Food Processing, Marketing and Co-Operation Fund 2014-2020: evaluation

1. Introduction

This report presents the findings from an evaluation of the performance of the Food Processing, Marketing, and Cooperation grant scheme (FPMC). The scheme has been in existence since the 1970s, however this evaluation is of the FPMC’s most recent 2014-2020 programme.

The findings are intended to inform policy decision makers regarding suitability of FPMC’s continuation after the current programme expires. The evaluation focussed on assessing how the scheme contributes to key aims of the Scottish Government and its Food and Drink policy subdivision which distributes FPMC grants. It assessed whether the FPMC’s objectives have been achieved and make recommendations looking forward.

Given that the FPMC current 2014-2020 cycle is due to end and the scheme is set to lose 45% funding from the European Union this represents a particularly relevant time to conduct such a evaluation

1.1. Background

1.1.1. Policy context

The scheme’s aims and processes have remained broadly consistent since its inception, whilst the wider aims of the Scottish Government have evolved. How FPMC fits with the wider policy agenda has therefore changed. As it stands, the programme is aimed at helping Scotland become a wealthier, healthier, and more environmentally friendly nation through supporting Scottish food and drink processing businesses.^[1] FPMC is supposed to be regarded a last resort funder. That means projects should only be considering FPMC once they have no alternative.

For the purpose of this evaluation, the core aims of the programme can be generalised into three broad themes:

1) Economic security and growth. For example through local and international trade of Scottish produce, jobs created, business resilience.

2) Reduced environmental impact at local and global levels. For example more sustainable practice.

3) Improved health and wellbeing of individuals and communities. For example through better knowledge and consumption of healthy and local food.

Economic security and growth

“A decade ago, food and drink had a low profile in the Scottish economy, with growth in the industry flat. It has now emerged as one of Scotland’s best performing domestic and fastest growing export sectors.” Scottish Government Ambition 2030^[2]

Between 2007-2017, growth of food and drink manufacturing in Scotland rose to twice the UK’s average rate^[1]. The food and drink industry is a major contributor to this with a 44% increase in turnover to £14 billion since 2007^[1].

The Ambition 2030 agenda intends to double economic value of Scotland’s fishing, aquaculture, and food and drink industries to £30 billion by 2030. This will be generated from both local and international trade. In the decade following 2007, exports rose 56% to £5.5. billion, including food exports which rose 111% to £1.5 billion with salmon and seafood exports performing particularly well (ibid.: pp 3). Sustaining export market growth will be central to the Scottish Government’s ambition of becoming A Trading Nation^[3]. International supply of Scottish products also supports the economy in secondary effects of increased tourism through promotion of Scotland’s proud past and present heritage in its produce.

Increased demand requires greater supply and this creates opportunities in the industry’s job market, boosting the economy. By 2017, farming, fishing, food, and drink provided 119,000 jobs in Scotland, with another 27,000 opportunities anticipated over the following decade^[1].

As FPMC’s core aims are to support and grow existing and start-up companies in Scotland, the fund can potentially play a significant part in meeting these policy aims.

Environmental impact

In April 2019 the Scottish Government declared a climate change emergency, making local and global environmental health an official priority. Scotland’s climate change policy endeavours to become a cleaner, fairer, healthier nation by 2032^[4].

Climate change and environmental sustainability strongly interlink and cover an array of contributing elements, notably to:

• reduce waste;
• protect biodiversity;
• reduce emissions;
• reduce water and energy consumption;
• develop efficient and renewable energy production.

Engagement with food and drink production will be paramount to achieve these intentions. For example, agriculture is estimated to contribute to around a quarter of Scotland’s total greenhouse gas emissions^[5] and so to achieve targets of net-zero greenhouse emissions by 2045 and a carbon neutral Scotland by 2040^[6], tackling emissions associated with food and drink manufacture will be crucial.

Climate is intrinsically linked to agriculture and its food and drink production. The relationship is two-way because as well as some practices potentially adversely impacting the environment, agricultural production may in turn be impacted by climate change. Agriculture and its productivity are therefore one of the most vulnerable sectors to the consequences of climate change (e.g. adverse weather conditions, land loss from rising sea levels).

