FDF Submission to the Cole Review of British Exports

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Winfred Summers
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1 FDF Submission to the Cole Review of British Exports This submission is made by the Food and Drink Federation (FDF), the trade association for food and drink manufacturing. Food and drink is the UK s largest manufacturing sector (accounting for 15.7% of the total manufacturing sector) turning over 81.8bn per annum; creating GVA of 21.5bn, employing more than 400,000 people and buying nearly two-thirds of UK agricultural production. Feeding a growing world population 1 under ever-increasing pressure on key resources such as energy, water and land, exacerbated by the likely effects of climate change, is a critical global challenge. The UK food system cannot be seen in isolation from the wider need to increase supply and ensure that people have access to sufficient, safe, sustainable and nutritious food. In this context we consider that the UK has an obligation to exploit its own productive potential, particularly where the effects of climate change could increase our comparative advantage in producing certain types of food. International trade has a key role to play in helping balance global supply and demand and mitigating risk. Given these challenges and opportunities, the UK s future international export advantages must lie in strategic industries such as food and drink manufacturing. The UK food and drink industry is demonstrating leadership through maximising efficient use of resources 2 and has a key role to play in the transition to low carbon growth to meet the challenges of food security and climate change. Research carried out by FDF to benchmark UK export support against that offered by key EU competitors indicates that the UK currently ranks fifth behind Germany, France, Spain and the Republic of Ireland 3. A structural assessment points to UK support being more fragmented than our counterparts, limiting the ability to develop a critical mass and to generate economies of scale at tradeshows. With this in mind, we have set out below a number of areas that could help to deliver more effective export support, enabling food and drink manufacturers to be more competitive and fulfil its potential in terms of increasing exports to third markets. 1 According to UN FAO, global food production will need to increase by 70% by FDF Five-fold Environmental Ambition 3 FDF ranking included on page 5 Food and Drink Federation 6 Catherine Street London WC2B 5JJ Tel: +44 (0) Fax: +44 (0) Web: Registered office as abov e. Registered in London with limited liability. Certificate of Incorporation no VAT number: The Food and Drink Federation seeks to ensure that information and guidance it prov ides are correct but accepts no liability in respect thereof. Such information and guidance are not substitutes for specific legal or other professional adv ice.

2 UK Food and Drink Export Performance More and more food and drink businesses are waking up to the benefits of exporting and, despite increased competition in the international market, demand for British products remains high. The UK exported nearly 13bn of food and non-alcoholic drink products in Exports have grown consistently in recent years, doubling in value since Further information about our export performance can be found here: Despite strong recent export growth, only 10% of UK manufacturers actively export their products. Furthermore, many of our closest EU competitors currently outperform us in terms of the share of exports as a percentage of total sales by the food and drink manufacturing sector. To address this situation it is clear that action is required which will help to change existing attitudes to exporting. 40% 30% 20% 10% Exports as a % of total sales 40% 38% 33% 32% 23% 20% 0% Ireland Spain France Germany Italy UK Provide incentives for new exporters UK Government could begin by setting out a package to incentivise and make it easier for business to begin exporting. Examples of possible measures seen elsewhere in Europe that could make a significant impact in the UK are: Income tax exemption and tax credits for staff working overseas on exports and on costs for overseas expenses incurred by exporters (France). Improved support for tradeshows. Germany provides up to 50% reimbursed costs and certain Spanish and French regions offer 100% reimbursement for involvement in particular tradeshows. Stronger links between regional Chambers of Commerce, regional UKTI offices and regional food groups on food and drink exports. Membership of Chambers of Commerce is mandatory in France, Germany, Spain and Italy. The first steps to exporting are often taken at local chambers. How active are local chambers on food and drink exports? The abolition of Regional Development Agencies hasn t helped regional support schemes. Expand on Food is GREAT and the IFB Food and Drink Summit FDF supports the work that has been carried out as part of the Food is GREAT campaign. Food is GREAT should continue as the unified brand for UK food and drink exporting. We urge for a significant increase in the number of events and activities taking place both in the UK and overseas as part of this successful campaign. Food and Drink Federation Page 2

