Scots food and drink chief: Producers ‘need more support’ to survive crisis

But he said their ability to furlough workers, under the Coronavirus Job Retention Scheme, is limited because they are still playing a vital role in the food supply chain.

Mr Withers said: “The challenge is you need a critical amount of your staff on that factory floor and up in the sales rooms in order to deliver on that output. You have suddenly got a high proportion of your normal fixed costs, but a dramatic reduction in the amount of income. In other words, you just become a lot less efficient. That is one of the real challenges that we have got just now.

“Businesses, understandably, could decide that the better economic option might to shut down and furlough all the staff, but then we would face real challenges in terms of food supply disruption.”

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Mr Withers argues firms in this position should receive support to help them through the crisis, and highlights moves by governments to bolster producers in Ireland and Canada.

He said: “The Republic of Ireland and Canada have both introduced wage subsidies. So for businesses that can demonstrate a drop in revenue of a certain percentage, there is actually a government subsidy, capped, going into the wages of workers who are continuing to work.”

He suggested a holiday on employers’ National Insurance contributions as another mechanism that would help ensure the survival of firms now making losses or facing “dramatic” reductions in income until they can start to recover.

Mr Withers added: “My argument from a Scottish context is that food and drink is a £15 billion industry. It has been our best-performing sector for a decade.

“Certainly in Scotland, it is going play a disproportionate role in driving the recovery in the second half of the year, so making sure we have got this sector still in a shape that it can do that come the autumn time will be critical.”

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Asked to comment on the effectiveness of emergency measures introduced by government to boost businesses and incomes, Mr Withers said: “The general view is that government, both south of the Border and up in Scotland, has reacted pretty quickly.

“Even just looking at the opening up of the furlough claim process, to build that kind of system, and to be processing tens of thousands of applications in a matter of two or three weeks, when it would normally take years has been pretty impressive. But there is no doubt there are real gaps in support too.”

He added: “The challenge is when you move quickly, you are going miss people, you are going to hit the wrong targets, and because of arbitrary thresholds, whether on rates relief or anything else, you are going to have people that miss out, who you feel should be supported. I think the judgement will be not so much on how many gaps there are on what is announced, but how quickly they are addressed as we go. The track record thus far has been pretty good, but I do think it is going to have to go further.”

Scotland Food & Drink has around 450 members, most of which are food and drink manufactures. Around half of its funding comes from membership fees and services, with the balance from government grants.

Mr Withers estimates around 10 per cent to 15% of Scotland’s 900 food and drink manufacturers have “mothballed operations entirely” since the crisis erupted. He added: “What I would say is that the level of staff being furloughed in food and drink will be a lot lower than in other sectors, because whatever is happening the world, we need to keep people fed and watered.”