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Food Affordability, Access and Security: Their Implications for Scotland's Food Policy - A Report by Work Stream 5 of the Scottish Government's Food Forum

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3 FOOD SECURITY

Security

What is Food Security? Food security as indicated above has a number of wide reaching elements the most important of which we attempt to discuss here. The Food and Agriculture Organisation define food security as "when all people, at all times have physical and economic access to sufficient safe nutritious food to meet their dietary needs and food preferences for an active healthy life" 42

While there are significant food security issues for the individual it seems likely that its principle impact will be on issues at the national and international levels and so this is the primary focus which they have received here.

More specifically Defra considers the different levels of food security as:

  • Individual or household food security which relates to income access to resources and affordability of food.
  • National food security relates to the ability of a country to consume sufficient food even in the face of severe disruptions to the supply chain
  • Global food security is concerned with the ability of the worlds agricultural producers to meet global demand and the efficiency and effectiveness of trading and distribution systems

Defra reports (2008) that "despite recent price increases the UK enjoys high levels of food security due to the small percentage of income spent on food and wide availability of food in stores."

However, a recent Chatham House study concluded 43 "what we had thought of as an abundant food supply is anything but. Western societies, in particular, have tended to take their food supply for granted. The global system as currently operated will reach breaking point unless action is taken". The overall pressures identified by Chatham house are summarised in Box 3.

Box 3 The Chatham House Fundamental Pressures

The Chatham House report lists seven fundamental pressures which affect global food prices and food production and therefore food security

  • Population: Increase demand from a rapidly rising world population with estimates of nine billion people by 2050 with 95% of the population growth in developing countries
  • Diet: The effect of "nutrition translation." As a country becomes more affluent there is a shift away from traditional foods (e.g. crops based) to an increasing consumption of meat and dairy products refined and processed foods. This results in an increased demand of animal feed, water and grazing land and is projected to continue to cause pressure on world food and feed crop prices.
  • Energy: Energy dependence of current systems and related factors such energy policies to reduce energy consumption, links to fertilisers, transport costs, biofuels,
  • Land: The potential to increase the amount of land available to agriculture is limited which suggests that output per hectare would need to be increased to meet the rise in population. There are a number of factors which this relies on (e.g. quality of soil, skilled labour) which are a cause for concern.
  • Water: Increase in global stresses on available water for human consumption relating to demand from an increased population, change in diet, reliance in some instances on non-sustainable sources, predictions for climate change.
  • Climate Change: Effects on crops already attributed to climate change include disruptive weather events, falling yields changes and spread of crop/livestock disease, changes in water supplies. These are expected to continue and in some cases get worse. Predictions are that world agricultural GDP output will decline by 16% by 2020.
  • Labour: Increased urbanisation is resulting in a decreased rural population able to produce primary produce. Other factors include suggestions that agriculture is not sustainable while it relies on poorly paid workers in temporary employment.

The study also identified a number of future-related observations about food.

1. The absolute level of food production worldwide is rising.

2. Despite this, food price has been rising for the last two years

3. Although absolute food production is rising, world population growth is outstripping the increase.

4. Measured in terms of days of consumption, world grain stocks have now fallen to half the levels of the mid-1980s and are lower than at any time since the 1970s.

5. In the short run food prices may well fall or be volatile, but the underlying supply shortfall must be confronted sooner or later.

6. Systemic change will eventually be necessary to 'square the circle' by halting the decline in per capita food provision.

The Chatham report concludes that if these pressures are left unaddressed they "threaten to lead to a significant deterioration in the balance between global demand for food and the capacity of world agriculture to supply."

This document is primarily concerned with national food security as it pertains to UK. However, since national food securities in Scotland and in the rest of the UK are linked to global food security the points described in Box 4 have the potential to affect Scotland.

Recommendation

17) The recent Chatham House report details how a series of world forces are likely to impact on the UK. We support the conclusions of this study and recommend the need to evaluate how their impact on Scotland might differ from that on the UK as a whole and to plan appropriately.

3.1 The Contribution of the Food Supply Chain

Key Issues Constructive debate about Scotland's food security depends on asking a series of key questions. These include: Where does our Food currently come from? How robust is the current Scottish food system? What are its main strengths and weaknesses? What should be the continuing role of the supermarkets? How might value added activities in the food sector be increased? What proportion of the food we consume should we aim to produce in Scotland? We address some of these issues below.

Where our Food comes from. Trade in food is a major international activity and it is increasing. In recent decades trade in food has increased by 550% over a period when total production increased by 320%. 44The UK sources 55% of its food imports from the EU45; with no single country accounting for more than 13% (Defra) 46. This suggests that our supply chain is founded on production in 'safer' countries in terms of their robustness. However this total masks a high level of reliance on non EU sources for fruit, animal feed and fertilizers 47(Table 5). It also demonstrates how influential EU policy is on our supply chain.

