The food and drink industry is an important part of the Welsh economy and the food supply chain is one of the Wales’ largest sectors, employing more than 240,000 people with an annual turnover in excess of £19 billion.
In 2016, 92.7% of Welsh meat exports which left the UK went to the EU.
As well as being a major employer in its own right, food production also supports a number of other industries such as tourism and hospitality.
To scrutinise the First Minister on the Welsh Government’s support for food and drink, and current issues facing the industry in Wales, the Assembly’s Committee for the Scrutiny of the First Minister visited Newtown on 16 February.
With uncertainty still about the UK’s future post Brexit, the Committee was keen to question the First Minister about potential future international trade arrangements and the implications for the industry.
Visit to local food producers
To understand local business concerns Committee Members visited Hilltop Honey, a local food producer, and held a roundtable discussion with representatives from the company and two other local businesses, Cultivate and Monty’s Brewery.
The Committee toured Hilltop Honey’s facilities and discussed a number of issues facing the food and drink industry, including tourism, trade, branding and promotion.
In particular, participants stressed the need to promote the quality and range of Welsh products in a more coordinated and high-profile way.
In relation to Newtown and mid-Wales, the Committee heard views that there is a “lack of coordinated marketing message for Powys” and “not enough support to develop the tourism industry in the area.”
The importance of mutual support between Welsh businesses was discussed, with the suggestion that “Welsh companies have got to work better with Welsh companies” for mutual benefit.
The businesses present also expressed concerns about the likely impact of Brexit, including the loss of access to EU funds and continued uncertainty about future trading arrangements with Europe and further afield.
First Minister answers local business concerns
Several specific suggestions that were proposed during the roundtable discussion at Hilltop Honey were raised directly with the First Minister during the formal Committee meeting.
The Committee questioned the First Minister over whether the Government could consider making a company’s first attendance on a trade mission free of charge, having heard that the costs of participating could put off small businesses from being involved.
Whilst the support already available from the Welsh Government was positively regarded, it was suggested that more companies may be able to participate if they could experience a first mission with a lower investment.
Given the emphasis that businesses had put on the need to promote the Welsh food and drink industry and Welsh produce, Members recommended that the Welsh Government should consider theming a future year of tourism promotion around ‘Wales as a home of food and drink’.
The First Minister agreed to give further consider to both of these suggestions and the Committee will write to seek further reflections.
Brexit and future international trade
Brexit and future international trade arrangements were key themes of the questioning of the First Minister.
The Committee heard of major concerns around the potential impact on food and drink producers if tariffs were applied to products exported from Wales to the EU.
The First Minister stated that:
“…90 per cent of our exports go to the single market. Meat, for example, can carry, in extreme circumstances, a subsidy of 104 per cent…Now, it’s obvious what the effect would be on our sheep meat exports if that were to happen, and there are a number of tariffs in other areas as well. So, tariff barriers are the ones that are most obviously talked about, because they would make our goods more expensive in our most important market.”
Concerns were also expressed about the impact of other barriers, such as slower customs processes impacting upon perishable goods and the need for continued alignment of food standards between Wales and the EU following Brexit.
In the absence of future EU support for the farming industry, the First Minister called on the UK Government to provide the necessary funding so that the Welsh Government would be able to guarantee payments to farmers.
The First Minister stated that this funding should not be part of the overall block grant to Wales and should be ring-fenced away from funding for other public services.
Catch up on the meeting now on Senedd TV.
Or read the full transcript.