Food Processing in Agricultural Regions.
Agricultural regions in any country, including the United Kingdom, have historically been seen as poorer neighbours to the more industrialised areas of any particular country (Pierpont 1997). This position has been brought about mainly as a result of the fact that pay, employment opportunity and economic output tends to be lower than other areas of industry. The logistical problem in terms of transport and flexibility of workforce is also a contributory factor.
Consequently, many agricultural regions have seen a significant decline in fortunes and employment during the course of the past three decades. In an effort to these problems, governments at local, national and regional levels have been seeking to produce a range of strategies that will support and regenerate agricultural, the results of which have met with mixed levels of success.
Irrespective of the help afforded to them, many agricultural areas still remain relatively weak. Where improvements are achieved, often it is at the expense of the agricultural industry itself. For example, promotion of cultural tourism, whilst it may benefit some agricultural communities, does not address the core issues, namely improving the indigenous industry and food production chain.
However, recent studies carried out have suggested that there may be another way to approach the issue. This research, as reported by Peter Pierpont (1997), suggests that if the development of food processing is encouraged within an agricultural area, it can result in an increased level of prosperity, producing subsequent improvements in employment, economic output and the GDP per head (Pierpont 1997).
Aims and Objectives
The aim of this paper is to evaluate the hypothesis set by Peter Pierpont (1997) and to ascertain if the development of food processing in agricultural areas can provide a route to prosperity. To assist with the analysis for this purpose the UK agricultural regions of Cornwall and Wales will be used as case studies, with other agricultural regions within the UK and Europe being used for comparative purposes.
Concentrating on the UK in particular, to enable the goals of this research to be achieved it is intended to focus the paper upon the following objectives: -
Provide an analysis of the historical development of the agricultural industry, paying particular attention to this sector within the United Kingdom.
To provide a detailed analysis of the two selected agricultural areas, which will include the past and present economic and employment positions.
Analyse and evaluate the impact that the development of food processing has upon selected agricultural regions.
Evaluate the synergy that is said to exist between the agricultural and food processing industries.
Overview of the research
Following this introduction, chapter two provides a brief background of the development of both the agricultural and food processing industries. This is followed by a critical literary review within chapter three. Chapter four provides details of the methods used for the research required for this paper, with the findings from resulted from the research are analysed and discussed in full in chapter five. The conclusion of this study, together with any recommendations that are considered appropriate, are outlined in chapter six.
Chapter 2 Background
Following the advances in technology over the course of the past three decades, there have been significant changes witnessed both within the agricultural and food processing, as they exist in the UK.
UK Agricultural Industry
Following WWII, the concentration upon the economic value of British agriculture came a poor last place to other industries as the UK sought to rebuild its economic position. Thus agriculture was basically left to fend for itself as it sought to compete with an increasing level of food products being imported from overseas markets (Greer 2005, p.86).
In line with the general industry trends, in both of the selected areas there has been a decline in the agriculture economy during the course of the past three decades, despite the fact that the rural areas have historically relied upon this industry to maintain their local communities. In the UK the rural farming decline has been exacerbated by the concentration of farming methods undertaken by large corporations together with the increasing levels of imported produce, which can be purchased at prices that the UK farmers cannot compete. Similarly, the pressure from retailers for lower pricing has reduced the competitiveness of the local farms. Evidence of these events can be seen from the following (figure 1).
This table shows how, during the past decade the agricultural industry contribution to the UK economy has fallen to nearly half of its 1996 value and the GDP by two thirds. Furthermore, whilst our exports in this area have remained relatively static, imports have increased by nearly 40%, which has affected the country’s self-sufficiency levels. Similarly, although net farm incomes have steadily increased since 1999, the total income from farming has halved, which indicates the size of the agricultural resources that have been lost since the turn of the century.
The concentration of farming into bigger units has been more pronounced in the UK, with an average farm size of 66.7 hectares, than most other areas of Europe, as is evidenced from the following table(figure 2). Even in countries such as France and Germany farm sizes are significantly smaller.
Figure 2 Farm Sizes
At the same time as the above results were being witnessed, there was also a significant drop in employment within the industry. This was partially due to the economic position of Agriculture, but at the same time the historical tradition of offspring following their parents onto the farms was also being broken, with less enthusiasm being shown for taken over the role of farmers due to the long hours of work required for relatively low levels of return.