Table 5 The source of UK food, feed and fertilisers48

Component

Source

UK

EU

Rest of World

Food

48

29

23

Animal feeds

81

5

14

Soya

0

18

82

Non- UK Fertilizers

68

32

If the countries from which we purchase food are limited in number then so to an even greater extent are where individuals obtain food. According to TNS Worldpanel, in December 2008, the four supermarkets (Tesco, ASDA, Sainsbury's and Morrison's) accounted for 71.5% share of the food retail market in Scotland. As a result the supermarket sector is pivotal to both national and individual food security and to any attempt to make changes to the supply chain. This situation is however not unusual for the EU. Only in Italy and Greece and in a number of the new entrants to the EU such as Poland is the share of the food market controlled by major companies less than in the UK. In addition our existing retailers have a good record on national and local sourcing. For example, in the year ending 2006, 100% of eggs, 100% of milk, 90 % of fresh chicken, 89% of beef, 70% of lamb and 96% of carrots sold in major supermarkets were all produced here. 49

Additionally, over recent years our supermarkets have been effective at sourcing a widening range of products at prices which have fallen in real terms. Supermarkets have done this by simplifying their means of sourcing and distributing food. They have also improved the robustness of their chains through investment and working closely with their suppliers. Sophisticated traceability systems and co-operation with supplier's means that problems such as contamination are minimised so that the chain can react quickly to issues such as animal disease. Through contingency planning the supermarket supply chain can react to interruptions in supply. For example, when the primary source of long grain rice (the USA) experienced problems with GM contamination the retailers were able to switch to alternative suppliers.

However, current reliance on 4 major retailers can increase vulnerability though the ability to act against a small number of companies. In times of changing pressures it is critical to future security to assess if a greater number of options would enhance our food security. To this extent there would seem to be an important need to better understand the contribution and the importance of small scale producers and alternative supply systems.

One of the weaknesses in the supermarket dominated chain, which is based on a lean inventory system, is where the interruption is outside the retailers' control, For example, industrial action such as fuel strikes, where despite planning there will be problems without Government intervention.

Externalities and Challenges. In addition the workings of our current food supply chains have significant externalities both in Scotland and in the developing countries including environmental degradation; especially in developing countries, continuing malnutrition (which appears both as a result of an inappropriate diet leading to obesity and an inadequate diet in the food poor), commodification of animals and excessive pressures on agricultural producers in the UK and overseas. 50 Some of these "costs" are neither sustainable nor compatible with Scotland's wider national aspirations and they have substantial carbon costs.

It is important to ask what the challenges Scotland faces in the future are. Those with the greatest potential impact on our food security in relation to the supply side of the food system seem to be:

  • Water Availability: This will be a major challenge as international demand for water increases coupled with the impact of climate change. It matters to Scotland because of the extent of our food imports, especially of fruit and vegetables. Some action has been taken in the processing and retail sectors but more focus is needed on improved use of water. We believe that consumers are some way off an understanding of the importance of water use and the impact of various agricultural systems on water consumption. It is difficult, currently, to see how consumer demand could influence production to improve water availability. This means that improvements will rely on the supply chain working together, without a clear added value to the producers. It is more likely that the economic cost of water will have an impact on demand through higher prices;
  • Farmed land: There will be challenges from the environmental impact of land management. Agriculture, fishing and forestry will always have large environmental footprints. Nevertheless, we believe policy makers need to give sufficient weight on food production compared to environment issues;
  • Pesticide use: The EU is currently considering the fate of a number of commonly used pesticides arguably for food safety and environmental reasons. If bans come into existence the short to medium term, impact on disease on crops within the UK are uncertain;
  • Fish stocks and aquaculture: It is clear there will be increasing pressure on fish stocks in the future. There are several challenges for Scotland. Firstly, can we increase alternatives to current favourites that are under pressure, such as promoting less fashionable species? Secondly, can we increase farmed species, which can be successful but can bring their own problems such as disease and adverse impact on the environment? Finally, can we manage our existing stocks in a more sustainable fashion to ensure their long term future? In all of these areas, the Scotland has made progress and we will see further activity by retailers to promote alternative species and support schemes such as the Marine Stewardship Council, but it is difficult to see what difference these will make in global terms, unless others also act. Again, as with water, there is a need to make these issues relevant to the consumer;
  • Science base: We believe it is important that Scotland and the UK continues to invest in our science base to ensure we are able to improve our supply chain, in areas such as climate change adaptation, food waste management, disease control and sustainable farming. Consideration should also be given to new technologies (e.g. nanotechnologies, animal cloning) and there potential impact on the supply chain along with consumer perceptions;
  • Consumer Trends: It is also important to ask what trends are likely to emerge on the demand side of the food system in the UK and what use could be made of local food networks?

    We predict consumer demand for these alternative food systems will continue to evolve in future years. There will continue to be more interest in the provenance of our food, its production and sourcing, but these will still lag behind the key drivers of consumer choice, taste and price. The key issue, as graphically demonstrated in the current market, is value, which doesn't preclude issues of provenance but means they must be clearly appreciated by consumers alongside price.

    One interesting impact of the current financial problems and temporarily higher prices has been an increase in cooking from scratch and an appreciation of the value of food. If this continues, supported by increased knowledge of cooking we could see an increase in interest in the sourcing of food and food knowledge.

Genetically Modified Foods. Any current discussion of the food supply chain must consider the issues posed by the cultivation of Genetically Modified foods in much of the world. 51 Production using GM varieties covered 114 Million Ha of farmland in 2008.However 90% of this area was in just 4 countries and so 93% of world food production does not use GM technology. 52GM crops remain largely restricted to maize, oil seed rape, cotton and soya. Of these only oilseed rape with an area of 34 kha is a significant crop in Scotland (the maize area in 2008 was 909 ha).