LEADER is a grant scheme with a number of similarities and shared aims with FPMC. A recent evaluation of LEADER^[7] found some of the projects it help funds managing to balance agricultural support that promoted environmental sustainability. This demonstrates that growth and sustainability are not mutually exclusive for programmes such as FPMC grants should be capable of contributing to wider environmental agendas by supporting businesses that harness environmentally friendly and innovative principles and practices.

Health and wellbeing

Scotland aims to become A Good Food Nation^[8]. Key to this is improving access, understanding, and benefit from local healthy foods. Provision and appreciation of healthy foods will be especially key for combating Scotland’s obesity burden. Two-thirds of Scotland’s adult population are obese, placing Scotland 5^th  highest  country worldwide for obesity. Reducing obesity will simultaneously reduce associated morbidity and mortality ranging from cardiovascular to mental health conditions and reduce the £3 billion cost projected for Scotland by 2030 if obesity remains unchecked^[9].

Fresh healthy produce can only improve the wellbeing of Scotland’s population through its nation-wide consumption. Health inequalities are also inextricably linked to deprivation; targeting the eating and knowledge of food in these sectors of society are a priority.

1.1.2. The FPMC Fund

The Scottish Government invests in agri-business through multiple pathways including financial grant schemes, which are divided into two Pillars. Pillar 1 encompasses standardised subsidies for agricultural businesses from money that comes directly from the EU and is administered by national governments (in this case funds are channelled through the Scottish Government). Pillar 2 awards grants that require co-financing from member state governments and is governed by the Scottish Rural Developments Programme (SDRP). The EU describes the purposes of this as:

• fostering the competitiveness of agriculture;
• ensuring the sustainable management of natural resources;
• combating climate change;
• achieving a balanced territorial development of rural economies and communities including the creation and maintenance of employment.^[10]

FPMC has been a part of the Pillar 2 stream since it began in 1973. Its role is to distribute a budget via grants to support development of capital (physical assets) and non-capital projects of existing small, medium, and large Scottish food and drink businesses and the establishment of new ones.

Appendix A provides a detailed overview of the FPMC application process. Eligibility is tested at various stages but is in the first instance restricted to businesses using Annex 1 (agricultural products identified by the EC) inputs and producing either Annex 1 or non-Annex 1 outputs. Eligible products^[11] can be categorised as:

• Sector 1: Fruit and Vegetables;
• Sector 2: Cereal;
• Sector 2a: Alcohol;
• Sector 3: Meat;
• Sector 4: Eggs;
• Sector 5: Dairy;
• Sector 6: Other

Grant size is decided as a percentage of the total project costs. The percentage is determined by business size, whether the project is capital or non-capital, and the type of output (table 1). By the first quarter of 2019, the scheme closed to new applications having exhausted its £66 million budget on 119 projects spanning all categories (figure 1).

Table 1: Grant limits by type and size of business/project^[12]

	Business/enterprise size
Project type	Large	Medium	Small/micro
Capital
Annex I output	40%	40%	40%
Non-Annex I output	Ineligible	10%	20%
Non-Capital
Co-operation	40%	50%	60%
Feasibility	50%	60%	70%
Consultancy	-	50%	50%
Fairs/shows (national events)	-	50%	50%
Innovation	15%	50%	50%
Training	50%	60%	70%

Figure 1: Number of FPMC grant projects by sector for 2014-2020 phase^[13]

FPMC-funded projects are located throughout Scotland, although the majority are located in the central belt and to the East of mainland Scotland, where the main population centres are. There is no remarkable difference in geo-spatial distribution of projects belonging to different sectors. Appendix B gives images of locations for all successful and unsuccessful projects by sector.

1.2. Methods

Aligning to core agendas of the Scottish Government and its Food and Drink division (see Policy Context), this research evaluates the 2014-2020 FPMC programme.