Figure 2 shows how severe this decline was in the five years to 2000, with a loss of over sixty thousand employees in that period representing nearly ten present of the previous workforce. The loss of skilled workers resulting from persons leaving the industry served to exacerbated the economic problems that it was experiencing.
Figure 3 Fall in workforce
In the case of Cornwall, much of this decline has also been fuelled by the increasing concentration upon the tourism attraction of the area. For example, due to the economic benefits, many traditional farmers have transferred the usage of parts of their agricultural landform food production to activities that will capture a share of the tourist market, such as campsites and caravan parks.
The position in Wales has become even more extreme than Cornwall. Central Wales is a more remote location than its Cornish counterpart, with a low internal level of infrastructure and a less developed transportation systems, which makes it less accessible for business and consumers alike. As a result, local businesses and services such as health care have closed or transferred their services to towns and cities, and much of the rural population has followed. This situation, together with the economic decline in agriculture as previously outlined, has led to many farms in the area becoming economically unviable.
UK Food Processing Industry
Food processing is defined as being any method or technique that issued to transform the raw product, being meat, vegetable, cereals another food products, to an edible dish for the average human. Without this part of the supply chain our diets would be more limited than they are today, with less variety to choose from and a more seasonal aspect to the food we purchase.
Therefore any process, from the preparation of meat at the Butchers to the preparation of ready-made meals for consumer consumption on sale in supermarkets is a part of this process. Food processing also increases the durability of the product, increasing the shelf and use life, which has the effect of reducing waste whilst at the same time increasing the quantity of supply. Indeed, as the BNF (Factsheet 2000) rightly observe, “without food processing it would not be possible to sustain the needs of modern urban populations.
Prior to the advent of new industrialisation methods, mass production and the new technology area, the majority of the food processing system was conducted at a local level. However, subsequent to these events, the food processing systems and organisations became centralised into the more industrialised areas of the country.
The major contributory factors behind this evolution of the food processing industry away from local to a central location was partially dictated by the increased access to labour, which due to its proximity to the workplace was in plentiful supply at a lower cost, together with the advent of the mass production process. In addition, such areas of the country and region enjoyed easier access to the national and international transport network. All of these advantages meant that the businesses involved could reduce costs and increase the speed of the production process.
The centralisation of the food-processing sector of the supply chain was also driven by changes in consumer demands and expectations. As supplies became more plentiful and the retail supermarket phenomena expanded throughout the country the consumer demanded lower prices in the food sector. To deliver this supermarkets needed to reduce their own costs, which could only be achieved by them having access to centralised purchasing outlets, rather than the previously diverse and expensive distribution network.
One abnormality that has arisen from this development is that often products harvested locally are often transported out of their local area to be processed and then returned to the shops within the same locality for sale through stores. For example, the raw milk product could be collected from the dairy farmer, transported to a processing plant a distance away from that farm and then, once it has been processed into the carton that we see on supermarket shelves, re-transported back to the local supermarket in the same area.
Chapter 3 Literature Review
Much has been written about the UK agricultural industry over the years and regarding the way it has developed, and there are a variety of views regarding the way it should develop in the future. Hector(1969) believes that in essence the industry has developed on the basis of an internal colony, with each area being a part of, but in essence operating as a separate unit from the whole. Indeed, if one looks at the UK just after the war, when “home gardens and allotments used to be vital sources of food” (Petty 2002, p.185), it is easy to see how this insular and separate attitude can develop.
In the first half of the twentieth century the British people had a very independent manner and were set in their ways. This contributes to the reason why, despite advances that have been made in agriculture over the years, in earlier section of his research Petty (2002, p.72) discovered that, in the main, the processes used to produce food on modern farms is still very conventional.
Despite the fact that the agricultural industry as an element of the National economy has become significantly less important over the years, there are still certain areas where it is considered to have an essential impact on the local community in terms of the revenue it contributes (Greer 2005, p.74 and p.77). These include such regions as Wales, with its unique hill farming industry, East Anglia for the cereal output and, to some extent, Cornwall for its wheat and grain.