Never the less the role of GM cropping is making it difficult to source components of the diet, and to an even greater extent the components of animal feeds, such as Soya from countries or regions which remain GM free. Soya is found in around 60% of processed foods. It is the principle protein component of many animal feeds. The UK imports over 2 millions tonnes of soya annually. The proportion of the soya crop which uses GM varieties is high in many of the major producing countries. It is estimated that 89% of the US crop is GM and 98% of crop from Argentina and over 50% of the Brazilian crop. 75% of food products in the USA now contain some GM ingredients.

We depend on imports from outwith the EU for soya which is a significant component of most of our processed foods and of our animal feeds, especially those fed to poultry, this is a real concern. (Table 5).

Indeed given the extent of our soya imports and the countries from which they are obtained it must be questionable as to whether all the nominally GM soya which enters the UK for use in animal feeds is really GM free. The extent to which a GM free food base can be sustained without an increase in production in areas over which we have greater control through specific trade agreements is also debateable. Maintaining non- GM product identity is in any case likely to become increasingly more expensive and so may require a revisiting of earlier decisions so as to re-emphasise the previous decisions and put in place mechanisms for monitoring the GM status of all imports or to reconsider policy options.

The GM Issues The use of biotechnological methods in respect of foods has raised issues which have not been evident in their use in other sectors including pharmaceuticals. This seems to be the case even in the USA. While most US production of soya is now of GM varieties to date no efforts have been made to commercialise GM rice varieties. The basis of this is consumer reaction.

In contrast to soya which is always used in a processed form rice is little processed prior to consumption which leads to a closer identification with the basic food product. 53 The ethical issues related to GM foods are today essentially just as they were when summarised by Bruce and Bruce and their co-workers a decade ago. 54 They identified the key issues as being the extent to which those who were concerned based that concern on inherent or intrinsic ethic stand points which were unlikely to change or on consequential ethics which might be alleviated by alterations in practice.

For example many early GM varieties contained, as a consequence of the transformation process, resistance to the antibiotic Kanamycin. Consequential ethics would lead to an objection to varieties containing antibiotic resistance. As a result later varieties were made with out the need for a Kanamycin marker so removing this consequential objection. Many consequential objections remain.

For example many studies, including the UK Governments large scale field evaluation of oil seed rape and maize have shown that current GM crops do influence biodiversity. Changes of this type, even had they been positive would however have no impact on intrinsic objections which tend more to be based on objections to the movement of genes across long evolutionary distances or to the role of the technology in increasing a move to intensive production systems with low biodiversity or the effect of placing key levels of control of domestic agriculture in the hands of a very small number of major international biotechnology companies

The recent IAASTD study confirmed that issues related to corporate control of intellectual property, creation, development and use remained major concerns and that current investment was not focussed on the needs of the poor. It must remain a matter of concern that most of the genes which might aid the alleviation of the consequences of climate change are under patent control by the major international biotechnology companies. At least 55 patent families of around 532 genes which could aid adaptation to abiotic stress have currently been filed on a near international basis by the nine largest Biotech firms. 55

Public Opinion on GM Foods Within the EU as a whole there remains significant opposition (58%) to the use of GM crops. 56 While opposition to the use of GM Technology varied, being highest in Slovenia (82%) positive support was never higher than 35% (Netherlands) and in most countries was around 20%.The one EU country with significant experience of the use of GM crops is Spain 57 Recently published results based on trials of Maize resistant to European corn borer showed that the GM variety out yielded conventional varieties and resulted in growers receiving a greater net return and a reduction in insecticide use. In general GM varieties have not been associated with yield increases. Concern over the potential impact of corn borer was the main reason for adoption. In the area of Spain where yield responses were greatest the price of the GM seed was increased by 20% compared to its price in less responsive areas.

Fair Trade and the Food Chain Fair trading policies both at home and internationally will be important to the correct balance between home production and importing from developing countries and the EU. Both in Scotland and in the developing world food will only be produced and so be available if in the short, medium and long terms production is profitable. Trading policy is thus important to securing future food supplies.

Food and health are current Scottish priorities for investment but they will need to remain so for the foreseeable future if the radical changes which are at the heart of linking food production to reduced green house gas production and using it as a means of improving national health are to be successful.

Recommendations

18) Food security is a complex subject and so it is important that Government and consumers identify the need for different aspects of food security to be assessed and addressed separately often within the context of major policy initiatives such as climate change mitigation, health improvement through diet, increased energy security, and land use allocation for food production. A Scottish food security policy must in total contain elements relating to climate change, water, biodiversity and eco-systems, energy, population growth, land, soil, labour and diet and health.

19) There is a need to quantify the impact of factors such as those identified here on Scottish food security and to evaluate the extent to which there is potential for local action

20) While home production provides a baseline for the national supply of healthy food the efficient workings of the market are also important to securing our food supply. Barriers that prevent markets from functioning properly, such as inadequate consumer information on food sourcing policies and production conditions, should be removed.

21) Food system vulnerability to climatic shocks can be reduced by increased food production (technology) and improved distribution (infrastructure), There is a clear need to better understand the contribution of all of these to food shocks

3.2 The Potential for Action by Scotland

There are a clear range of actions which if taken at a Scottish level are likely to have a significant impact. Dependable and diverse local primary production and processing are likely to give a degree of isolation from global forces.

