More than a month ago, I wrote about UK Environment Secretary, Andrea ‘Scotland is full of subsidy junkies’ Leadsom. She was quoted as saying:
‘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.’
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.
Today, the Scottish Government announced a record year for Scottish food and drinks exports. Growing by 8% or £421 million to £5.5 billion and having doubled in the time of the SNP administrations, here’s a quick summary:
‘Food exports alone grew by 22% to £1.5 billion. The fish and seafood category recorded the largest overall increase of £156 million (up 26%), with Europe the leading export destination. Exports to EU countries were worth £2.3 billion overall, up £133 million last year. Scotch Whisky exports grew by £153 million (up 4%) to over £4 billion in 2016.’
Crucially, the profit margins for food and drinks sales are high by contrast with other exports. The UK is a big arms trader but the profit margins on advanced weapons are small as the development costs are high and we have often have to bribe Saudi princes to get the contracts.
I’ve only got a US example but I suspect our development costs are no lower. On an F16 fighter, the profit margin is only 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.