In Wales for example, over a wide area of the country agriculture is still the industry that is central to the regions community and economy. However, despite this fact the area has still witness a reduction in the number of people employed in agriculture (Jones 1999, p.185 andp.309). As has been noted earlier, most other agricultural regions, including Cornwall have experienced a similar decline in the employment base.
Nevertheless, in terms of preserving the countryside and agricultural industry, there is still somewhere in the region of eighteen million hectares of land in the United Kingdom that is used for agricultural purpose (Petty 2002, p.30), for which an effective management strategy has needed to be developed over the years. Certainly, if the UK wishes to halt the decline in the levels of self-sufficiency
However, as has been widely recorded, efforts to revitalise the industry have been thwarted by several events that have had an adverse effect upon the industry. For example, in early 2001, as noted by Agriculture (2007), the decline was exacerbated by a serious outbreak of foot and mouth within the animal population and this, followed by health risks from BSE and swine fever, severely curtailed the agricultural industry’s ability to expand within both the home and international market places.
Following these events, and in an effort to reposition the importance of agriculture within the economy, the NFU , one of the most active representative bodies for the industry campaigned for the government and the EU to create an innovative plan in an effort “to restore public confidence in home produced food” (Greer 2005, p.40). Similarly, farmers in Wales in the late part of the last century engaged in a series of active protests, which were aimed mainly at reducing the effect that subsidised imports
In response to these concerns and also as a result of the initiatives set in place by the European Union, DEFRA has produced and discussed a number of strategies over recent years. With the central focus of these being action required nationally to seek a restructure of the agricultural industry into a more efficient sector (Greer 2005, p.129),the organisation’s purpose is to restore the former prosperity of the regions.
Whilst maintaining the unified approach, development plans have been set in place for “England, Scotland, Wales and Northern Ireland” (Greer 2005, p.41). However, it has been recognised that to prosper, agriculture has to seek new and innovative ways to add value to its industry, which entailed a certain level of diversity from traditional methods and approaches if the industry was to achieve recovery and become competitive nationally and internationally.
Initially some areas, such as Cornwall, have taken the “colonial “approach discussed within Hector (1969) and sought other ways of increasing their individual incomes and prosperity. As has already been mentioned, in this particular region, many turned to tourism for this result. However, with the advent of “cheap” flights and travel, even this opportunity is now in decline. Thus the industry needs to look for more sustainable options. To this end Peter Pierpont (1997) suggested research shows that combining the development of food processing within the agricultural regions may provide a positive option.
As with any are of industry, a range of supplementary operations has grown around agriculture. These indirectly include such organisations as financial institutions, equipment manufacturers and suppliers and the chemical and biotechnology organisations.
However, the most directly linked ancillary industry to agriculture is food processing (Greer 2005, p.49). It is totally apparent that the two industries and inter-dependent. From the food producers to the processing and packaging operations and then on to the retailers, all of these areas are an integral part of the food supply chain.
As has been previously noted, in the past the agricultural industry and regions have tended to remain separate from the rest of the food supply chain. The perceived advantage of this approach was seen to be that farmers felt comfortable and confident within their own business environment and, as long as they were producing the required levels of products, saw this as their main income generator.
However, the disadvantage was that, as the retail industry became more organised and, with the development of supermarkets and other price conscious outlets, so they began to have more influence upon the agricultural industry, forcing down prices and demanding higher yields and quality, all of which added to the economic difficulties being experience within the agricultural regions.
However, European Union regional data strongly suggests that agricultural regions that have taken it upon themselves to develop the food processing industry at a local level have seen increased value-added to the industry itself (Pierpont 1997) although, in his study he suggests that the structure of the French farming industry has given it an advantage in this area over their Cornish counterparts, despite the geographical and socio-economic similarities. Nevertheless, in Cornwall and other agricultural areas of the UK, those within the agricultural industry are beginning to take notice of the agro-food approach.
For example, a group of growers and farmers from the southwest regions of Cornwall across to Hampshire have formed their own “organic marketing co-op,” (Petty 2002, p.112) which provides a better value basis for the sale of products to the retail market. Similarly, in Wales certain regions have created action plans for their agricultural industries which includes integrating more of the food processing and supply aspect of the food chain within their region, thus enabling them to benefit from the added-value of a resource that had previously not been available to them (Greer 2005, p.194).
