufacturing, water treatment, recycling and energy efficiency.  Food manufacturing and agricultural businesses should be encouraged to achieve the sustainability targets set out in the Food Industry Sustainability Strategy (2006).  These targets should be converted into opportunities for increasing the competitiveness of food businesses.  

There should be collaboration with the logistics sector to develop more efficient distribution within the food supply chain and to roll out best practice to smaller companies.

 

Business Innovation

There is scope for businesses to improve their productivity by adopting new business processes and in maximising the potential of ICT.  More food businesses need to develop from “supplying a product” to “providing a service” in order to strengthen their relationships with their customers.  The Northwest has fewer firms and lower rates of firm formation than the average for England and the food and drink sector provides good opportunities to improve this performance.

 

Skilled Workforce

Steps need to be taken to ensure that the changing skills needs across the entire food sector are met and that training is delivered in the most appropriate ways.  The Sector Skills and Productivity Alliance for Food in the Northwest will provide the mechanism for coordinating targeted training provision across the sector.  It needs to engage with all of the relevant national sector skills councils; Improve , LANTRA and People 1st .

 The image of the industry needs to be improved to encourage new entrants and this should be linked to improving the value of jobs within the industry.

The Northwest has a high proportion of economical inactivity and the food and drink sector needs to be integrated into wider policies to reduce worklessness.  At the same time, food businesses need to be encouraged to adopt more flexible work practices in order to be more economically inclusive. 

“Food Miles”

The issue of food miles is complex but there is a clear need to improve the logistics for the food and drink sector to reduce congestion in urban areas and major trunk routes, to improve access for both producers and consumers in rural areas and to reduce the impact on the environment.  The current demand for locally produced foods could be used to explore the use of all transport systems, links with other industries and back fill of transport vehicles.

 

CAP Reform

Support for farm businesses will be delivered by Business Link from April 2007.  Awareness of the implications of the changes to the Single Payment Scheme is relatively low in the Northwest and needs to be raised.  Particular emphasis needs to be given to the lagging rural areas identified in the RES.  The issues of landscape management and cultural heritage are strongly linked to the tourism sector and the quality of life.  Specific actions need to be part of the tourism and quality of life strategies for the region.

 

Environment, Sustainability and Legislation

 The Food sector impacts on the environment in several ways:

The Northwest faces a particular challenge in terms of the quantity of waste materials that are produced.  Mixed food waste is a particular problem and represents a valuable resource which currently mainly goes to landfill.  At the same time energy costs are increasing.  There is still the opportunity for further improvements in the quality of water courses.  Food businesses should therefore be encouraged to improve their competitiveness by being more energy and resource efficient, by looking at new ways to convert their waste streams into material with a market value and to improve the quality of their waste water discharges.  There is scope for agricultural businesses to improve their environmental impact in particular the ammonia emissions from the large dairy sector in the region.  The Food Industry Sustainability Strategy sets targets for the UK and these need to be adapted to set challenging yet realistic targets for the Northwest.  The strong environmental technologies and energy sectors in the region should be used to help the food and drink sector achieve these targets.  

There is also the potential for agricultural businesses to move into producing non-food crops, especially those that will reduce the environmental impact of the wider food sector, eg crops for bio-diesel, starch for packaging products etc.

 

Image

The image of the sector will be improved by improved working conditions, increasing the emphasis on high value jobs, and increasing the emphasis on healthier and premium products building on existing brands.  This will lead to the encouragement of new entrants into the industry, improving the value of jobs, improving the perception of the region as centre of quality food with strong brands and improving inward investment, especially re-investment.  There is an opportunity to position food in a more positive way to help maximise the benefits of cultural and other major events and to develop the quality of the visitor experience.

 

Priorities

The 2006 RES highlights the importance of improving productivity and developing the market to increase GVA, whilst ensuring that growth is sustainable and that the size and capability of the workforce also increases.

Priorities for the Food and Drink sector therefore need to fit clearly with achieving this growth and in particular supporting the RES Transformational Actions.  From the above analysis of Trends, Issues & Drivers and their Significance for the Northwest Region six main priorities have been identified.  For all the priorities it is important that businesses at all levels within the food sector focus on satisfying consumer needs.

The six priorities are all interrelated and there is some overlap between them.  These overlaps will need to be carefully considered when the Action Plan to deliver the strategy is developed. 