Improved resilience leads to improved security, and so an audit of growing, processing and manufacturing capability covering all aspects of the food chain would help to produce a better picture of how Scotland is currently placed and establish what action is required at a Scottish level.

Current Scottish Food production. The current production of agricultural crop commodities in Scotland in 2008 is summarised in Table 6 and current production of fruit and vegetables in more detail in Table 7.

In the last decade the area of vegetable production has increased but the area of fruit decreased. Not all of the Scottish production which might have been used as human food is used directly in this way. A significant proportion of Scottish wheat goes into distilling and barley to make animal feeds. In addition a significant proportion of Scottish beef (around 70%) is exported to England.

Table 6 The output, thousand tonnes, from the major sectors of Scottish crop production in 2008. Figures for cereal crops include total production for human and industrial use only

Crop

Wheat

Barley

Oats

Oil seed Rape

Potatoes

Vegetables

Fruit

706

575

106

142

680

291

26

Table 7 The out put in tonnes of fruit and vegetable production in Scotland in 2008

Crop

Carrots

Turnips and Swedes

Calabrese

Brussel Sprouts

Peas

Other Vegetables

Strawberries

Other fruits

136,973

66,616

12,429

13,655

17,376

44,648

18,086

8,143

Agricultural production in Scotland is however dominated by animal based production (Table 8) and especially that based on extensive systems. Animal production has however decreased in the last decade. Pig numbers have fallen by 30%, sheep by 20% and cattle by 10%.

Table 8 Agricultural production in Scotland and in the UK

Area of major agricultural activities (kha)

Total agricultural land area

Crops, fallow and set aside

Grass

Rough grazing

Woodland

Scotland

6,210

600

1,244

4,036

249

UK

18,694

4,984

7,104

5,732

606

Scotland as % of UK

33

12

18

70

41

Climate and Production Climate has a marked influence on the agriculture which is possible. The land area devoted to rough grazing in Scotland is 368% of that in England but cereal production in Scotland is 48% of that in England and vegetables and fruit 11% and 6% respectively.

While Scottish agriculture functions with a series climate related disadvantages it never the less has a number of marked positive features. These include the quantities of carbon which are stored in our soils and their potential for further storage, the availability of water and our ability to produce animal products from grass and, as a result the ability to develop farming systems based on recycling of animal waste products and consequently a more limited use of energy based resources such as fertilisers and pesticides. Given the challenges associated with Climate Change all of these are of major potential significance.

Alleviating the impact of climate change will be aided by increased soil carbon storage. Current high levels of carbon storage are a product of low soil temperatures but aided by grass production, which partitions more of its photosynthetically fixed carbon to the soil than many other crops, as the major farming activity and by grazing and cutting the grass which accentuates the process.

Water seems likely to become an even more important determinant of crop production in the future as a consequence of increased temperatures. Mixed farming systems have the ability to meet some of their needs for nitrogen from the use of animal manures and so in Scotland where crop and stock production are less geographically separated than in elsewhere in UK there is a higher potential to contribute to climate change targets for agriculture through a higher level of integration of farming activities. 58 These issues were discussed in more detail in sections 2.2 and 3.1.

Scotland's Ability to Produce a Healthy Diet In section 2.4 of this report we considered some of the links between food and health and identified that the average diet in Scotland is deficient in fruit, vegetables and in cereal based products and the quantities of these products needed to improve the diet (Table 4). Elsewhere in the report, sections 4.1, 4.3, 5.1 and 5.3, we discuss the availability of the components of a healthy diet in Scotland. The make up of items used in healthy eating retail studies and the concept of the healthy Shopping basket has been discussed by Anderson etal 59. The make up of the healthy shopping basket is summarised in Table 9.

Table 9 The make up of a health eating indicator shopping basket ( HEISB). Items in bold can currently be produced in Scotland. Items in brackets may be able to be produced in the future if the effects of climate change are as is currently envisaged.

Food group

Food items

Cereal and potato Products

Brown rolls, porridge oats, potatoes, oven chips, white and brown rice,, spaghetti, (Wheat breakfast biscuits), (whole meal bread)

Fruits and vegetables

(Apples) , bananas, grapes, oranges, orange juice, canned pineapple, frozen berries, baked beans, broccoli, carrots, (cucumber) , lettuce, onions, frozen peas, (peppers) , canned sweet corn, tomatoes

Dairy products

Semi skimmed and skimmed milk, low-fat yogurt

Meats and fish

Beef mince, prepared lasagne, chicken breast, haddock fillet, salmon fillets.

Fatty and sugary foods

Low fat spread

The content of the HEISB was drawn up so as to permit a study of the availability and price of healthy food in different parts of Scotland. (see sections 4.3 and 5.3 for more detail) It should not be taken as a firm guide to the make up of a healthy diet. Never the less the composition of the HEISB can be used as a basis for assessing the extent to which those items deficient in terms of the Scottish diet might be produced in Scotland and the implications for our food policy of moving to a diet of this type.

It indicates both that many of the components of a health diet will need to be imported but that many fruits and vegetables either can either be produced or can be substituted by an item which can be produced in Scotland. On the basis of current healthy eating targets 60 and the population figures for Scotland 61 it is possible to estimate what quantities of additional food would be required to meet these targets (Table 10).