It is argued by researches that creating a more localised food processing sector within the agricultural regions, where farmers and producers can be more directly involved with other areas of the food chain, including preparation, distribution and marketing, will produce positive results in terms of the financial stability and growth within the farming and rural communities.
It is clear from the research that has been carried out into agriculture, that there is a need to address the decline within the industry, which as can be seen from figure 1 (page 7 of this report)has fallen by ten present in the last decade. The majority of this research shows that the last three decades have seen a consistent decline in the fortunes of the industry, both in terms of its economic value to the UK economy as a whole, and in relation to employment statistics.
Some researchers see developing the food processing industry within the agricultural regions as the way forward and the route to prosperity. The question is whether this theory is supported by the facts within the areas being used as a case study in this paper.
Chapter 4 Research Methodology
Within the introduction section of this study, the four key objectives for the research were outlined. The research into how the agricultural industry has developed, particularly in relation to United Kingdom provides essential background information, which will assist in understanding why these areas have become of such concern to government and non-governmental organisations over recent decades.
The choice of Cornwall and Wales for the case study is appropriate because in the case of the former, much attention over recent decades has been concentrated upon developing the tourism attraction, rather than agricultural needs of the area. Wales provides a much larger agricultural environment, which has to compete with small pockets of heavily industrialised regions, specifically on coastal areas.
Food processing, up until the last decade, has been seen mainly as an industrial activity and therefore it is important to understand how the transfer of this activity to agricultural regions has both evolved and to what extent the case study areas have benefited from this latest development. Similarly, as an integral part of this area of research, the relevant synergies will provide a better understanding of the basis for accuracy of the hypothesis.
Choice of research approach
Due to the nature of the area being research, it is felt that the qualitative method or research, which uses primary data as its basis(Collis and Hussey 2003, p.53), would not have been appropriate. The questionnaire and research based approach, whilst useful, would not have provided the necessary detailed research information that is required for the purpose of adding to the understanding of the issue of food processing development in agricultural regions, apart from giving some indication as to how the various stakeholders, specifically those who operate within the respective industries, have reacted to this evolution.
The significant level of research and statistical data required for this study led the author to believe that the quantitative research approach would be a more productive approach. In an endeavour to ensure the reliability of the data researched, a wide and diverse range of sources has been used for this study (Collis and Hussey 2003. p.71).
This situation provided the author with the ability to cross-refer and check the accuracy, impartiality and validity of the information gathered, which enables the highest possible level of objectivity to be attached to the conclusions and recommendations reached.
With regards to the data relating to the agricultural and food processing industries, this has been acquired from a variety of sources, which includes UK and EU government departments and other industry associations and observers. Included within this data is the relevant statistical information from UK and EU surveys.
Additional data was obtained from Internet sources, books, journals and other industry and economic sources. Wherever possible prime sources have been used for data gathering, particularly in relation to the strategies and policies that have been suggested and implemented by teak and EU governments. This data includes current and suggested policy documents.
Selected areas case study
In keeping with the advices given by researchers such as Collis and Hussey (2003), a substantial amount of time has been expended in digesting all of the material available in relation to the agriculture industry in Cornwall and Wales, to make sure that the chosen material was apposite to the objectives and questions being sought. Furthermore, data from organizations active within the two selected areas was also used.
These sources, together with others, were used to obtain past and future strategic information as well as for outlining the current position of the agricultural and food processing industries in both of these regions of the country. To provide objectivity in regards to this data, industry reports and independent research carried out bother experts in the respective industries were also reviewed.
The reason for the choice of these two areas is that, whilst there are similarities in terms of their agricultural heritage, they differ in terms of economic and political development and evolution. Politically Cornwall is still an integral part of the UK political structure, whereas Wales has a degree of devolved power. Economically Cornwall has attracted a wider diversity of activities and services, particularly within the tourism sector, whereas this has impacted upon Wales to lesser extent.
In order to achieve a comparative benchmark for the case study, the areas selected have been assessed against similar regions within other member states of the European Union. In this instance, information from the EU itself and various sources within the selected nation states, have been used.
Chapter 5 Findings, Analysis and Discussion
To enable an analysis of the hypothesis that was set at the commencement of this paper, it was decided to use two distinct Agricultural regions, these being Cornwall and Wales for the reasons that have been outlined previously.
