Development Project Proposal

Argyll Agriculture: Creating an Efficient Supply Chain Network

Argyll Agricultural Forum

October 2006
Contact: fergus.younger@sac.co.uk

Executive Summary

Introduction

An improved agricultural supply chain can tackle a substantial number of the

actions identified in the Argyll Agricultural Strategy. The creation of an
efficient and effective supply chain will generate many positive
externalities associated with other key elements of the agricultural
strategy. Argyll and the islands have many challenging circumstances
most notably the dispersed nature of the area and the limited capabilities
of the available agricultural land. The wider impacts of the CAP reforms
will continue to reduce the value of financial support on which farmers
have become reliant in the past. Hence the agricultural sector of the
Argyll economy is facing an increasingly uncertain future.

However, many farmers in Argyll are now realising that the future lies in adding
value to local agricultural production by creating a more efficient local
supply chain that links local producers more effectively to local and
national markets. In addition, as is being demonstrated in many rural
localities across the UK, consumers increasingly recognize the value of
quality regional produce. As demand for local produce is generated
there is potential to broaden the influence of the food production sector
across Argyll by improving the linkages across the local supply chain.

Objectives of an efficient supply chain network

To address many of the development issues that are likely to emerge post-CAP
the agricultural sector across Argyll needs to develop a more efficient and
effective supply chain network to enable local producers to be better able to add
value to their production outputs. An improved supply chain network aims to:

• improve the competitiveness of producers within the food-based industries of

Argyll and the islands.
• extend marketing and business development opportunities for producers
within this market place.
• improve the supply and availability of local food (1) across Argyll and the
islands.

Policy and Linkages

The main agricultural policy drivers at local, national and EU levels are
increasingly supportive of quality regional food production. The role of the
agricultural sector within local economies is significant as this sector has direct
and indirect linkages to other important local economic sectors including tourism,
forestry, transport and increasingly to activities related to health and well-being.

Rapidly changing market drivers and support mechanisms means it is now

necessary to put in place appropriate development support mechanisms that will
improve the competitiveness and capability of Argyll producers to compete in
local and national markets. A key mechanism in maximizing local
competitiveness is improving linkages across the local supply chain.

Producers who wish to add value to their product face challenges ranging from
an increasing trend in the costs of inputs, issues of distribution and transport,
availability of manufacturing advice and support and adequate marketing and
promotion of the end product.

The management of these aspects of the supply chain is often undertaken on an

individual basis with resultant additional costs and inefficiencies. However an
improved supply chain network will allow producers to benefit from reduced
costs, reduced administration, access to information and shared markets. In
other words a more competitive environment in which producers can operate and
remain in business.

Addressing the different aspects of the agricultural supply chain through an

Argyll-wide network allows key areas to be targeted by:

• Raising the profile of the local food production sector

• Raising the profile of Argyll as a good food destination
• Facilitating business cooperation and networks amongst local food
producers
• Dissemination of best practice advice across the Argyll producer’s network
• Tackling supply chain issues at a local operational level
• Tackling supply chain issues at an Argyll strategic level
• Ensuring business competitiveness issues are tackled in an integrated
and effective manner
Proposed Development Activity

The Argyll Agriculture Forum is proposing a 3-stage approach to improve the

supply chain network across Argyll:

1. The creation of a supply chain network web site to provide baseline data
and information; who’s producing what, where it is being produced, where is
it available etc

2. A supply chain coordinator to manage development actions at a strategic

Argyll level. This would include the management of the proposed network
facilitators, and research, promotion and marketing of “Argyll” products, and
coordination of development activity associated with the agricultural strategy.

3. Eight supply chain network Facilitators across the area to tackle

operational issues. This would include establishing or contributing to local
supply chain groups, undertaking local market research, improving local
cooperation, promoting local food to the hospitality industry and raising issues
that can be tackled from an Argyll perspective. It is proposed that the
facilitators could operate within existing community development groups.

Indicative Costs

The estimated indicative costs for the proposed development project are set out
below.

Stage 1 Creation and management of web site (1 £5000

year)
Stage 2 Supply chain coordinator (3 year) £90,000
Stage 3 Supply chain network groups (3 year) £120,000
Totals £215,000

The sourcing of funding for the proposed development has to be discussed in

detail with potential project partners. However, at this stage it is envisaged that
Stage 1 could be supported by local partners with additional funding support for
Stages 2 and 3 being sourced from national and European partners. Stages 2
and 3 have the potential of being part of a European transnational project. The
Commission is increasingly promoting this approach as a source of funding for
agricultural development projects.
In this paper “local food” refers to any finished food product that is produced in Argyll. The
product can be sold within or out with Argyll.