In this blog, Lorna Dawson and Michelle McWilliams (Gateway Knowledge Brokers) share content from the Scottish Agricultural Organisation Society (SAOS) conference at Crieff Hydro on the 16th January 2025, useful for anyone working in agriculture and food.
There was insight on how we can tackle the challenges in our supply chains and turn them into opportunities. For example, we looked more closely at some of the great work that SAOS co-ops have been progressing in their own supply chains.
Introduction and summary
“The UK supply chain is not broken, but it is hanging by a thread”, said Ged Futter, a retail consultant with over 30 years’ experience, including 15 years as a buyer with Asda. “UK retail is the most brutal in the world because we offer the best quality at the lowest price; everywhere else tries to do one or the other, not both.” Retailers’ contribution was also acknowledged though; many food producers wouldn’t be able to sell their products without them, they just want to engage with them in the right way. Despite the many challenges faced by the supply chain, there were also many opportunities to build resilience and Scotland was in a fantastic position to achieve this.
Along with a tough retail environment, the supply chain faces shocks which are becoming more severe and more frequent according to Allene Bruce from SAOS. BREXIT and COVID were closely followed by the war in Ukraine and that’s before you consider other factors such as the skills shortage, water and land shortages and greater urbanisation. Fortunately, SAOS is tackling this by measuring the resilience of 15 different sectors. Their new Sector Resilience Tracker will identify characteristics that indicate resilience, design a method of measuring it, identify areas of weakness and develop supporting interventions. A mixed picture emerges with the already well-documented skills shortage being one of the weakest areas but encouragingly, there is evidence of strong current and future consumer demand.
Indeed, the demand in export markets is a big opportunity for Scottish producers according to Ged Futter. Export markets also mean suppliers are less dependent on supermarkets, allowing suppliers to occasionally say No to the buyers continually driving down prices. In today’s market, where overall capacity is reduced, it is now harder for supermarkets to go elsewhere at short notice. Ged talked about how Yorkshire strawberries are getting better prices from the Middle East than their local Morrisons in Bradford. Later in the day, we also saw Angus Fruit’s impressive plans for the Middle East markets.
Scotland is well-placed to take advantage of these export markets because it already has a strong brand, thanks to whisky and salmon, and both can also share a wealth of export experience. Combine this with technical, safety, quality and accreditation standards that are some of the highest in the world and this can only be good news for exports and domestic supply, according to Ged.
In the afternoon, we heard from the frontline producers in the soft fruit, pork and dairy sectors. Just how tough it can be hit home again with the afternoon speakers, not least the rollercoaster the pork industry has weathered in recent years. The ever-entertaining Andy McGowan from Scottish Pig Producers shared the litany of shocks that had hit the sector including a petrol bomb attack on an abattoir! The consistent message from all the producers was that collaboration was key. Collaboration is a word that is often bandied around but here was hard evidence of producers walking the talk.
Not surprisingly for an SAOS conference, Coops were clearly an exemplar of collaboration. Angela Porchez demonstrated how twenty two farms had worked together with Angus Growers and John Gray of Angus Soft Fruits highlighting how vertical integration had helped deliver their ambitious plans. Then it was the turn of the dairy industry who showed how coming together in Dairy Producers Organisations (DPOs) had helped them negotiate better terms and conditions.
Along with collaboration, technology could be a significant aid to building resilience; drone pollination was just one of the innovations that could save a huge amount of time in the soft fruit sector, although caution was advised that positioning technology as a solution to everything was often overblown. And, encouraging for scientists, is that academic collaboration was also seen as a significant opportunity. Towards the end, Angus Soft Fruits called upon the government to press on with agreeing terms of trade with other countries to extend export markets.
All in all, we would highly recommend attending next year, scheduled for 22 January 2025. It was an excellent conference with front line industry experience. A comprehensive guide to the content of each session is detailed below.
Building resilience in our food supply chains – Session 1
Building resilience in the supply chain was the topic of the morning session. Helen Glass, Head of Supply Chain Innovation, SAOS introduced this session and reinforced the need for resilience to be built right through the food supply chain. Allene Bruce, SAOS's Head of Supply Chain Development introduced the work of SAOS on resilience as part of the Scotland Food & Drink Partnership. She talked about resilience starting with our earth seen by the image of a seedling germinating through a visually impoverished ground. Resilience however is now moving up the agenda. Post war was about production but a series of shocks recently with diseases, economic collapses, Brexit, COVID and the Russian war on Ukraine have impacted on the food and farming industry. These factors has resulted in economic pressures, scarcity of resources, urbanisation and also changes in diet. As a key strand to the strategy, SAOS are leading in a number of work streams aimed at building resilience in the Scottish food and drink industry - working on a risk register, developing supply chain maps, assessing supply chain resilience and building a sector resilience Tracker. Using this tracker it was identified that one of the lowest scoring indicators across all sectors were the availability of appropriately skilled and workers. One of the strengths she mentioned was strong consumer demand for products from this sector and the beneficial use of accreditation.
