Food and Drink Special: Scotland’s exports surge and new SNP policies will maintain the growth.

13th February 2017

Today’s good news report begins with the mouth-watering prospect of making UK Environment Secretary, Andrea 'Scotland is full of subsidy junkies' Leadsom, eat her own words about Scotland. Her plan to boost UK food and drinks exports by £2.9bn in the next five years is a complete non-starter if we can get out of the Union before then.

The Scottish drinks industry has another cause for celebration this Burns Night as new government figures reveal that beer and gin exports are catching up with those of ‘guid auld Scotch’

This is from The Drinks Business on 25th January, 2017:

‘HMRC overseas trade statistics revealing that Scotch exports are currently shipped at a rate of 34 bottles every second….With two-thirds of the UK’s gin produced in Scotland – accounting for more than half the world’s total exports – and a record 22 breweries opening last year – bringing the total number of breweries to more than 100 for the first time in more than a century – the demand for traditional Scottish drinks shows no sign of slowing.’

“Scotch whisky is a driving force of the UK food and drink industry, accounting for nearly one-quarter of all our food and drink exports each year,” Leadsom said.

I think she might have more accurately said ‘the driving force’. We make most of the gin too? That’s a bit of a tonic.

Readers will probably already know that Scotch whisky is a big part of the UK’s export trade. You won’t be surprised to hear that it creates almost £5bn a year for the UK economy and that it supports more than 40,000 jobs across Britain.

I didn’t know, though, that in 2015 it was the biggest net contributor to the trade in good s by the UK.  For those like me requiring a definition of ‘net contributor’, it’s: ‘excess of selling price over variable costs per unit’ or ‘profit margin?’

So, unlike arms sales, for example, we can sell Scotch and gin for far more than it costs to make them. I have serious doubts about the net contribution from the sales of advanced weapons. Leaving aside the ethics and I know there have to be some reservations about alcohol sales too, the profit margin on an F16 fighter is allegedly 11%. It’s 60% for Scotch. Also, I doubt that the profit margin on the F16 takes into account government grants and development costs. The development costs for the F35, which the UK hopes to buy for its aircraft carriers, have risen from 233 to 379 billion dollars! Those costs will have to be recouped in the sales.

Potential £750M boost to Scottish food industry

On 10th February 2017 reported enthusiastically on a new Scottish Government initiative:

‘Scotland’s food and drink industry could get a £750M boost, as the government plans to make public-sector catering contracts more accessible to Scottish businesses.’ 

At the moment only 48% of food contracts for schools, hospitals and other public-sector organisations are supplied by Scottish businesses. Rural economy Secretary, Fergus Ewing wants to see this figure increase. Obviously, preferential treatment is not allowed but a public contracts website that businesses sign up to will, it is hoped, ‘bring the whole supply chain together’ and ‘increase local sourcing’.

Scottish fund to support organic conversion opens

Farmers Weekly on 12th February 2017 announced:

‘Scottish farmers who want to convert to organic can apply to the Scottish government for support under a new scheme. Farmers have until March 31 to apply for the five-year agreements which will start in 2018 and are guaranteed for the full five years. The payments are front-loaded for the first two years to support conversion, with reduced support available for a further three years.’

According to Scottish government figures there has been an 11.7% increase in spending on organic food in the last year. The total spend was £57.8 million. Crucially, home-grown supply is insufficient to meet demand and so there is a big domestic gap to be filled.

Reader figures are falling after my abandonment of the ‘attack dog’ strategy but I’m still feeling better so…..


11 thoughts on “Food and Drink Special: Scotland’s exports surge and new SNP policies will maintain the growth.

  1. Hugh Wallace February 13, 2017 / 11:33 am

    It needs to be remembered that Scotland is responsible for 100% of the world’s Scotch production, regardless of how Westminster decide to divvy up the export figures.


    • Finnmacollie February 13, 2017 / 1:12 pm

      And I must be responsible for a good proportion of its consumption 🙂


      • Hugh Wallace February 13, 2017 / 10:36 pm

        That’s how to keep the economy going. It is practically a patriotic duty to drink whisky & gin. Slainte!

        Liked by 1 person

  2. Sam February 13, 2017 / 3:31 pm

    Here’s a question regarding Scottish produce. Often read that if the final port of export for goods made in Scotland is in England then these goods are marked down as English produce.

    Re American Fighter Aircraft , have read that a compliment of them for one of the New Gordon Brown Carriers will cost the UK twice the price of the carrier.
    Then when you look at the cost of the American weaponry for the new Trident Subs. I ask my self what reason is there for the existence of the British economy other than creating money to be spent on American weaponry. I’ve missed out the cost of the illegal wars.

    Liked by 1 person

  3. johnrobertson834 February 13, 2017 / 4:48 pm

    I’ve heard the same story re port of exit. Can find definitive evidence. Re USA, like Oz, we’re a client state.


  4. johnrobertson834 February 13, 2017 / 5:06 pm

    But what about profits where the HQ is in London? See the last sentence:

    The role of headquarters in multinational profit shifting strategies

    Matthias Dischinger and Nadine Riedel

    This paper stresses the special role of multinational headquarters in corporate profit shifting strategies. Using a large panel of European firms, we show that multinational enterprises (MNEs) are reluctant to shift profits away from their headquarters even if these are located in high-tax countries. Thus, shifting activities in response to corporate tax rate differentials between parents and subsidiaries are found to be significantly larger if the parent observes a lower corporate tax rate than its subsidiary and profit is thus shifted towards the headquarters firm. This result is in line with recent empirical evidence suggesting that MNEs bias the location of profits and highly profitable assets in favor of the headquarters location (for agency cost reasons among others).


    • broadbield February 13, 2017 / 7:04 pm

      But one reason why some MNE’s pay so little tax in the UK is due to “transfer pricing”, where a “subsidiary” pays another part of the same company, usually based in a tax haven, a price for goods or services or intellectual assets etc and thereby diminishes its profit and tax liability in the UK. Richard Murphy’s site has lots on tax: as does the Tax Justice Network:

      Fair and progressive tax must be at the centre of an Independent Scotland’s fiscal and social policy.


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