Agricultural regions – Cornwall
Cornwall is set in the South West of the UK. Although it is traditionally an agricultural region, it has perhaps become better known since the Second World War as a tourist area. Nevertheless, it still has a significant agricultural base within its economy, which is still seen as one of the primary industries for the county (Cornwall County Council 2007), with a growth in the number of holdings during the period from 1997 to 2001 (see figure 4), which compares favourably with the movement in England as a whole.
However, the industry has seen significant reduction in the areas committed to the raising of cattle and sheep livestock, which reflects the overall difficulties that have been generally experienced in this area as a result of disease epidemics such as BSE and also the inroads being made by foreign imports.
Despite recent declines, it is seen as one of the foundations for strong rural communities, but the industry can only retain this position by increasing employment, which through current agricultural methods and strategies is not happening.
Figure 4 Farming in Cornwall
However, despite the apparent improvement seen above, this has not translated itself into improvements on the employment issue. As can be seen from the following table (figure 5), the numbers of people employed within the agricultural industry are continuing to fall.
Despite the fact that in comparison to England, Cornwall has suffered less, the Cornwall County Council (2007) do not see this downward trending their region being reversed in the immediate future, with the majority of the remaining workforce consisting of owners and tenants(Cornwall County Council 2007, 3.38).
Figure 5 Agricultural employment Cornwall
Agricultural regions – Wales
Agriculture in Wales, because of the internal terrain, is most known for its Hill Farming element. It has a substantially higher level of holdings than Cornwall, spread over a greater land mass (see figure 6).
Figure 6 Farms in Wales
In terms of employment the region, like Cornwall, has seen a consistent decline in the numbers during the past decade, although as the following table shows, there was a slight improvement in the figures during 2004 (see figure 7).
Figure 7 Agricultural employment in Wales
Causes of Agricultural decline
Some of the responsibility for the current position and trends has been levelled at the “cost-price squeeze” effect that is currently taking place within the food chain, with consumers consistently demanding lower retail prices. Whilst it is true that this has had significant impact on the industry, it is not the sole cause of the current position. Three other significant factors have also had an adverse effect.
Disease. The perceived lack of safety in British foods following the incidences of foot and mouth, BSE, swine fever and, more recently, outbreaks of avian flu (Haynes 2007) has also had a significant impact upon consumer’s and buyer’s both confidence in the UK and abroad. The fact that these have occurred within a relatively short period of each other has done little to improve the recovery position of the industry as a whole, the timescale of which has been extended as a result of these events.
Technology usage. Apart from the larger corporate farm holdings the use of modern technological advances within agriculture within the smaller holdings has not been taken advantage of to the extent that other industries have respond to this area of business to the same extent. This is presumably due to the older age demographics of the older owners and tenants, together with the time constraints that they experience as a result of low levels of employment. Based upon the lack of profitability of many small farms, another contributory factor tithe lack of new technology resources in use results from the limited financial resources available to purchase the equipment and training necessary for such innovations.
Finally, the local “colony” attitude as indicated by Hector (1969)is still in evidence in many rural and farming areas. The psychological position of a large element of the agricultural community is resistant to change, a situation that makes improvements for greater efficiency difficult to implement.
National and Regional Strategies
There have been a number of initiatives instigated with regard to the agricultural industry, particularly from the European Union, although these and those that have come from the UK authorities, have not been met with unanimous approval. In the case of the EU strategies there Isa body of opinion that this limits national action.
As Alan Greer(2005) states in the introduction to his study on the agricultural industry, “there is a widespread assumption that the existence of a CAP across the European Union undermines the capacity of states to construct their own national policies.” To a certain extent the comment made by Greer is true. As will be seen within this section of the paper, a large proportion of the strategies and policies relating tithe UK agricultural industry have in fact come into existence as a result of EU discussions and directives.
Irrespective of these comments, it is important to remember that the European Union as a whole commits in excess of forty-five billion dollars each year in support of farmers throughout the member states. Therefore it is fair to state, as Cardwell (2004, p.8) does that “Agriculture enjoys numerous advantages in the operation of the Legislative process and bureaucracy.” Whilst it may be true that the major part of these funds are utilised in the purchasing and storage of surplus products such as beef, wheat, milk and butter, before selling it to other nations, usually within the developing and third world(Gardner 1996, p.3), this still represents a significant level of state aid.
