FDF gives government food for thought

The Food and Drink Federation (FDF) is a non-profit trade association and the voice of the UK food and drink industry. It has several functions, chief of which is to lobby government on behalf of its food and drink industry members. Its membership comprises manufacturers of all sizes as well as trade organisations and groups dealing with specific sectors of the industry.

The Manufacturer asked FDF’s director-general, Melanie Leech, how she hoped the 2009 Budget would benefit the food and drink industry, about energy, the environment, skills and the industry as a career choice, bureaucracy and food security.

Food and drink (F&D) is the biggest sector in UK manufacturing; FDF says it accounts for 14% of total manufacturing output. Has this proportion changed recently and what do you attribute the change to?

We are a very stable part of the manufacturing landscape. To put that 14% in context, this sector has a turnover of £72.6bn and gross value added of £21.6bn. The industry employs some 440,000 people. There has been consolidation in the industry so we’re tending to move towards some large groupings of companies. The sector as a whole is dominated by a few very big companies then a host of perhaps 8,000 SMEs down to micro enterprises. But the sector has been stable.

What is the food and drink industry hoping for from the Budget?

The biggest single thing we’d like is for government to acknowledge the strategic importance of the food and drink industry.

We have not felt that we’ve had that in recent years, when the Government has talked about manufacturing and the key sectors of the UK economy. As the biggest sector in UK manufacturing we don’t think that’s right and, particularly with food security so high on the agenda, the Government can take the opportunity on Budget day to make a very clear statement about the importance of food and drink manufacturing to the country and to the economy.

That’s important because of the signal it sends to investors in food companies and the management of those companies, giving them confidence to continue to invest in UK production over other parts of the world, its important for private equity investors seeing a stable, growing and confident area to which to invest and its important to bring people into the industry because we need to get bright young talent into the industry and one of the best ways to do that is for them to see clearly that this is a sector that is valued by the government and that they can have confidence will make a career for them.

So has the F&D sector been somewhat neglected by government policy in preference for, for example, somewhat more glamorous areas of manufacturing such as advanced engineering?

It is undoubtedly true that the sector has been overlooked and when the Government published its manufacturing last year, there was barely a reference to F&D manufacturing in it. If you look at the document that Gordon Brown published in April, New Industry, New Jobs, there’s a lot of talk about manufacturing in that but no reference to food and drink manufacturing, so I think government has missed a trick there.

Investment direction: Is more investment needed in F&D manufacturing to make it leaner, more competitive and to offer and make use of more appropriate skills?

The strengths of the industry are in innovation, not only in process innovations but in product innovation, and in marketing — we have a huge talent in marketing expertise in the UK. So across the board we are a high value added sector that has expertise that competes globally, across all the different aspects of manufacturing. So if the Government wants to have an industry for the future, it needs to give us the incentives to continue to attract enough expertise and excellence to the UK.

Environment: in your recent pre-Budget submission, you concur with the expectation of a green Budget, and you highlighted FDF’s Five-fold Environmental Ambition. What is this and how could a stimulus package support it?

We came together as a membership [around 200 UK food and drink companies] almost 18 months ago to commit to making a real difference to the environment through our fivefold environmental ambitions, which are: reducing carbon dioxide emissions; reducing water use in our processes; reducing food and packaging waste in our factories and aiming to send zero to landfill by 2015; reducing the amount of packaging reaching households and fewer and friendlier food transport miles. We set out to make a difference across the whole environmental impact of the industry.

When we reported back last autumn, we had very encouraging results. For example, we had reduced our CO2 emissions by 17% [across our membership], against 1990 levels. We found that 82% of food and packaging waste at factories was being reused or recovered, and not reaching landfill. We’re working hard to reduce the remaining 18% even further. But to say that actually four fifths already is not going to landfill and is being recycled is actually a very significant achievement.

Energy and waste: is the greater imperative for companies in your industry to reduce wastage and carbon emissions for environmental reasons, or is the driver more about economising, given the recession?

It has to be both. The leadership of our member companies is very aware of the environmental impact F&D manufacturing has, and of their responsibilities to do what they can to mitigate those impacts. What is good for the environment is in many cases good for the bottom line too — for example, we administer a climate change levy agreement on behalf of the F&D sector, and those companies have saved around £14m a year.

