Hansard

I am pleased that the Parliament has set aside time today to discuss the implications for Scotland’s food and drink industry of the United Kingdom leaving the European Union—specifically, the catastrophic impact if we were to leave without a deal. That is important because the food and drink industry is one of sectors that will be most adversely affected by Brexit, which will threaten the economic growth of the industry and—even worse—undermine its ambition to double its value to £30 billion by 2030.

Our food and drink industry is economically and culturally vital to Scotland. It is one of our largest employers, sustaining jobs in some of our most fragile and rural communities, and it is underpinned by our farming and fishing industries, providing markets for the raw material that primary producers harvest, cultivate and catch. It is also increasingly becoming the bedrock of our tourism offer and is one of the reasons why people enjoy marvellous holidays in our countryside—which, as we see today, is constantly sunny. Further, it continues to be the star on the international stage, with our whisky and seafood being exported to more than 100 markets across the world.

The statistics speak for themselves. Exports are at record levels and are now worth £6.3 billion, which is up 78 per cent since 2007. Sales of Scottish brands across the UK market have risen by 37 per cent since 2007. Investment by Scottish businesses is up 72 per cent since 2007, and the birth rate of new businesses has risen by 86 per cent in the past eight years.

Today, I can share the news that the latest turnover statistics measuring the overall value of the industry in monetary terms have been published and show that turnover in Scotland’s food and drink sector is now at record levels. Turnover for 2017 was valued at £14.8 billion, which was an increase of £836 million on the previous year—what a tremendous tribute to all those who work in the sector.

The success has been helped by the continued and substantial support from the Scottish Government. Since the EU referendum result of June 2016, the Scottish Government has provided £90 million of grants to the industry through the European maritime and fisheries fund and the food processing, marketing and co-operation programme, which have supported more than 600 projects the length and breadth of the country. That support has given businesses the confidence—even in the face of uncertainty—to invest and to grow their ambition, workforce, product range, productivity and reputation.

Scotland’s reputation, which is founded on provenance, quality and heritage, makes Scotland stand out from the crowd. However, success in those markets has been hard earned. It did not come easily or overnight; it required substantial effort to build a customer base and even more effort to maintain it in the face of fierce competition. For some sectors, such as seafood, the supply chains have been finely honed to ensure maximum speed and efficiency, which is facilitated through trading arrangements that have been built up over a number of years.

Last month, however, we came perilously close to jeopardising all that success. As members know, the European Council has extended the United Kingdom’s membership of the European Union until 31 October. That extension rescued us from the nightmare scenario. Had it not happened, the impact on the food and drink sector would have been catastrophic. There would have been severe disruption to our supply chains, the imposition of punitive tariffs, the loss of markets and the introduction of complex and costly non-tariff barriers, including the requirement for export health certificates. Thankfully, we were spared that.

However, as things stand, if an agreed way forward is not found soon, the risk of a no-deal Brexit will rise again, with the potential for more money, time and effort to be wasted. Of course, the UK Government could remove that risk by making it clear that, if the only alternative is a no-deal Brexit, it will revoke article 50 instead. That is in its gift. Until that happens, the Scottish Government will continue to do all that it can to support the industry in its preparations. Over the past six months, we have worked extensively with stakeholders from across the industry to minimise the damage that would be caused if we crashed out. Today, I will update members on that work.

I have spoken about the success of the industry, and I contend that our trading relationship with the EU is at the heart of that success. Last year, more than two thirds of our food exports went to the EU, and seven out of 10·of our top export markets are in the EU. The EU is the largest market for Scotch whisky, and 64 per cent of our seafood exports go to the EU, the majority of which rely on just-in-time supply chains across the channel. France alone accounts for a quarter of our red meat exports. In addition, our seafood industry is heavily reliant on EU nationals, many of whom have made a life in Scotland. Indeed, in Grampian, more than 70 per cent of the workforce are from elsewhere in the EU.

The implications of leaving the EU are so severe because the food and drink industry is significantly more important to Scotland’s economy than it is to the rest of the UK’s economy, particularly that of England. Food and drink exports are four times more important to our economy than they are to England’s economy. Seafood exports account for 58 per cent of our overall food exports, whereas seafood exports from England account for only 6 per cent of its food exports. The seed potato industry, which exports more than 30,000 tonnes annually to the EU, is unique to Scotland. Therefore, the cumulative impact of leaving the EU without a deal is estimated to be a £2,000 million loss of sales for Scotland’s industry. Those figures were calculated by the industry, using the UK Government’s economic projections.

I have conveyed that information to the UK Government. Indeed, I wrote to Mr Gove on 19 February, setting out 10 clear and practical asks. Those include guaranteed continued protection in the EU for our iconic products that hold protected geographical indication status, which is absolutely essential for high-quality Scottish produce; negotiated market access to the EU and third-country markets; the facilitation of frictionless supply chains by allocating space on the Government-funded ferries for seafood and other time-sensitive products; a derogation from the EU being sought to avoid the need for export health certificates, which it is estimated would cost the industry up to an extra £15 million per annum; and financial support for livestock producers, particularly sheep farmers, who are likely to be completely shut out of export markets because of the impact of tariffs.

Despite those and other compelling arguments, which I also conveyed in person, Mr Gove’s response was, sadly, non-committal.