Farmed shellfish Amongst other Scottish Primary Producer Sectors Lessons to be Learnt?

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1 Farmed shellfish Amongst other Scottish Primary Producer Sectors Lessons to be Learnt? Association of Scottish Shellfish Growers Annual Conference 22 nd - 23 rd October 2015 Alan Stevenson, SAOS

2 Market Driven: Moving From a Supply to a Demand Economy Supply Economy Demand Economy Market Segments Homogeneous Specialised Change Rate Supply Constrained Exponential Volatile! Uncertain! Complex! Ambiguous! Products Rationalised on Cost Complexity Enabled Segmentation By Demographic By Customer Values Demand Linear, normal Volatile, random

3 In Practice The Humble Bean 21 st Century.. 20 th Century.

4 The Economic Engines of Supply & Demand Have Traded Places.

5 Facing Up to the Market 70% of businesses still in supply economy mode reacting or responding to the winds of change in the market (Gartner Group Research) Too many are operating traditional approaches two or more steps removed from the market New Market Driven Supply Chains are emerging that: Deliver customer value and address complexity Define and deliver competitive advantage Change culture and processes within businesses & chain

6 Scotland s Primary Sector Outputs Agriculture Seafood Salmon Farming Shellfish Farming 3.2bn 514m 800m 10.5m Sources: Scottish Gov & Industry Statistics

7 Agric Sector Share of Output 2013 (Source Scottish Gov Ag Stats 2015) Eggs 2% Other 10% Cereals 15% Cereals Potatoes Oilseed Horticulture Cattle Sheep Pigs Poultry Milk Eggs Other Milk 14% Poultry 4% Pigs 2% Sheep 6% Potatoes 10% Oilseed 1% Horticulture 10% Scotland Total Output 3.152Bn UK Total Output 25.9Bn Cattle 26%

8 Best Practice in Supply Chains Alignment & Communication throughout the Chain Informed Joint Decision Making Commitment & Trust Innovation, Adding Value & Sharing Risk

9 SCOTTISH PIG PRODUCERS LTD Pig Marketing Co-op set up in 1979 Members in Scotland and Northern Ireland Market 75% of available pigs in Scotland and...currently 3500 pigs per week in N. Ireland Traded 470,000 pigs last year Turnover 53.1m Invested in new Pig Processing Plant in Brechin (Tulip) ISO 9002 (NQA Quality Management Approved)

10 Market Driven Producer - Market Security - Financial Security - Communication Processor- Delivery Security - Quality of Product - QA Chain Pigs / Haulage Retailer - Security of Supply - Added Provenance ScottishSPCA - Direct Link to Producers (ASDA Porklink)

11 Invested in Innovation All aimed at helping the Industry as a whole whilst being cost-effective for the primary producer: Bad Debt Insurance (1981) Early Payment System (1999) Heavy Pig Programme (2002) Health Monitoring (Pilot Scheme 2001) Wholesome Pigs (Scotland) Ltd (2003) ASDA Contract Tripartite Agreement (2009) ASDA Porklink delivered direct financial support to producers February to April 2011 SSPCA (2009) Key Work with Gov, Trade & Research Organisations!

12 Formed in Members 4,300 acres - mainly Broccoli & Cauliflower 11,000,000 turnover Targeting major retailer supply and freezing Function of ESG - Marketing, Agronomy, R&D

13 Competitive Advantage - Critical Success Factors Must have understanding of Ultimate market Customers & their strategies Global search for new ideas Beneforte Need confidence to invest Drive Innovation through Chain Major retailers Key processors Farmers

14 Critical Success Factors Add Value Maximise return via all routes Fresh/Premium/Health Frozen/Convenience Reduce Risk Collaboration Market Knowledge Operational Efficiency Trust

15 OatCo & Pepsico Formed in 2002 Long term commitment from both parties Shared market driven confidence to invest Processing ( 8.5m) Farming (now Quakers largest oats supplier) Supplying 50,000 tonnes per year (70%+) Innovation in health/convenience and agronomy

16 Key Strengths Joint market forecasting and planning Favourable forward contracts above open market price Consistent and secured supply for Quaker Rewards for growers for commitment & loyalty On- Farm specification sampling to ensure effective management of production intake Knowledge sharing - market & agronomy Number of rejections significantly reduced

17 Finally..a few other leading examples! Whisky & Grain Sector Salmon Argyll Hill Lamb Mackay s Jams & Fruit Processing Sector Scottish Berry Sector Scottish Dairy Growth Board Brand Group Pelagic Seafood Sector Scottish Shellfish Growers! Market Focussed Collaborative Aligned Strong Brand Values -Innovative - Ambitious!

18 EVOLUTION It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change. Charles Darwin