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

3. Section 2: Processes

There is a formally identified strategy for processing applications. This section unpacks this process and examines how those who are involved in it, as experts and applicants, perceive the various process stages.

3.1. The application

Figure 17 (below) summarises the key stages in the application process (see Appendix A provides more detailed information available to applicants online^[25]). Overall experience of the application was rated good (79%) by successful applicants (figure 18). Somewhat unsurprisingly, unsuccessful applicants were less pleased, although still the majority rated their experience as satisfactory (50%) or good (28%).

Figure 17: Application process annotated with conflicts of stakeholder’s actual experience

Figure 18: Successful applicants’ experience of the application process.

Most (54%) successful applicants did not believe that any part of the application process needed to change. The most popular change amongst successful (29%) and unsuccessful (39%) applicants was for better guidance, which was reinforced consistently across interviews. It was felt that there should be more clarity about what to expect from the process, and transparency about how risk of applications generally varies over time, increasing towards the end of programme cycles as funds dry up. There was also demand for transparency about timelines owing to unpredictability of continually shifting deadlines; one applicant described it as having to navigate between “moving goal posts”.

“It was not made clear on what basis our application would be successful.  If we had known how little chance we had of gaining funding, we would not have spent £4120 with an agent.”

“I think that it needs to become clearer as to how the applications are assessed to help inform the information provided within the application.”

“it was a very strenuous, stressful process”

Survey respondents (unsuccessful)

Transparency around timelines and risk was perceived to be instrumental for businesses to be able to weigh up whether applying to FPMC would in the first instance be an appropriate decision and thereafter how they planned business activities according to restrictions of the application, the most commonly identified of which are outlined below:

1) Waiting for approval. A condition of FPMC is that the applicant must not begin their project until the outcome of their application is confirmed. This was a source of confusion and frustration because applicants did not understand the logic behind this rule and felt it negatively impacted their business. The application process could roll on for several months and in that time applicants lost out on contracts and production. Having to raise funds to cover project costs (FPMC works by retrospective claims) meant that being unable to recover those costs quickly or commence production was a double financial strain. Interviewees did not understand why they could not commence the project at their own risk, especially when other Scottish grant schemes already work successfully in this way.

2) Making amendments could take months, adding to delays before being able to begin their project. The more delayed a project’s start was, the more likely an amendment would become necessary, fuelling somewhat of a self-fulfilling prophecy. One applicant described how demand changed in the time elapsed since submitting their application so they needed to upscale proposed equipment but replacing quotes costed their application several-months more delay.

3) Quotation requirement. Having to source three separate quotes for any one piece of equipment proved problematic. It was especially difficult when equipment was bespoke or second hand because very few or no other models existed to quote, or businesses were so remote that supplying quotes beyond the most local supplier was difficult and futile. More flexibility was desired.

4) Payment regime. Businesses must raise funds to cover costs before claiming grant. Lack of upfront payments was considered contradictory given that eligible applicants were only eligible because they were in financial need to start with. Raising funds for even temporary cover of project costs was often a struggle, particularly for smaller businesses for whom even small additional costs could incur undesirable knock-on effects for the rest of their business. Upfront payments is prevented by EU regulations, hence EU-exit may provide opportunity for a more suitable system. This issue is recognised by other rural grant schemes such as LEADER.

“A project that requires a grant should be applying because financially it couldn't go ahead without the funds. In which case, having to find the money to pay the invoices up front is always going to be difficult and prompt payment of the grant award vital for the project to progress throughout.[Due to delays in FPMC payments] I have been unable to purchase some of the equipment which was part of the project and therefore was unable to put in a claim for all of the grant funds which were available.”

“[O]nly criticism is that after having funded, [the] grant payment was very slow to be paid.”