The Common Agricultural Policy seeks to achieve fairness of competition within the EU, whilst at the same time providing aid. The potential drawbacks of this policy is that it still leaves farmers vulnerable to policy changes and increases in costs that are not fully reflected within the subsidies.
For example in Wales, which benefits from CAP, the increases in prosperity that it has brought to the hill farmers in the area could disappear if policies change and the EU or local authorities felt that this was providing the area with an unfair advantage, or changed the conditions in relation to eligibility (Jones1999, p.320 and Cardwell 2004, p.227). In terms of cost increases, during the reform of the CAP system it has already been noted that these increases had an adverse effect upon the UK arable industry as awhile (Gardner 1996, p.148). Thus it would be true to say that such policies only remain appropriate should all other factors remain the same.
In the UK in 2002, the government commissioned a report on the future of farming and food (Curry 2002) in an attempt to define strategy, which would led to a more sustainable for the future of agriculture and those who work within the industry. One of the main conclusions of this report (Curry 2002, p.109) was that farming had “become detached from the rest of the economy and the environment.” There port also suggests that this position has been reached partly as a result of the substantial subsidies, which its authors believed should be ended (Curry 2002, p.110).
To address this position the report suggests that new research bodies, comprising of representatives from all the industry stakeholders, including the consumer, should be set, which will include within its remit, the setting up of “demonstration farms” to be used as models of economic success in farming. One comment within this area of the report that is particularly pertinent to the research of this paper is the comment that “at the moment some [food]chains are too long” (Curry 2002, p.113), suggesting that a food chain centre be set up to ensure the communication activities within the food chain are improved. Together with this Curry (2002, p.118) suggests the creation of marketing grants to help farmers to be able to more actively promote their produce in the local area.
This is seen as an important area for farmers to take advantage of, particularly in view of the increase in consumer concerns within regard to the safety of food production and other environmental issues. Similarly, it recommends a higher level of training and involvement by farmers within areas of new technology as it relates to equipment and processes.
Not all of the recommendations of the report have been accepted as appropriate or even workable. Adam Quinsy (2002), whilst praising many of its recommendations, takes issue with the cost element, indicating that, with the price of new technology and the low prices that farmers receive for their products would make it difficult for the farmers to implement many of the recommendations made, for example the increased levels of training.
Furthermore Mr Quinsy (2002) contends that there are inefficiencies in the food chain, but that the retailing end of this sector are the ones who are responsible, and are using higher prices to consumers and lower cost from suppliers to address these issues rather than take steps to make the system more efficient.
However, it does seem from all of the strategies that are being put forward by governments and other authorities, that there is a consensus towards diversification an integral part of the way forward, although the Curry (2002) report stops short of fully supporting incorporating a more localised food programme as part of this diversification programme.
Whether this was intentional, or merely not part of its remit at the time, or even a deliberate omission to avoid creating issues that would be likely to impact upon other stakeholders within the food chain, is debatable. This is in spite of the fact that the Government, in their report “Facing the Future” (2002) recognised that all parts of the food chain were “mutually dependent.”
Food Processing in the agricultural regions
In addition to the findings of Peter Pierpont (1997), many other researchers have indicated that, by becoming more involved with the food processing aspect of the food chain, the agriculture industry can achieve benefits. For example Caldwell (2004, p.312), whose research confirms that the agriculture industry is at a low point of that chain, and the economic results confirm this, also states earlier (p.13) that the inclusion of parts of the food-processing element can increase that communities “GDP” by around two present.
Furthermore there are benefits from EU subsidies that would attach to those who become involved with the food-processing element. For example, agricultural exporting receives a greater proportion of the Farm funds than the pay-out “levies on imports of food” (Gardner 1996,p.44).
Similarly, certainly within the area of organic food processing, the UK government, whilst setting high standards (Cardwell2004, p.282) does provide considerable assistance to the industry, most of which would be directed towards to the smaller farming unit. This is one particular area of the industry where the smaller size of the business, and its lower reliance on mass production, is a distinct advantage.