Can we fix our supply chains? Session 2
Ged Futter discussed if we could make our supply chains better, and shared key findings from his OFC 2024 report and asked: “Is our UK food supply chain broken?” and provided insights on the farmer/retailer negotiations. "Retailers are often lambasted as being the sole cause of all ills in the sector but it's a gross distortion of the situation". “Working together makes the industry stronger!”
Image: Ged Futter’s slide with a quote from a food supplier ‘Retailers are often lambasted as being the sole cause of all ills in the sector, this is a gross distortion of the truth. As one grower said: We wouldn’t have a business if it wasn’t for the multiple retailers, we just want to engage in the right way.”
The focus on price by buyers is relentless, all to try and reduce the impact of the cost-of-living crisis. What a buyer wants is availability, but it is not possible to meet all of these requirements, instead long term contracts are what the industry needs. Retailers may think they can replace domestic supply with imports but the further you move away from the UK the lower the standards can become and the bigger the food safety risk. Farmers have to learn to say No and his advice to farmers and food producers was to keep their own brand rather than doing private label, and to pursue opportunities to export. Retailers believe that there is a sea of plenty out there and if they lose a UK grower then they can replace it with an import. But that's actually not true; the retailers power has decreased. The biggest exports are in whisky and salmon, with now soft fruits are blossoming in markets particularly in the Middle East. We have experts in exports. “It's about mindset in the marketplace and it's a market for the product globally”. Scotland is well-placed to succeed, having 90% of the UKs surface freshwater and a globally recognised brand. There are advantages to today’s upheavals; and hope prevails - "when the industry is at its most volatile, the biggest opportunities arise".
Aligning producers with retailers – Panel Session chaired by James Withers
Then we were welcomed to a Q and A session chaired by James Withers, consultant and board member of Scottish Food Alliance, with Allene and Ged on the panel. One issue raised is that people want to work long term, but retailers work in the short term. However, success lies in long term relationships. Farming is about generations and planning. The consensus was that farmers should not over rely on retailers. Exporting businesses are vulnerable to external threats, for example Brexit for export has been dreadful, but new markets in the Middle East are growing. UK Retail is the most demanding sector in the world with 8 main retailers in the UK. Other countries have less competition. Aldi make most money in Australia, where there are fewer retailers and where price is key. In the UK consumers want the best quality at the lower price - we want both, but it's not sustainable. Different sectors need diversification and to build collective resilience, through collaboration. However, buyers are generally focussed on sales and profit. However, those that work in the long term get the better prices through trust. How retail is perceived is very important to retailers which means they’re changeable depending on society and the media’s current priorities. Retailers will bend and move which can be difficult for suppliers as the priorities keep changing. New Zealand, Australia, Ireland are all over the global market. The panel agreed that the UK should follow suit. There is however a tension between ‘buy local’ or to ‘pursue the global market to build resilience’? The panel felt that we can have both a strong export business and a strong local market. It's not ‘or’ but its ‘and’. Training in Negotiation skill are essential for suppliers for dealing with buyers, something SAOS provides. Tesco train all their buyer teams early on in the power of negotiation. They want you to think they have alternatives - but capacity on farms is now not there- we no longer have over supply! The power has shifted - as the market has shifted. There is a high standard of living with a generally low price of food. So, where does profitability lie? Every business has to be sustainable financially, but we need to get negotiations right. It was interesting that the 3rd cheapest place for food in the world is the UK. Consumer behaviour needs to help steer policy in the direction it benefits the industry. Farm assurance schemes are important – and baselines works – but we should not add more complexity if the return is not there. Each retailer has their own standards. Those supplying UK retailers are already there. Current technical standards are good in Scotland.
