The unsung heroes of recession

Posted on 4 May 2010 by The Manufacturer

FDF's Julian Hunt says its time Government paid the food industry its dues...

It’s a constant frustration for all of us involved in the food sector that we have been taken somewhat for granted during the recession. As politicians have talked about how important it is that we rebalance the UK economy – which is to be applauded – they appear to have had very little to say about how our sector has provided some much-needed industrial stability when overall manufacturing output has been battered by the economic storms that have been raging in the past two years.

You don’t have to dig too deep into the detail of the Government’s data on manufacturing production to see how food processors have weathered those storms, with output down just 2.6 basis points since 2008, compared with an 11 point drop for manufacturing as a whole.

It’s understandable that most people don’t think of baking bread, producing frozen ready meals or moulding chocolate bars as manufacturing per se. But manufacturing is not just about engineering or banging bits of metal, it’s about processing too. And today our sector stands as the UK’s biggest manufacturing sector, employing 440,000 people directly and indirectly accounting for a further 1.2 million jobs, with 7,000 enterprises generating £72.6bn of turnover.

Now, many pundits have been talking about the importance for the UK of an export-led recovery in manufacturing – but I would argue that few sectors can truly claim to have made any tangible progress on this front. And ours is one of those that have prospered.

UK food and non-alcoholic drink exports were up by 4.4% in 2009 to £9.7bn, a fourth consecutive year of record growth, built in part on the back of strong overseas sales of added-value product areas such as soft drinks, breakfast cereals, biscuits, sauces and condiments. Put another way: we have added £2bn to our export figures since 2007 when the term ‘credit crunch’ sadly became part of everybody’s business lexicon.

Compare our performance with the 11.8% drop in exports for all UK commodities during 2009 and you can see that our sector is outperforming manufacturing as a whole.

Innovation remains the lifeblood of our sector. It underpins our success in both the domestic and export markets. The recession clearly created new pressures on pricing and discounting – exacerbated by softer consumer confidence in 2008 and 2009 – to which food and soft drink companies had to respond. Despite those recessionary challenges, our sector launched an incredible 7,500 products onto the UK grocery market in 2009, according to new data from researchers Mintel.

All of which should be a very timely reminder that UK food and drink is not only the country’s biggest manufacturing industry, it is a high value sector offering world class capabilities in areas of production, logistics, sales, marketing and innovation.

Like all major business sectors, we expect growth over the course of 2010 to be sluggish. Consumer and businesses will remain pretty cautious in the year ahead and I tend to agree with forecasts from the likes of the CBI that we will have to wait until 2012 before the level of economic activity gets back to where it was before the recession started. But that is all predicated on how the next Government deals with the challenge of cutting the country’s eye-watering budget deficit in a way that does not stifle the fragile growth that is being predicted. It’s disappointing, but hardly surprising, that neither political party really addressed this issue in their campaigning up to 06 May.

Against that uncertain backdrop, we agreed with Alistair Darling when he said in his pre-Election Budget last month that the role of modern government was to work with the key sectors to help them compete and to prosper. In our case – as the unsung heroes of the recession – the next Chancellor may be relieved to hear that we are not looking for cash handouts or direct intervention in order to remain successful; we are, instead, looking to develop a closer and more strategic partnership with Government.

What would that look like? A clearer, more coherent and consistent approach to food policy right across Departments would be a good start. We also want an appropriate regulatory environment here in the UK so that our industry can remain competitive. But we have another more basic demand: given our economic importance we believe it’s high time that Government stopped taking the food industry for granted.

We are not alone in thinking this way. The Government’s own food policy advisors recently pointed out that the food sector can contribute to balanced growth in so far as employment in the food sector is distributed across the UK. The employment and social cohesion that we generate in rural areas are particularly important, given that manufacturing is the biggest customer of UK farming. Government was also urged to do more to celebrate our sector’s successes; recognise our contribution to the economy and employment; and promote what is best about our food here and abroad.

All of which was music to our ears. Our challenge is ensuring these important messages – and the facts about sector’s importance to the economy – do not fall on deaf ears after 06 May.

Julian Hunt, director of communications, Food and Drink Fedeartion