Some within the industry may consider that the inclusion of food processing within the local agricultural industry may have certain disadvantages. These include the following areas: -
Lack of continuity of sale. The fear in this instance is that changing from a position where there is a constant stream of bulk orders that ensures sale of all production, to one where the level of sale is more locally dependent could leave the farmers with unwanted and unusable stocks. However, this situation can be addressed by efficiency of management and using a progressive transfer of product sale.
Cost prohibitive. The perception is that raising the capital to undertake such a venture would be cost prohibitive both in terms of the capital outlay and the promotion. The latter part of this concern is addressed within the Curry report (2002) where it recommends marketing grant and the former is a question of developing an appropriate business plan.
Lack of expertise and knowledge. Training is available to cover most of these areas and, to a certain extent it is simply an extension of the marketing process of selling in bulk to the larger organisations. Furthermore, by the formation of co-operatives there is the potential to pool skills and resources to counteract any deficiencies in these areas.
Conversely, there are also advantages to be gained from the process: -
Added value. With more control over the processing and destination of its products, the farmer is likely to receive an increase in the revenue per unit of product sold. This will provide additional profits, which will enable the business to invest in more efficient measures and processes within their business.
Local economy. With more funds remaining in the local area, this will improve facilities within the local rural community and lead to this position being able to be more positively sustained.
Employment. With the increased efficiency levels employment within the industry will rise, enabling a continuity of succession to more easily be developed.
A well-known example of a successful transition to the inclusion of the food processing element at a local level can be found in the case of the Prince of Wales “Duchy of Cornwall” business, which has even extended its sales internationally in the US (Milford Mail Tribune2004), where the business is successfully offering “Duchy Originals” to consumers.
As is evident from the highly publicised levels of tax that the Prince is having to pay on the revenues from this business, amongst his other interests, this proves that the venture has resulted in the business becoming more efficient and increased the prosperity of the business and the local community who work or benefit from the business.
Other international studies have also suggested that food processing can bring advantages to the agricultural industry. For example, Ann Brentmar (1996), in her study into the inclusion of the food-processing sector within the farming community in Oregon, US, commented upon two separate but important issues. The first, and the one most relevant to this research, was the benefits that it delivered to the farmers and producers.
As Ms Brent mar’s (1996, p.4) research rightly indicates, in general terms farmer and farming is the most labour and risk intensive part of the food chain and, at the same time the one sector of that chain that attracts the least reward.
However, by incorporating the food processing chain, which includes marketing, within the farming activity, it can have the effect of increasing revenue and profitability, which provides an opportunity for these businesses to become more efficient and self-reliant. Secondly, by becoming more self-sufficient in this manner, such a move has the added benefit of preserving farmland, for instance from development, and as a direct result of this will help in the maintenance of rural communities, increasing employment opportunities.
Conclusion and Recommendations
The hypothesis set at the commencement of this paper was to ascertain if the development of food processing in agricultural areas can provide a route to prosperity. From the research that has been carried out for this paper it is concluded that this case has been proven.
All businesses, irrespective of their industry, has to grow and develop, which means adapting to the current environment, and adapting to the changing demands and expectations of the market place, and the agriculture industry cannot be exempted from this process.
To address the problems of the industry exclusive of diversification has been proven to be not a viable option. Despite all of the initiatives that have been introduced over the years, the Agriculture industry has not responded positively to these aids, as the continual declines in its fortunes have shown.
Therefore, in addition to measures to creating more efficient methods of farming, it is apparent that diversification does provide an opportunity for added prosperity. Whilst, as shown in Cornwall with tourism, some benefit can be gained from diversification outside of the industry itself, this has not been able to be sustained, mainly as a result of influences outside of the control of the agricultural industry itself.
In the view of the author diversification within an area that the industry has some knowledge about, such as food processing, would be far more sustainable. Whilst there is little doubt that certain operator’s within the existing food-processing operations would have reservation regarding it becoming a more localised event, it is proven that, particularly in terms of current concerns from consumers in relation to food safety and environmental issues, promoting localising food processing as addressing these concerns can bring increase in revenue and therefore add value to the business and industry.
However, during the transitional period, whilst the industry is in the process of change, there will remain a need for assistance from governments and other non-governmental organisations. Similarly, it is important for the industry itself to understand the need, and takes the necessary steps, to adapt to change from whatever sources this emanates.
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