Co-ops in action with soft fruit – Afternoon Session 1
In the afternoon the topic was Co-ops in action with Angela Porchez, GM of Angus Growers, and John Gray, MD of Angus Soft Fruits. Angela and John shared the platform, profiling their soft fruit businesses and their innovative work in market diversification within an integrated supply chain. John’s soft fruits are for both UK and markets abroad. Labour costs are a big proportion of the soft fruit business, 50 per cent of their business costs are staff. The company has a head office in Arbroath and a Birmingham technical team, close to distribution depot and retailers. Creating a new brand of strawberry is not for the faint hearted. Breeding trials with strawberry are being run constantly – often taking 7 to 12 years to launch a new variety. The current new sweeter raspberry ‘AVAMonet’ has come about through a long period of investment. Now it is a successful export to Europe, Egypt, Morrocco, Hong Kong, Malaysia and Chile. However, they don't have terms to trade with other countries at the moment and so need government to help access these further global sectors. Also, it was emphasised how exports are helping to build their brand. They consider the triple goal of considering People, Planet, Profit and promote sustainable practices to reduce carbon footprint wherever possible. The collective allows them better advocacy, acting as a collective voice. The Berry Industry highlights rising production costs and a limited availability of labour. It was discussed how perhaps a viable solution is through technology. For example, drone pollination has been tested to pollinate with precision, robots are used to treat powdery mildew, and coir is used as a growing medium, while also considering alternatives such as heather, hemp and wool. More control over propagation leads to better crops. Artificial Intelligence is also being used as a solution to shape the future of soft fruit farming. Angus growers started by having 19 soft fruit growers. It now has over 51 million pounds turnover and collectively produce 35% of the soft fruit in Scotland. The Co-op is a not for profit company, one member one vote, and the biggest strength is close working with marketing at Angus soft fruits. A close strong relationship has been built by being transparent in pricing and commissions which helps create trust. They respond quickly to customer taste, and demand which helps maintain the supply chain. Challenges are greater and profits are shrinking. However, they feel they are coming round the bend now – but not have not yet turned the corner. Fairer prices can be achieved by trust and transparency from the grower, through to the processor to the consumer.
A rocky road for the pig supply chain – Afternoon Session 2
Andy McGowan, MD of Scottish Pig Producers and vice chair of SAOS, discussed how the co-op members have been working with Brown Brothers improving supply agreements, through to the development of the Kilted Pork Company Ltd. They have over 500,000 pigs. The Co-op schedules, helps negotiates contracts and sorts out problems. There are over 59 businesses in Scotland. This Co-op has its origin as Grampian pig producers, but with the closure of Lawson of Dyce, there were issues in the supply chain, and this was followed in 2013 the closure of Halls of Broxburn then owned by a Dutch Co-op. With a 45% share of Scottish pork processing there was an urgent need to find a home for the pigs. Collaboration between coops was a collective solution. There formed a new organisation in Brechin with 53 farmer shareholders. However, sadly in 2015 the site was flattened. Then the most modern pig abattoir in the UK was set up - Tulip Danish designed and built. However, in 2017 a petrol bomb ruined much of the interior and they had to find homes for pigs quickly and with due regard for animal welfare. Then followed a glory period of 2018-21 and they got an export licence to China where better prices were achieved [because the Chinese eat every part of the pig] so the licence there is very important. Then the storm clouds came in 2021 with a lack of abattoir workers. Brexit labour issues. The Brechin plant saw an outbreak of COVID and the Chinese asked them to surrender their export licence, a licence which was only regained at the end of 2024! More recently Scottish pig producers, lawyers accountants with the support of Opportunity North East came together to restructure so that it could be sold as a going concern to Browns Food Group, who see the Scottish identity and quality as their USP. They have set an aspiring target of £100M sales of Scottish pork in 5 years, double the current amounts. The Kilted pork brand for example is being marketed to lock in the Scottish brand. The future is now for Scots pig producers to merge in principle with two other Co-ops with a UK wide co-op for the UK. The sector has highly motivated and skilled staff and it’s important to them being part of a group that can be trusted.
Image: Andy McGowan, Scottish Pig Producers presenting at the conference.
Sharing best practice in the supply chain – Q&A Panel Session chaired by James Withers
A Q&A session with Angela, John and Andy, joined by Teresa Dougall of Scottish Quality Crops (SQC) was then enjoyed by all, again ably chaired by James Withers. Many thoughts were voiced, some of them outlined below. We need to be proud of what is being produced and share knowledge in Scotland. The soft fruit industry is not yet mature but benefitting from working in collaboration, and we have to work together to survive. It can make any case better if we cooperate rather than people doing their own thing. One can learn through collaboration, as there is no one single grower doing everything right. We must not wait until there is a crisis to come together but be cooperative before any potential threat appears.
Image: Panellists, pictured left to right James Withers, Teresa Dougall, John Gray, Angela Porchez, and Andy McGowan.