Table 10 Estimates of the increased quantities of fruit and vegetables required to allow the achievement of current Scottish Government dietary targets.

Item

Projected increase per person per year (kg)

Quantity needed for the Scottish population (Thousand tonnes)

% of current Scottish production

Probable consequence of the change

Fruits and vegetables

73

370.7

117

Would require movement of some current cereal area into vegetable and soft fruit production. Personal production could contribute.

Bread

174

883.6

125
(current wheat crop)

Currently most Scottish wheat is unsuitable for bread making but climate change may allow some production especially if mixed with hard wheat from elsewhere and if bread making process changed

Breakfast Cereals

6.2

31.5

29.7
(current oat crop)

An increase in consumption of oat based products would help with this target

The Viability of a Diet Based on Local Production The future role of Scottish agriculture in its contribution to the national diet and its contribution to food security are very key issues. There is however a range of options available to our home based agricultural systems as well as options for significant change in our diets as illustrated in Box 4. The Fife diet represents an attempt to live on a diet focussed on foods produced in the area and as such indicates both what might be achieved through a change in patterns of consumption and the impact of such a local focus on the richness of the diet.

Box 4 The Fife Diet

The Fife Diet Collective ( FDC) is measuring and affecting change beyond the farm gate. The FDC is an innovative consumer led network of people that are committed to sourcing food from within the region of Fife, they are the largest network of this kind in the UK.

The ongoing FDC involves communal growing to grow the food required to work towards restoration of a viable local food system. The research engages with the Fife Diet participants shopping and eating habits utilising new media technologies to enhance their ability to source food and communicate with each other as well as monitoring them on four levels: their food miles, carbon foodprint, nutritional balance and household budgets.

Future Research and Technology Transfer Needs The amelioration of factors leading to the generation of green house gases and to global climate change is a major element within Government policy. Any food policy must be consistent with the objectives of climate change policy. The need to assess the significance of changes in crop or in animal production in non economic terms represents a significant change in emphasis. In the past a number of approaches to production were essentially discounted because of there lack of production even though they may have been good in terms of their carbon, nitrogen or water foot prints.

While it is clear that total food production is important it is also timely to review production against the background of a much wider range of objectives. This would suggest the importance of the development of a series of radical options for both agriculture and for the food chain. Such radical options would seem likely to benefit from the provision of additional resources, such as an increased spend on appropriate R&D and on technology transfer.

Recommendation

22) Improving food security will require changes in patterns of consumption as well as in production. There will be value in looking at the potential of initiatives such as the Fife Diet as means of stimulating interest in and discussion of food change options.

3.3 The Importance of Scottish Food Production

The Role of Domestic Production The impact of domestic food production and processing is clearest in terms of its potential effects on food security. Food prices have been affected by government actions for most of the period covered by recent history, and governments have regularly intervened to both reduce the price of food and as a means of influencing the basic nutritional elements. However, in an era of financial turbulence and problematic energy supplies local production seems likely to have a significant role in ensuring food availability in general, but also particularly through Government action for those on low income diets who will always be the most vulnerable to both price rises and short term interruptions to supply.

What proportion of our food we need to produce locally so as to affect security is a key question. Answering it requires us to look at the future and to assess what we think will be the major factors affecting both Scotland and the UK and those countries from whom we currently obtain most of our food. At the present time food remains relatively cheaper and more available to the consumer than it was a decade ago and so it could be concluded that there is no current problem in relation to current supply arrangements. However there are risks which are independent of well functioning markets, systemic risks may not be managed well by the market mechanism and in addition to market failures there are other barriers which can prevent the market from functioning. 62 In addition the costs of ensuring an increase in food security by increasing home production will always be easier to estimate than are the benefits of such a policy. The latter depend on both probabilities and uncertainties as well as individual and collective attitudes to risk.

What we can currently be certain about is that the gap between increasing world crop production and world population growth is decreasing, that most of the factors which have lead to increased agricultural production in recent years such as the expansion of the area under agriculture and the use of water for irrigation will not be options in the future and that, that global stocks of grain are at their lowest for many years. This suggests that an approach to the proportion of our food which we produce based only on economic factors 63as suggested in the recent past would be unwise. However all of this needs to be seen in the context of the the UK having the greatest trade deficit in food of all the EU countries. Scotland has a trade deficit in most fruit and vegetables but a surplus in beef and lamb. At the present time the UK is 60% self sufficient and 74 % self sufficient in foods which can be produced in the UK. This however represents a decrease from a high of 80% in the mid 1980s for all foods and around 95% for indigenous foods. 64

It helps to question why we do not produce all of our own food. We produce less than we consume because agricultural land in the UK is scarce compared to our population and to the availability of land else where, because our climate prevents the production of many commodities such as soya and citrus fruits, because our climate is seasonal and because over time our population has developed diverse tastes requiring significant quantities of the food we produce to be imported. All of this would suggest that there is no easy way to estimate the % of our consumption which should be produced in Scotland. It will necessarily vary across commodities (Table 9, 10). It would be inadvisable to estimate it on the basis of current economic factors: the problems in the banking sector in 2008 and 2009 have made the UK a poorer country than it was when the previous Defra analysis of the situation was carried out. On the basis of past trends 65 the aim of producing approaching two thirds of our food from our own resources would seem to be prudent. This needs to allow for our continuing ability to export premium products. The rationale for both of these is addressed later in this section.

