Campaigners in favour of the ‘yes’ vote are confident that seceding would be wholly beneficial for the sector. However, many are presuming that an independent Scotland would be swiftly granted membership as part of the EU, and this may not prove to be the case.
The white paper Scotland’s Future: Your Guide to an Independent Scotland, produced by the Scottish government, assumes a natural progression into the European Union. Following a ‘yes’ vote, there would be an 18-month period in which time agreements between Scotland, the remainder of the UK and the EU will ideally be made.
Should there be discord at the end of this period, the Scottish government must have contingencies in place to support the industry and ensure that its ability to export competitively is maintained.
Scottish food and drink exports were worth £5.4bn in 2012, and over 70% of these went to the European Union (according to Scotland Food and Drink), including exports to France, which valued £675m. Clearly, this is vital revenue that’s largely underpinned with the financial and trade benefits offered by EU membership. The reintroduction of trade barriers would cost the sector millions of pounds in duty charges and tax should the EU negotiations be delayed or, at worst, fail.
While the impact of a departure from the EU would be far reaching, it’s worth exploring the areas that would be hardest hit.
It will come as no surprise that Scotland’s biggest export is Scotch whisky. Its value in 2013 was £4.3bn, according to the Scotch Whisky Association (SWA).
The European Affairs Department (EAD) of the SWA works to ensure that the drink can be sold on equal terms with all other spirits in:
The announcement in George Osborne’s latest budget to the end of the alcohol duty escalator is a significant boost for the industry. This would have added 4.8% in excise duty, which Scottish Conservative leader Ruth Davidson warned would add £2.50 to the price of single malt whiskies. If Scotland were to leave the UK and fail to join the EU, the potential is that it would have to renegotiate such tariff deals with the UK, EU and other nations without the leverage of being part of the world’s biggest trading body.
The EU is also in the process of negotiating free trade agreements with the US, which is the largest market for Scotch whisky having imported £758m of it in 2012.
The inability to trade freely and competitively presents a huge risk for an independent Scotland. Trade bodies and legislators will have to facilitate the continuation of these international agreements in some form. Without them, brand owners will begin to question their presence in the country, and should they begin to lower investment or even take their non-Scotch production elsewhere, the resulting job losses and associated economic impact would be devastating.
Provisions for a seasonal workforce must also be made. This means ensuring the free movement of labour, and that effective licensing practices are in place to protect workers.
The recently scrapped Seasonal Agricultural Workers Scheme (SAWS) has resulted in the loss of 22,000 workers from the EU who were provided with temporary permits to enter Britain and harvest crops. Should Scotland secede completely from the Union and not be able to rejoin, changes that facilitate greater flexibility in contracts in order to support seasonal food supply chains will be vital, as would easing access back onto benefits when seasonal work has finished.
The onus in remedying this should not fall exclusively on businesses that will be left with little choice other than to increase wages to lure domestic workers to the roles.
The Gangmasters Licensing Authority (GLA) is responsible for regulating the supply of workers to the agricultural, horticultural and shellfish industries. Employment agencies operating in those fields have to be licensed by the authority that protects workers from mistreatment.
The GLA has been very active in Scotland. From the date of its inception until January 2013, it had revoked 12 licences and refused nine, evidencing a clear need for this kind of administration in the country.
Put simply, if Scotland splits from the UK, the GLA must be replaced in order to protect workers and offer labour providers and employers a framework to legitimately recruit a workforce. This will be costly to an independent Scotland. The GLA’s net expenditure in 2012/13 financial year was £581,000.
There is a range of highly recognisable assurance schemes in the UK, Red Tractor and Lion Eggs being the most prevalent. These are used to promote consumer confidence and high standards, and are fundamentally marketing tools used by producers to boost their profile.
Quality Meat Scotland, a public body responsible for marketing the Scottish red meat sector, is assured under the Red Tractor scheme and this poses an interesting problem to the industry. Under EU competition rules, the logo cannot be restricted to British produce. The reality is that it is used solely on UK foods, and other schemes recognised by Red Tractor assurance are inclusively British. Should Scotland go it alone, clarity on whether producers in the country can continue to bare the scheme’s logo will need to be provided.
Following a vote for independence, the Scottish government has pledged to enter into negotiations with the UK and EU institutions to fully define its fishing rights. Given that the value of the landed catch in 2012 was £87m, these discussions will be vital, and Scotland must maintain its quota on order to sustain the sector.
There will also be some discussion around the availability of Scottish waters to other nations and EU states that are currently permitted to follow fish stock into any EU waters.
A number of Scottish food and drink products have been granted Protected Geographical Status under European Union law through the Protected Designation of Origin (PDO) or Protected Geographical Indication (PGI) regimes.
The status is used to promote and protect the names of quality agricultural products and foodstuffs, and the following Scottish products are all protected under EU law:
If Scotland breaks away and is unable to or is delayed in joining the EU as an independent country, then there are concerns over the continuing use of the status. This puts relative industries and the Scottish government under pressure to re-market these products and ensure they maintain some form of protection.
Copying from other brands can not only harm sales in the short-term, but reputation in the long-term if lower quality products are sold bearing the same label.
There is also significant costs associated with introducing and enforcing an independent system that protects these products on a pan-European scale.
While the focus of the media is on the big issues between the two sides, there is no doubt a vote for independence will have an effect on the food sector. The importance of the food economy to Scotland is clear and the two sides would be well advised to consider the scale of the impact.
© FoodBev Media Ltd 2024