A warning that sometimes technology can be oversold – really will robots replace all human labour required? The consensus was that there is a place for it in farming, it helps efficiency, but fruit is a labour-intensive industry. Pigs, cattle and sheep are variable, and this makes it difficult to automate. SQC is an important consumer facing brand with high standards and assurance on production safety, transport etc. it provides confidence in the product. With over 90 per cent of crops grown in Scotland, quality assured is a great success story. A brand at any level gives you ownership, otherwise cost can be driven down to the lowest common denominator. Collaborating with academia? How is it done? People out there are ready to collaborate but growers need to be receptive and open to the partnership. Opportunities are there for farmers and growers to work with researchers within SEFARI Gateway and organisations such as Innovate UK. For example the James Hutton Institute’s New Barley Hub is a great success, and farmers should take advantage of having some of the best world class research institutes based in Scotland.
Dairy dynamics in the supply chain
Hamish Walls of SAOS Dairy set the dairy scene. In 1994 it went from a highly regulated milk marketing board to the wild west. Milk quotas changed and there was volatility until 2025 with the implementation of Fair Dealing Obligations. It has taken 30 years to get supply chains more aligned and farmers are key in that supply chain. Again the 3 pillars of sustainability was discussed - Profit, People and Planet set against a backdrop of high volatility and reducing profit margins.
James Withers introduced Rory Christie of the Milk Suppliers Association, Max Sealy of Selkley Vale, and lan Harvey of Davidstow Creamery Direct. We heard from three dairy Producer Supported Organisations (DPOs) about their current remit and their negotiating role on behalf of members, followed by a chat around their plans for the future. They discussed how the sectors differ but all are still learning from each other. However, it was felt that cooperation can save and indeed strengthen sectors. Cooperation can allow skills to be shared to help marketing and strengthen negotiations. Co-ops help create an environment where all can thrive through professional representation and help the processor gain market access. A co-op is an association of peers so they can share knowledge of the industry. SAOS helped in the re-opening of the Galloway creamery. It was an association, then a Co-op and then gained DPO status. However, they still need to encourage consumers to pay the true price for the products. One of the biggest challenges is constant change and supply and getting a consistent volume of milk. When prices fall production also tends to fall. Different contract groups all want something slightly different. Muller for example sees the benefit of one voice aligning all the members voices. It’s a bit like a marriage- sometimes rocky- sometimes glorious but - always supportive. Working with an international company is not guaranteed market access as you still need to compete against their suppliers in other countries. The UK tends to look inwards a lot of the time so we need to build better trade deals and build long term international relationships. We should probably aim to get DPO status in other sectors.
Image: James Withers (left) chairing the dairy panel.
The question was raised as to how to negotiate price and James asked the dairy Co-ops how they do that. The replies were that “Volume is critical and it’s all about leverage and supply and demand and it’s based on a global market and a global dairy trade platform”. The advice was to understand the market”. They usually agree a sensible outcome through relationships, negotiate the contract, price being only one part of that, and don’t give away anything else. It’s about supply and demand. If there’s too much milk then the price will go down. DPOs should help farmers meet their sustainability goals. Some advice came from the panel; deliver value for the customer, become a part of the customer supply chain, justify to members what is being done, involve the next generation. The industry needs new leaders to take the next steps forward, to get more diverse. Get down that farm lane to talk to the farmer, so that collective group can ensure sustainability is delivered. Build long term relationships so not treated unfairly. POs a real force for the future. Maybe in the future-we will have contracts with less volatility in price. Working together is the solution – the farmer, the processors and the retailer.
The day was brought to a close with a summary and a call to action from the Head of SAOS, Tim Bailey. “We have faced many crises over the last few years, and we have a lot of targets that need a hell of a bang, but there’s not a lot of buck around”.
Image: Tiim Bailey, CEO of SAOS presenting.
Cooperation and collaboration are key to driving the industry forward. Delivery resource, Legislation & Policy support and Financial Incentives will stabilise the success of Co-ops like a three – legged stool. Though managing risk, we can build resilience, sustainability and reap rewards for farmers and growers, retailers and customers. 2025 is the international year of cooperation, so it’s a great year to all come together and collaborate. The future is good for the Scottish brand.
Lorna Dawson & Michelle McWilliams, Knowledge Exchange Brokers, SEFARI Gateway
Lead Image: Helen Glass (SAOS) interviewing conference delegates Lorna Dawson (Gateway), Polly Douglas (UK AgriTech Centre), Angela Porchez (Angus Growers Co-op) with Douglas Bowden-Smith (SAOS).
All Image Credits: Lorna Dawson & Michelle McWilliams.