Scotland's Food Trade The majority of markets for Scottish manufacturers are not actually in Scotland. Given the great importance of the UK and international markets to Scottish food and drink manufacturers, being insular is not an option. This is particularly true in light of the importance of both imported raw materials and home production for Scottish manufacturers. Furthermore, wider markets (beyond Scotland) are critical to food security in the sense that they encourage incremental increases in products beyond the demand levels generated by a purely domestic market.

Scottish trade figures are only available for trade with countries overseas, from which trade with the rest of the UK is omitted. Imports and exports of different food categories are shown in Figure 6. It would help to have better information on trade flows within the UK and to have information on Scottish capacity for food manufacture and on the requirements of this sector.

Figure 6 Scotland's trade in food by category, 2007 (£000s)

Figure 6 Scotland's trade in food by category, 2007 (£000s)

Source: HMRC

Given the large volumes of food imported and exported between Scotland and the rest of the UK, it is important not to read too much into these statistics. In addition to the fact that it does not show Scotland's trade relationship with the rest of the UK, any produce that flows between Scotland and overseas countries that goes through the UK is also unaccounted for.

Figure 7 Scotland's trade in food and drink, 2007(£000s)

Figure 7 Scotland's trade in food and drink, 2007(£000s)

Source: HMRC

Nevertheless, these figures give an indication of what food types flow in and out of Scotland.

For example, Figure 7 shows that our food exports are much lower than our exports of drinks. This is mainly due to high exports of whisky, in production of which Scotland has competitive advantage. By looking at exports of different categories within food, Figure 6 shows that fish is our biggest export. Also, we are very reliant on the import of animal feed, which means that even though Scotland's livestock production is high, we are still heavily reliant on trade even in that sector.

What proportion should we aim for? The proportion of the food consumed in the UK which is home produced has varied from a low of around 30%in the 1930's to a high of around 70% in the 1980's. 66 As recently as 2006 the UK government argued that our ability to produce our own food was not of strategic importance as the market would ensure that we were fed. 67 This view is now being increasingly challenged on the basis of its sensitivity to global factors such as trading on the commodity markets and because of concerns related to the long term effects of climate change.

Although UK food imports have always exceeded exports the gap has been increasing steadily since 1960s and doubled between 1995 and 2005. 68 In this period imports of poultry increased by 82%, eggs and egg products by 163%, breakfast cereals by 229%, pork by 171% and beef and veal by 101% (Barling et al 2008) Recent UK government reports have tended to minimise the importance of home production and have stressed the importance of the market mechanism and our ability to import much of what we need, especially from else where in the EU69.

Conversely, Defra also state "increased domestic production would improve the balance of payment, protect from global market volatility, reduce dependence on suppliers and ports, and prevent disappearance of industry 70.

Also the recent Chatham House report on Food Security 71 states "recent market responses in nearly 40 countries around the world delivered principally through imposition of export controls provide a sharp reminder that reliance on a fully functional global trade system comes with a degree of risk. Assessing what might be the appropriate balance between home production and imports and developing options to increase the security of home production now seems appropriate."

The Reasons for a Reappraisal Price rises in 2008, and turbulence in financial and trading markets, issues surrounding climate change together with concerns about animal diseases and forward projections about the future capacity for production in some of our current suppliers are significant reasons why we consider the issue of home production should be re-examined. We understand that the current diet enjoyed by Scottish consumers can not be produced in Scotland. However we consider there is need for better understanding of what can be produced and of our current ability to meet our food needs from domestic production.

Government should ensure that there is research available to provide guidance on what crops would grow best in Scotland, what the land options are for such crops and how to use the produce both in respect of processing by food businesses and on an individual basis. This needs to relate both to the current situation but also to the projected cropping environment expected as a result of what we currently understand to be the situation when currently anticipated consequences of climate change have become a reality. 72 Such information would also provide a better basis for Government to respond to current EU proposals to redevelop the CAP and which has the potential to have a major adverse effect on Scotland's ability to remain a significant producer of its own food. 73

The links between Scottish agriculture and food security are complex. They raise issues such as appropriate land use and the working of rural communities which go beyond food production. There is also widespread concern over the erosion of the Scottish and the rest of the UK farming sector and in comparison with other nations; the UK agriculture sector shows poor growth and levels of efficiency. There are also uncertainties over the long term capacity of some sectors of the UK agricultural base 74 (e.g. the dairy sector ;).

A Changed Scottish Agriculture We argue that. Scottish Agricultural production needs to be seen as the baseline for Scottish food supply. As such Government needs to consider the current and future position of Scottish agriculture and maintain programmes of research which will continue the supply of new technologies and change of practice to the Scottish agricultural industries. For instance we should support the new eco-technological production approaches which seem likely to emerge and may include: crop rotations, cover cropping, agro-forestry, 'green' fertilizers derived from agricultural and food waste, new varieties (that have resilient, pest-resistance), more efficient use of inputs through advanced information technology, and reduced waste.