3 We also encourage UK Government to organise more food and drink specific export networking events, bringing buyers to the UK. The highly successful IFB Food and Drink Summit in 2014 could serve as a useful template for future events, as well as an event called Market Place held every two years in the Republic of Ireland. This event provides a very useful meet the buyer opportunity for all food and drink exporters, not linked to a trade fair. Provide incentives to develop export mentoring Export mentoring currently takes place with some businesses sharing their experience with manufacturers in non-competing food and drink sectors. FDF would like this activity to be better recognised and encouraged through the creation of an Export Champion Club. This would enable experienced exporters to spend time promoting the benefits of exporting and mentoring new food and drink exporters. Incentives should be provided to experienced exporters that actively participate, e.g. subsidised access to tradeshows. Deliver integrated long-term export support UK export support is offered by a range of government departments and trade associations. This results in a lack of clarity for business over who in government is responsible for export policy and for the provision of export support. This isn t the case in the likes of Germany (BMEL), Spain (ICEX) and the Republic of Ireland (Bord Bia). UK Government should address the lack of clear lines of leadership on food and drink exports and drive through more long-term thinking, in particular around the organisation and planning of UKTI activities. FDF would like to see more targeted, sector-specific support delivered from a single centralised location to make it more readily accessible by business. A one stop food and drink export shop could make a huge difference to SME manufacturers in particular, who often struggle with export requirements and finding official guidance on requirements. A starting point could be to develop the Open to Export food and drink landing page into a single portal for accessing existing export guidance that is currently hosted across a range of Gov.uk websites, as well as displaying information about business opportunities published by UKTI. UKTI s slow Ministerial budget approvals process can often result in manufacturers missing out on opportunities to participate in export events because events are hosted at such short notice. In order to maximise the benefits of export promotion events and allow business the opportunity to take part, a calendar of events should be agreed and approved allowing industry sufficient time to consider events in terms of their own business planning. Provide free sector-specific market research UK Government lags in terms of providing sector-specific market research reports to help exporters. For example, Germany offers an extensive market research service. Projects are fully funded on the condition that they benefit the wider industry. The result is a long list of available research, covering various products and markets. By way of contrast, the basic UK market reports published on Gov.uk can be of some Food and Drink Federation Page 3

4 use to business, however they lack insight into specifics of the food and drink sector that exporters are most keen to see. Provide grants for SME export training In our research, we also found that in comparison to our EU rivals the UK faces a significant competitive disadvantage in terms of the lack of support for developing a pipeline of skilled export managers. Training in food and drink relevant export skills is expensive in the UK and furthermore difficult for businesses to secure. There isn t currently any grant support available from UKTI to address export skills. Prioritisation of food and drink in trade negotiations Food and drink should be considered a strategic priority in Free Trade Negotiations (FTAs). In the absence of a multilateral trade agreement under the WTO s Doha Round, we are seeing increasing numbers of FTAs under negotiation between the EU and third countries. Market access for UK food and drink exporters should remain a priority in FTA negotiations. At the same time, the role of imports should also be considered. Manufacturers often rely on imports of raw materials that aren t available in the UK in sufficient quantities to manufacture products that are exported. As a result, securing access to imports of high quality agricultural raw materials that are competitively priced can play a critical role in ensuring the competitiveness of exported goods to third markets. Food and Drink Federation Page 4

5 Annex: FDF Ranking of Export Support in the EU FDF carried out research in 2014 to understand the differences in export support provided in the UK versus France, Germany, Spain, Italy and the Republic of Ireland. This research was carried out by: reviewing Government websites; analysing export support services/schemes and initiatives; interviewing trade/export specialists at counterpart trade associations; and questioning UKTI counterparts overseas. The results of this research produced the following ranking of export support. Support type Germany France Spain Ireland UK Italy Tradeshow s Export advice 4= 1 2 4= 3 4= Market research 1 2 3= 4 3= 6 Trade missions 1 4= 2= 2= 4= 6 Export training 1 2 3= 3= 5 6 Export finance 2 1 3= 3= 3= 3= Busine ss opportunities 1 2= 4= 2= 4= 6 Regional funding 1= 1= Overall ranking Food and Drink Federation Page 5

6 The UK Food and Drink Manufacturing Industry The Food and Drink Federation (FDF) represents the food and drink manufacturing industry, the largest manufacturing sector in the UK, employing 400,000 people. The industry has an annual turnover of over 81.8bn accounting for 15.7% of the total manufacturing sector. Exports amount to over 12.8bn of which 75% goes to EU members. The industry buys two-thirds of all UK s agricultural produce. The following Associations actively work with the Food and Drink Federation: ABIM ACFM BCA BOBMA BSIA BSNA CIMA EMMA FCPPA FOB PPA SMA SN SNACMA SPA SSA UKAMBY UKTIA Association of Bakery Ingredient Manufacturers Association of Cereal Food Manufacturers British Coffee Association British Oats and Barley Millers Association British Starch Industry Association British Specialist Nutrition Association Cereal Ingredient Manufacturers Association European Malt Product Manufacturers Association Frozen and Chilled Potato Processors Association Federation of Bakers Potato Processors Association Salt Association Sugar Nutrition UK Snack, Nut and Crisp Manufacturers Association Soya Protein Association Seasoning and Spice Association UK Association of Manufacturers of Bakers Yeast United Kingdom Tea & Infusions Association Ltd FDF also runs specialist sector groups for members: BCCC FF MG ORG SG Biscuit, Cake, Chocolate and Confectionery Group Frozen Food Group Meat Group Organic Group Seafood Group Food and Drink Federation Page 6

FDF response to the Apprenticeship Levy survey

FDF response to the Apprenticeship Levy survey 1. The Food and Drink Federation (FDF) is the voice of the UK food and drink industry, the largest manufacturing sector in the country. The industry has a