Two broad approaches were taken, combining quantitative and qualitative techniques. This mixed-methods approach is sometimes referred to as data triangulation, which refers to data on the same phenomenon that has been extracted in multiple different ways. The advantage of data triangulation that uses qualitative and quantitative techniques is that one data source works to neutralise inherent bias in the other^[14]. This should improve comprehension and accuracy when it comes to drawing conclusions from the combined data, which is important for research validity. Methodology for this report was four-fold:

• Review of all existing project materials and relevant ‘grey’ literature;
• Surveys of successful and unsuccessful applicants;
• Semi-structured interviews with:
  - applicants from a range of businesses and grant statuses, and
  - experts from the assessment panel process and an independent application consultant.

Recorded project data

The existing project materials provided by the Scottish Government’s food and drink division and included application and monitoring forms. Additionally, summaries and forms relating to project assessments were reviewed. Assessments were conducted by staff external and internal to the Scottish Government, whom populated the National Projects Assessment Committee (NPAC) panel that approved and declined projects, seconded by Ministerial approval. A review of relevant ‘grey’ literature that pertained to relevant legal and policy development was also conducted.

Surveys

Two separate surveys were conducted online, one for successful applicants (n=112) and another for unsuccessful applicants (n=102). Questions were kept broadly similar between the two but it was necessary to make some adjustments so that they were relevant to each group. A copy of the survey questions can be found in Appendix C.

For clarity, consistency, and ease of use, most of the questions provided multiple-choice answers and generated categorical quantitative data. Some questions harvested additional qualitative feedback where more information was necessary.

Interviews and site visits

Qualitative data also came from semi-structured interviews conducted with applicants and ‘experts’ (professionals who processed the applications).

Applicant interviews aimed to address three main themes:

• Understanding and opinion of the scheme’s objectives
• Experiences of the application process
• The future of FPMC

Three applicants were interviewed for an average time of forty minutes. One represented a large fruit & veg business; one represented a small alcohol business; and one represented a declined alcohol business.

‘Expert’ interviews aimed to address three main themes:

• Understanding and opinion of the scheme’s objectives
• The Assessment process
• The future of FPMC

Four experts were interviewed for an average of one hour. Two were experienced NPAC members; one was professionally associated with NPAC committee members; and one was an agent with over a decade’s experience of assisting a range of businesses submit their applications. Interviewees were all given anonymity and audio recordings of the interviews were deleted after notes were transcribed for the purposes of this report.

Table 2 (below) summarises the measurement criteria and resource/s for each objective domain.

1.3. Report Structure

Findings have been grouped thematically and into two sections. The first section is the more conceptual, regarding how the FPMC scheme links to the Scottish Government’s key objectives to make Scotland a wealthier, healthier, and more environmentally sustainable nation. The second section is concerned with practicalities, focussing on how well the scheme works in terms of stakeholders’ experiences of the application and assessment processes. Due to the rarity of non-capital projects, all results refer to capital projects unless explicitly identified as cooperative.

Table 2: Measurement criteria and resources

Objective domain	Sub-measures	Sub sub-measures	Resource/s
Wider economic benefits	Innovation	New products, new technologies	Monitoring forms
	Multipliers		Surveys; interview
	Exports
	Tourism
Benefit to the business	Jobs created	Full time, part-time, seasonal	Monitoring forms, surveys
	Jobs safeguarded
	Turnover
Health	Type and quality of output product		Monitoring forms; surveys
	Accessibility	Market reach, affordability
	Socioeconomic statuses	Jobs created, job security, staff morale
Environmental sustainability	Type of output product	Packaging, emissions	Application and monitoring forms; surveys; interview
	Processing methods	Water, energy
	Culture	Knowledge, attitudes, principles,

Summary

• Food and drink processing plays an important part in helping Scotland become a wealthier, healthier, and more environmentally sustainable nation.
• This evaluation aims to assess whether and in what ways FPMC demonstrates its contribution to this core triad of objectives of the Scottish Government.
• It will assess how effective the scheme has been and whether its continuation is supported on a total or partial basis, particularly given the pressing context of substantial shift in political and economic landscapes post-Brexit.
• FPMC should play a role in helping Scotland achieve its wider objectives by supporting the development of Scottish food and drink processing businesses through partially funding suitable projects.