Also, social values and preferences are shifting decisively towards what are broadly viewed as 'sustainable' methods, and wherever there are affluent consumers, the demand for local, seasonal, increasingly vegetarian, fairly traded and organic food seems likely to continue to rise. 75 Government needs to put in place the necessary research and knowledge transfer to assist these changes. There is a view that agricultural production can be switched on when needed in the same way that industrial commodities can be increased as long as the basic production capacity remains. However we would argue that much of agriculture is not like that. Land does not remain in a productive condition and the skilled work force, those able to take part in knowledge and technology transfer and researchers in key areas of agriculture such as agronomy and crop management will not be available unless these skill bases are maintained. If lost they will take a significant period, probably of the order of a decade, to recreate.

Although the above section refers primarily to agriculture, fisheries and aquaculture have an important role to play in the food supply for Scotland and the issues affecting them are of a kind with those raised above and so should also be considered in the context of the discussion above.

Recommendation

23) The UK has the greatest trade deficit in food of the EU countries There is a need to follow up the 2008 Food consultation with a public debate on these issues with the aim of developing a national consensus. Government will need to put in place the necessary research and knowledge transfer to inform such a debate.

24) Government should initiate research to assess what novel opportunities are available and likely to have significant impact on the proportion of the Scottish diet which can be produced in Scotland.

25) Scottish Agricultural production needs to be seen as the baseline for Scottish food supply. There is need for better understanding of what can be produced.

3.4 The Importance of Energy

The Energy Needs of Agriculture Energy issues will impact on all parts of the food chain as a result of their effects on storage and on transport costs. They will have a significant additional impact in the processing and production sectors. 76

In recent years the energy costs of the processing industry have increased significantly. There remains a clear role for Government to provide an energy network which is fit for purpose, has sufficient capacity to meet the needs of industry and facilitates growth. There is need for a range of approaches to reducing energy costs. These include for the processing industries more sustainable working practices, use of renewable energy, improved building techniques.

The functioning of Scottish producers is also linked to the availability of affordable energy. Many current approaches were developed at times when the supply of energy seemed unlimited and inexpensive (e.g. reliance on nitrogen fertilisers, pesticides) see also section 2.2.

Generation of Energy on the Farm Energy influences both our ability to produce and the dependability of production by many of our current suppliers. Developing means of linking the generation of energy and production at farm levels will be increasingly important. Box 5 gives an example of such an approach.

Box 5 Linking Food Production and Energy.

Ice cream manufacturers Mackie's of Scotland have their own energy supply - three Vestas V52 wind turbines - referred to as "Mackie's", "Ice" and "Cream". Each of these graceful machines have a 45 metre turbine and three 25 metre blades on the turning propeller and capacity to produce 850 KW of power - so a total capacity at the farm of 2.5 MW.Wind turbines are not a new sight on the farm, Mac's father Maitland previously installed a smaller turbine which powered the business's former piggery unit until 1997. That was one of the first grid connected wind turbines in the UK but did not have a very large output."Wind energy is renewable, economic, safe, and good for the environment. "Managing Director Mac says "We are keen to find new ways to cut our energy consumption alongside our other environmental projects. The investment in wind turbines makes good sense for our business because our consumers have told us that it is important for them to know that our ice cream is made with 100% renewable energy. It also makes good financial sense, we are a rural business which needs significant power levels and will continue to need more as we grow. "

Options for a reduction in energy needs Oil prices have in the recent past and will continue for the foreseeable future to be responsible for rising prices of food production. Many of the elements in our diets which are being emphasised in relation to health, such as fruit and vegetables, are particularly vulnerable to increases in the price of energy. Increases in the cost of energy in the 1970s were responsible for the loss of much protected cropping in Scotland. In addition the production of fruit and vegetables both a require significant use of water, which is in increasingly short supply and which may involve a need for energy to power irrigation systems, and applications of fertilisers and pesticides both of which require major quantities of energy in their manufacture and application.

Horticultural crops usually receive many more applications of pesticides than do agricultural crops. For example carrots would usually receive applications of 4 different herbicides, 4 insecticides and 2-4 fungicides and strawberries 3 herbicides, 2 insecticides and up to 7 different fungicides. In contrast winter barley normally receives a similar number of herbicides but fewer fungicides and often no insecticides. 77 There is thus a real need to develop systems of horticultural production with lower direct and indirect needs for external inputs of energy if current targets for fruit and vegetable consumption are to be realised. (Table 10)

This is important whether fruit and vegetables are produced here or imported. The key needs are for systems which are more effective in there use of water through systems such as deficit irrigation and more effective gearing of water supply to key production stages. One of the major limitations to the ability to produce fruit in Scotland is the frequency of late spring frosts which kill fruit buds at a time when they are very sensitive. 78 A consequence of climate change may well be a reduction in such frosts increasing the potential for Scotland to re emerge as a producer of fruit and to meet the normal irrigation needs of this crop from our higher availability of water.

Developing ways of making Scottish agriculture less energy demanding is important to food security at the domestic level as well as our commitments to mitigating the effects of climate change. There is therefore a need for research to develop energy efficient means of crop and animal production. This is likely to require a return to a greater reliance on crop rotations, and further development of mixed farming (see also section 3.1).

Energy and the Rest of the Food Chain Energy is important in relation to other parts of the food chain. The food and drink manufacturing is highly energy dependent, especially in the sub-sectors of dairy and meat processing.

On average Scottish manufacturing purchases £0.09 of energy per £1 of Gross Value Added ( GVA) generated. The dairy and meat processing sectors, which are of significant importance to Scotland have levels which are in excess of that and which can be up to £0.35 for dairy processing.

