206. The Policy Commission on the Future of Farming
and Food believed that "one of the greatest opportunities
for farmers to add value and retain a bigger slice of retail price
is to build on the public's enthusiasm for locally-produced food,
or food with clear regional provenance".
It identified the main source of funding to support such initiatives
as the Rural Enterprise Scheme, which "provides assistance
for projects that help to develop more sustainable, diversified
and enterprising rural economies and communities. Its coverage
is wide-ranging but the primary aim is to help farmers [although
non-farmers are also eligible to receive assistance] adapt to
changing markets and develop new business opportunities",
and set out a number of recommendations intended to overcome barriers
to the widespread development of local food products. The Policy
Commission recommended that:
- "the Rural Enterprise Scheme budget should
be substantially increased at the Mid-Term Review";
- Regional Development Agencies "should consider
how to overcome problems of distribution and availability of processing
within their regional economic strategies and seek to encourage
the networking and planning that are necessary for the development
of these local initiatives. Where third-party support processing
facilities are available, every effort should be made to work
with existing businesses";
- where need is identified, "professionally-managed
collaborative ventures developing processing units should have
a high priority for grant funding and Government aided venture
capital initiatives. The English Collaborative Board should be
involved in scrutinising these applications"; and
- "retailers who give over a portion of their
store as an outlet for local producers to sell direct to the public
should receive business rate relief on that part of their premises".
207. We discussed these recommendations with Sir
Don Curry, the Chairman of the Policy Commission and with a number
of other witnesses during the course of our Inquiry. Sir Don highlighted
the "significant rise in farmers' markets ... [and] an increasing
interest in local food, locality food and regional food".
He described again the obstacles to the expansion of the market
for local food, and he emphasised that the Policy Commission recommended
that both Regional Development Agencies and Food from Britain
should have co-ordinating roles to play in developing a regional
food strategy, including distribution, and "driving speciality
foods and local food initiatives", respectively.
However, he accepted that local food "will not be the mainstream
of food production [although] it can [provide] valuable opportunities
for the people prepared to participate in it to add value and
sustain what would otherwise be unsustainable businesses".
He was not able to say how the recommendation relating to the
provision of business rate relief in respect of the retailing
of local produce would work,
but instead said that the recommendation needed to be teased out
as the report was implemented.
208. There was support for the idea of developing
local food initiatives from a number of our other witnesses. The
RSPB said that it was aware of an "entrepreneurial spirit"
amongst farmers and thought that there were "quite a lot
of initiatives developing".
Friends of the Earth argued that Regional Development Agencies
should put strong local food economies at the centre of their
policies to "regenerate and sustain local business and employment".
(In fact, some are doing so. Yorkshire Forward is developing the
concept of business clusters, of which one is food.) The Council
for the Protection of Rural England said that it was "very
much in favour of the development of local food economies",
and added that it had shown that schemes which aimed to link farmers
directly with consumers "help to generate jobs and generate
greater amounts of revenue within local economies and actually
contribute to rural regeneration".
209. However, some of the support was more cautious.
Professor Hughes pointed out that local or regional food "will
only be successful if consumers think it is relevant", and
that "not everything has value because it is local or regional".
This need for caution was borne out by the comments of the supermarkets:
Tesco confirmed interest in 'local' produce but said that its
customers were "more concerned about health, safety, animal
welfare than ... about local [food]".
Furthermore, research conducted by the Institute of Grocery Distribution
suggests that local food might not necessarily add value to the
farmer, once processing and other costs are taken into account.
The Institute found that "although the majority of consumers
are willing to pay more for such local food, one-third of consumers
actually expect to pay less for local foods, simply because it
is more efficient to distribute locally and therefore the cost
should be less".
However, it is clear to us that marketing and advertising can
establish strong markets for regional products such as Scottish
and Yorkshire beef, Wiltshire bacon, Lincolnshire potatoes, Lakeland
or Welsh lamb, and Wensleydale cheeses (even if it is not made
there). We take the view that regional branding holds out good
210. Whitbread cited the example of a farmer who
had taken advantage of the fragmented nature of the food service
sector to supply local restaurants. In doing so he had demonstrated
that need for farmers to be "entrepreneurial".
Opportunities will not just fall into farmers' laps. They need
to understand the market and be able to spot opportunities. Although
the local food market remains relatively small a number of successes
have already been recorded. This is because people have tested
their ideas in the marketplace and responded if they have received
favourable feedback. The Rural Enterprise Scheme has a role
to play in the development of local food initiatives, but it remains
the case that the true basis for success is producing something
that the consumer wants. Creating regional or national food brands
may be a more fruitful way of exploiting local identity, though
producer organisations like co-operatives have traditionally lacked
the financial muscle to be able to develop and promote new national