“Our company ended up with a serious cash flow problem as the grant was never forthcoming, even though we had spent considerable sums of money on the project”

Survey respondent (successful)

5) Use of agents. The majority of successful (79%) and unsuccessful (67%) applicants used agents. Despite this, there was widespread concern about the role of agents - even by those who used them – about the expense, disadvantage to smaller or start-up businesses, and the sense that projects would be unfairly assessed based on the quality of the agent more than the project.

Agents’ disproportional success was commonly associated with their being well versed in how to portray projects best under the assessment criteria, especially through use of ‘buzz words’. The agent interviewed echoed this, speaking of their familiarity with the system from more than a decade’s experience with FPMC.

Start-up or small businesses are most disadvantaged because they are more likely to be rejected by agents as too high risk, or the agents’ fees are too much to afford especially when applicants are already stretched to raise funds required to cover upfront project costs, outlined above. The agent interviewed as part of this project outlined a strategy of adapting their costs according to project size and so either this is still unaffordable for smaller businesses, or this agent was not representative of others who did not adjust costs according to business size.

Agent use was amongst the most commonly identified issues with application. Regulating use of agents was a popular idea, but how to implement this realistically proved a challenging concept.

6) Feedback is already a part of information relayed when unsuccessful applicants are informed of their outcome. The feedback is regarded by applicants as important to understand why their project was rejected and how to improve subsequent applications. However the satisfaction and/or receipt of this feedback was reported as inconsistent and there was demand for a more standardised quantity and quality of feedback.

“when I speak to fellow distillers who have been successful I do still wonder why we were unsuccessful!?”

“ I know that there was at least one very similar application from a local business that was successful so would be good to know why that (and others) were successful and ours was not”

Survey respondents (unsuccessful)

7) All-inclusiveness. All sectors, locations, and sizes of businesses are put through one process. With very few exceptions, neither business sector nor location was regarded as inappropriately handled under the current all-inclusive model. However there was clear consensus that changing the application according to businesses of different size would be advantageous. Being small or start-up affected business’ resources and experience which could disadvantage them against larger businesses.

Quantitative response data revealed a high proportion of repeat success amongst applicants. Almost half (43%) of successful applicants had made previous successful FPMC applications. Some very large businesses have received several FPMC grants over multiple funding rounds and programmes. Part of this may be linked to use of agents but either way this data could be a red flag as to whether the current system may be inadvertently biasing a selection of businesses that do not necessarily represent those most in need. Projects that have previously submitted an application and particularly those that have submitted several successful applications will have opportunity to increase their success rate just through familiarity with the system.

Generally there was a sense that the application process was “clunky”, “outdated”, and “onerous”. One business noted the additional delay and financial cost from having to post several documents, which seemed unnecessary and inconsistent when the rest of the process was largely computerised. In contrast, one small business felt “discriminated” against because of the extent that the current process was computerised, which may affect smaller business disproportionately. Taken together, there is room to extend the computerised platform, but  also to develop an alternative paper application option so long as there are businesses struggling to use computers or access the internet.

Although the scheme has several issues, there was also specific and widespread positive feedback. The claimants process was by some regarded as performing particularly straightforwardly, especially relative to other schemes. There was also widespread support for the existence of the scheme, which fills an important and unique role not met by other grant schemes. Several applicants left very positive feedback about the genuine difference the scheme had made to their businesses, some of which are given below.

“The system has been a great help to our company.”

“We have been willing to keep reinvesting in ourselves and with your help its allowed us to expand .”

“[G]ood scheme which provided us with a leg up on a project which without some level of support we would might not have done.”

“We have greatly appreciated the grant we received and it has made a big difference to our business.”

“I like the scheme because it is an in depth form which makes small businesses like myself to think fully about the project. Look at the market place and risk profile. Without the support we would not have moved on[…]. It shows a commitment in the business.”

“We appreciate the support of the Scottish Government particularly in supporting the industry against the background of the potentially very damaging impact of Brexit. The investment would not have happened without this support”

Survey respondents (successful)

3.2. The assessment

There were few issues identified with the current assessment process by the experts and it was expressed that the system worked well.