Actions will need to be cross linked to the priorities for the Northwest in other strategies for Tourism, Health, Landscape management and Non-Food Crops.  There is a clear need for working with the plethora of national initiatives to maximise the benefits to Northwest businesses.

 

The six main priorities will be:-

 

Market Development

To develop value added activities to meet the changing consumer and supplier demands.

 

Productivity and Skills

To increase the productivity of food businesses across the region by enhanced collaboration with science and technology, education and training and to meet their future needs by providing a skilled workforce.

 

Healthier Food

To improve the provision of and access to healthier food for all sections of society in the Northwest.

 

Environmental Opportunities

To identify and promote the benefits to business of achieving environmental sustainability.

 

Strategy for Sustainable Farming and Food (SSFF)

To promote a prosperous sustainable farming and food sector that contributes to the environment and social well being of the region.

 

Image

To promote a positive image of the Food and Drink sector and its contribution to the image of the Northwest as a good place to be.

Table 1 (in the Annex) shows how the priorities for the Food and Drink sector support the RES Actions.

 

Rationalisation of support structures   

To deliver the Northwest Food and Drink Strategy a robust support structure is needed.  It is essential that this is fully integrated with the new Business Link which will form the front line of direct support through its Information, Diagnostics and Brokerage service.  In recent years a number of support organisations have been set up, generally to provide support services to a sub-set of the Food and Drink sector.  This proliferation of organisations produces confusion for food businesses and duplication of effort.

A new merged support organisation will therefore be created which will bring together the activities of the existing organisations.  This will achieve a single point of contact, a consistent message and by reducing overheads more resources will be available for activities which will benefit food companies.  The new organisation will take over the delivery of the NWDA Cluster development programme from the Northwest Food Alliance and will play a leading role in the food sector SSPA.  It will continue to support the regional and speciality food businesses which are currently provided for by the North West Fantastic Food Partnership which includes the regional and sub-regional partner organisations.  The new organisation will be mainly strategic with a strong emphasis on; networking, ensuring appropriate skills provision, ensuring that food business are linked to the regional knowledge base to maximise innovation and improving the image of the sector.  Some specialist delivery services may be retained where these fit with the new Business Link model.

 

Action Plan

The new support organisation will have the responsibility for developing the detailed action plan to deliver the Northwest Food and Drink Strategy.  The Action Plan will be for the sector and will form the basis of the Business Plan for the new organisation.  The Action Plan will need to show how each action contributes to the six main priorities.  Each action will have; measurable outputs and outcomes, the timescale for delivery, the organisations involved including which organisation will lead and the RES Action(s) which the action will support.  It is expected that an outline Action Plan should be completed by November 2006 (subject to progress in setting up the new organisation).  A full Action Plan needs to be completed no later than March 2007.

The new organisation will also have the responsibility of monitoring the delivery of the Action Plan and preparing an annual progress report.  The section below covers the indicators which will be monitored.  The lead organisation for each action will be responsible for reporting the specific outputs and outcomes to the new organisation for collation into the progress report.  This will be particularly important in 2008 as a contribution to the next review of the Northwest RES.

The new organisation will also review and update the Action Plan on an annual basis, preferably in the period between October and December to inform their annual Business Plan.  The other lead organisations will also be involved in the review and updating process.

 

Outputs and Outcomes

It is vital in turning the Northwest Food and Drink Strategy into reality that we have a shared view on what success will look like and that the strategy makes a difference.  In broad terms this is covered by the vision statement but it needs to be expressed in a quantifiable and measurable way.  The difference to the Food and Drink sector and to the regional economy needs to be measured using official data where possible.  Not all data is collected on a sector basis and even when it is, the definition of the sector needs to be agreed and applied consistently.

The Northwest Food & Drink Strategy will contribute to the delivery of the Northwest RES.  It is therefore appropriate to use the relevant indicators for the RES to monitor the delivery of the Northwest Food & Drink Strategy.  The headline indicators which can be monitored from public data are:

 

There are a number of other indicators which are not available on a sector basis from public data.  The mechanisms to collect and monitor the Northwest data for these indicators will need to be determined.  These indicators are:

 

The Northwest Food & Drink Strategy will also contribute to other indicators such as Tourism expenditure and to a reduction in congestion but it is not possible to disaggregate the contribution from Food and Drink to these indicators.

The Action Plan to deliver the Northwest Food & Drink Strategy will have specific outputs and outcomes associated with each action.  Some of these could be combined to give another view of the impact of the Northwest Food & Drink Strategy on the regional economy.