Transport is especially vulnerable both to price rises related to energy costs and also to industrial action. Currently our supermarkets hold only a small number of day's supplies. It seems important to evaluate the long term viability of such policies in an era of peak oil.

Some potential alternative routes of supply are discussed elsewhere in the report. It is clear that were food production to be organised so as to reduce current needs for external sources of energy and to explicitly conserve carbon within the production system that it could make a significant contribution to the delivery of several current climate change targets and increase the resilience of our food system.

Recommendation

26) High food prices and current levels of profitability permit investment in new agricultural technologies aimed at increasing production while addressing environmental issues. Over a period of 10 years and beyond, a new eco-technological production approach seems likely to emerge. Government needs to maintain programmes of research which will continue the supply of new technologies to the Scottish agricultural industries

27) Government should provide additional resources for knowledge transfer related to energy capture and use at farm level and research to identify what options exist for the generation of energy at a farm level which might be used to meet farm based needs such as crop drying.

3.5 The Role of Fair Trading Practices

The Maintenance of Production Capacity. Scotland has always been a trading nation. The limitations of our climate and soils mean that we will always need to import a significant proportion of the food we eat and which we use within our food manufacturing industry. The case for the need to trade fairly in relation to both home and oversees producers was detailed in a report produced by the Church of Scotland in 2007 79. This identified a series of instances of the ways in which the current Common Agricultural Policy and our food chains acted unfairly on producers both in UK and in the developing countries (Box 6.) In the short term current practices may lead to reduced prices but in the longer term production both in the UK and overseas, particularly in the developing countries will only occur if it is profitable. Exports of produce from both the EU and the USA based on marginal costs has resulted in loss of productive capacity in countries from whom we may in the future need to import. Similar considerations apply to some elements of Scottish production.

Box 6 Effects of EU and US export subsidies

Dairy - Jamaica

Winston Tailor, a Jamaican dairy farmer, inherited his land and everything he knew about dairy farming from his grandparents. He delivered fresh milk from his 25 dairy cows to locally based processors who turned it into various dairy products for Jamaican markets. However, a surge of milk powder imports into the Jamaican market - 67% from the EU - squeezed Winston out of business. He simply could not compete with cheap, subsidised EU milk powder flooding into Jamaica. The EU was estimated to be subsidising milk powder exports into Jamaica to the tune of € 4 million annually - with most of those subsidies going to European processors and exporters rather than European dairy farmers. In the end (2002) Winston was forced to sell his dairy cows to the butchers for meat.

Chicken - Ghana

Francis Kumajor runs up and down a busy road in the centre of Accra, trying to sell chickens to commuters in the sweltering heat. Few drivers, in their air-conditioned vehicles, stop for him. "For the whole day I have not managed to sell enough to pay my rent" complains Kumajor, with three cages of birds still standing by the roadside. The cause of Francis' plight is not difficult to find; in fact, he articulates the problem well. "Walk into any supermarket and you will find they are bulging with imported frozen chicken", he says. People do not want to buy local chicken because imported ones are much cheaper."

For the last few years the Ghanaian market has been flooded with cheap imported chicken from the EU and the US. Demand for local poultry has collapsed, threatening the livelihoods of over 400,000 poultry farmers in Ghana. In 2004, imports were estimated to be as high as 40,000 tonnes. In 1992, domestic farmers supplied 95% of the Ghanaian market, but in 2001 their share was only 11%.

Importers pay a duty of 20% on poultry shipped into Ghana. Under WTO rules, the tax could be as high as 96%. In 1994, the Ghanaian parliament passed a law allowing an additional 20% duty to be imposed on imported chicken, bringing the overall tax to 40% - perhaps still not high enough to combat the subsidized chicken imports. However, under pressure from the IMF, the duty increase was reversed two months after its increase. And in 2006, the Ghanaian Government overturned the Act under which the duty was raised, even though a court had recently ruled in favour of farmers seeking the duty protection. The matter will likely go to Ghana's Supreme Court.

(Sources: Oxfam and CorpWatch)

These issues remain important and could act as a basis to define our trading relationships. In particular there is a need to recognise the importance of social relationships both in respect of the consumption of food and in relation to the impact of trading regimes on social relationships among producer groups in Scotland and overseas. Issues such as global climate change have emphasised that there are issues which need to be viewed on an international basis.

Unsustainable and environmentally damaging food production practices both at home and overseas have been a consequence of market orientated trading practices which have been dominated by pressures to reduce price and to buy on price rather than on quality.

The Carbon Footprint of Trading While we need to reduce our greenhouse gas emissions at home it would be wrong were we to continue to be a cause of increased emissions and more environmental damage overseas as a result of our trading practices. Trade is seen as a key element in aiding the sustainable growth of developing countries. Fair trade will not only help to prevent environmental damage, it will also allow developing countries to develop as trading partners and as sources for Scottish exports. Many of the rules relating to trade are set at EU or World Trade Organisation ( WTO) levels and so are not capable of being set by us alone. It is important however that we are clear about the importance of fair trade and that we use our influence to support fair trading systems.

Recommendation

28) Scotland should continue to develop its thinking about what it means to be a Fairtrade Nation and to identify actions which it needs to take so as to increase this as part of its food security policy.