Those interviewed were happy with the constitution and function of the assessment committee, noting that the panel benefited from its wide diversity of members who brought good breadth and depth of knowledge to the NPAC meetings.

The length of time members were on the panel can be seen as being indicative of their commitment of the scheme and the team they were a part of. Although they thought the current membership served the purpose of the scheme well, there was support for adding representatives of the scheme’s key areas. A Highlands and Islands, food standards, and environmental specialist were identified as examples of such representatives and which speak to the core objectives of FPMC. The few issues raised echoed those identified by applicants:

1) Use of agents. Panel members recognised that many businesses used agents and that access to agents was not necessarily equitable. Those able to afford agents were potentially advantaged. There is irony in that those unable to afford agents’ fees were ipso facto more likely to be the businesses in most need of grant assistance.

2) All-inclusiveness. Generally it was not felt necessary to provide different assessment criteria for different business sectors. There was a vague question as to whether it would benefit very remote businesses by having a separate Highlands and Islands administration of a portion of the funds, but this was not stressed as imperative. The size of business was again what wanted different procedures to better support smaller enterprises.

One member noted that in over a decade of working on the NPAC panel, they had never seen an application form. This will limit experts’ understanding of what applicants have to do, how it might differentially affect types or sizes of businesses, and how this affects committee’s approach in the subsequent assessment process.

Another member outlined that they believed the current assessment criteria was designed for projects valued at over £100,000, illustrating the potential lack of suitability for much smaller projects which may apply for only a few thousand pounds.

Much of the feedback about the position of businesses of different size could be seen as questioning the appropriateness of larger businesses under FPMC. But it is worth noting that interviewees (one expert and two applicants) stressed that larger businesses should continue to be supported as they are import for Scotland’s food and drink processing industry generally and the size of the business does not necessarily correlate to its cash flow, hence it could be a mistake to regard larger businesses as self-sufficient purely because of their size. 

3) Alcohol. Opinion about suitability of alcohol projects in FPMC was again varied. Everyone shared the belief that they generated profit quickly, but nobody agreed that the sector aligned well to health and environment objectives. Furthermore, even though they were regarded a lucrative sector, their rapid profitability put their true need of the fund into question compared to other sectors. (See section 2.4)

4) Non-capital projects. These were so rare to FPMC (n=5) that all discussion automatically regarded capital projects until interviewees were specifically asked about them.

There was variable opinion on what to do for the lack of cooperative projects applying. One expert supported more promotion via FPMC may help encourage applications. Another said there simply lacked supply of non-capital projects, in which case promotion would be an ineffective use of resources. Another believed that it could be worthwhile to drop cooperative projects altogether to streamline the scheme’s objectives and redirect funds to the more popular capital projects, however, another expert believed it was necessary for FPMC to accommodate cooperative processing projects because there was no alternative grant scheme for them to turn to and the portion of FPMC already allocated was small enough that it would not make a huge difference to capital projects.

This feedback is more pertinent nowadays given the substantial increase in capital applications. On the one hand this is a good sign that there is demand for the fund and that FPMC functions well enough to be increasingly popular. On the other hand, competition for funding is now higher than ever so that only lately have projects begun to be pitched against each other. If certain types of projects are unfairly disadvantaged then there is need to update the scheme to ensure it continues to meet its objectives whilst treating businesses fairly.

Summary

• There is widespread support for the existence of the FPMC grant scheme, which is perceived as fulfilling a unique and important purpose in supporting capital projects of food and drink processing businesses and which interviewees were keen to see protected going forward.
• Experts perceived the assessment process to generally work well, and specifically regarding the abilities of the panel members as individuals and as a group to make well-informed decisions about awarding grants.
• There was however agreement with applicants that the scheme would benefit from revising how it treats businesses of different size in order to better support smaller ones.