When you consider the times we are now in and the pressure on companies, it’s harder to make those investment decisions where they have a long payback, which is why we appealed in our pre-Budget submission about providing incentives and enabling companies to continue to make that investment. For example, if you look at one of the case studies on our environmental ambition, McCain, they have invested £15m on a four to five year pay back period, to put things such as wind turbines on site, they’re investing in an anaerobic digestion facility and they’ve got a combined heat and power facility. They were able to make that investment at the time they planned to, but it would be tougher for them to make that decision with confidence in the current economic climate. And other companies, large or small but particularly smaller companies, will struggle to make those investment decisions with long payback periods when they’re focused on survival.

Provide other examples of F&D companies using alternative energy facilities and what is stopping more companies from using them?

There are two main factors stopping them, one is simply that the facilities have to be there. We are working closely with the National Industrial Symbiosis Programme, NISP, and WRAP [Waste & Resources Action Programme] to match the availability of the infrastructure to the corporate appetite to use it. We hope to have a map on one hand of where plants will be created, and on the other where the waste is arising that can be diverted to that process. Government has to provide and invest in the infrastructure to take the waste, then for some companies they will need incentives to be able to take those facilities up in the short-term because of cash flow problems, so they’ll need some help to get there. Industry will get there on it’s own over time but in order to accelerate the pace we need targeted investment that will help companies to take those long term investment decisions on a shorter time scale than it would otherwise be able to do.

Govt help might be in the form of targeted subsidies, or adjustments to the planning or tax systems.

Skills: Does the food and drink industry need to “up-skill” its workforce? What is the most effective method of doing this; that is, which skills bodies and training schemes offer the F&D industry the most effective training?

We work very closely with the sector skills council for food and drink manufacturing, Improve. It has done a lot of work over the last 3-4 years to map the skills needs for the sector and match that to the availability of the right courses and training — we’ve supported them very closely through that. They are part of the skills alliance that work with the Department of Business, Enterprise and Regulatory Reform (BERR) on skills for manufacturing, through their Insight to Manufacturing Programme and their Manufacturing for the Future programme, which is about trying to attract talent into manufacturing generally; but we want a slice of that for F&D manufacturing.

We’re also involved in the less highly qualified end of the spectrum, working through initiatives like championing the new diploma in food manufacturing and product design which we introduced this year. That is a very important piece of the jigsaw of trying to attract people at all levels in all the different kinds of roles, because it is a very diverse career choice and there are a very diverse set of jobs available.

Is it difficult attracting qualified people into your industry?

We have been successful attracting good quality people in the health and wellbeing side and the work we’ve done to invest in healthier products, we’re leading the world in that. And we’re leading the world in areas such as marketing. So we have been very successful in promoting the UK as a centre of excellence. But you have to put up against that the research that we did with Improve last year that shows that around 25% of food science jobs in the UK are vacant. You can see that we do have a problem of attracting the talent of the future into the industry and that needs to change if the UK is going to maintain its position.

Where does the FD stand on Train to Gain and the amount of paperwork involved in this initiative?

Its one of the things we’ve highlighted as a very quick and easy thing for government to make a real difference for our smaller members in particular, to take an axe to bureaucracy, and I absolutely hear and understand our members’ bureaucracy grievances. This is a very highly regulated sector and that’s absolutely right and proper, particularly regarding food safety. But we’re also burdened continuously by new regulation, quasiregulation and voluntary targets that we’re being asked to sign up to. We can’t do that and maintain a healthy and vibrant industry in the downturn, so our Budget submission had a moratorium on more regulation.

Is food security the biggest global challenge to the F&D industry?

It has to be for the planet. People are still working towards what food security really means. What it doesn’t mean is self-sufficiency, but it does mean the ability to maximize and use resources efficiently. Its playing to your strengths effectively, so partly about maximizing food production where that’s environmentally sustainable and the right thing to do but also about open and flexible world markets, about global sourcing the environmental and social impact — a very complex and rich mix, but it has to be high up the agenda and it certainly is for the companies we represent.

Nobody has seriously floated self-sufficiency as a likely model for the UK. The debate is much more about what we have to do globally to make sure that we can feed the planet. Looking to 2050 and a doubled population, and food production going up by 50%, there’s enough challenge there for everybody to have a part to play in that.