Sustainable Scottish. salmon. Scottish Salmon Farming Economic Report October 2013 Investing in sustainable jobs, communities and business

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1 Sustainable Scottish salmon Scottish Salmon Farming Economic Report October 2013 Investing in sustainable jobs, communities and business

2 Contents Chief Executive s Foreword Chief Executive s Foreword 1 SCDI Analysis 2 Key Findings 3 Sustainable Investment 4 Employment 5 Exports 6 Communities 7 Regional Breakdown 8 The Scottish salmon industry continues to be one of the great economic success stories of modern times. In an age when provenance, traceability and identity are becoming ever more valued by the consumer, it is heartening to know that our largest food export ticks all the boxes. The figures in this report demonstrate why this industry requires support from many parts of public life: from the environmental agency which ensures our environmental credentials prevail to support sustainable production to the Local Authorities whose responsibility it is to ensure we develop in close harmony with the communities we serve. The key to the future is sustainability. You will see from this fourth report that the economic sustainability of this industry is clearly demonstrated. We now export to over 60 countries worldwide and the impact of this is demonstrated by record levels of investment in recent years saw the biggest year-on-year increase on record in capital invested. We increased investment to nearly 62 million in the last year, bringing the total for the last three years to nearly 154 million. These record results have delivered a significant number of new jobs in the industry itself, but as importantly, additional jobs in the feed supply sector, local service industries and fish processing have all added to the vibrancy of the economy of the Highlands and Islands. It is no secret that we need to grow this industry, not only to supply the worldwide demand for our products, but also to sustain and develop the communities in which we operate. This report clearly demonstrates how significantly private investment can transform a lucrative regional industry into a global player that delivers the very best of Scottish quality around the world. PAGE ONE Scott Landsburgh, Chief Executive of Scottish Salmon Producers Organisation

3 SCDI Analysis Key Findings PAGE TWO Scottish Council for Development and Industry (SCDI) set out in our Blueprint for Scotland our ambition of doubling Scotland s exports by 2020 and it is positive to see in this report the investment being put in by Scotland s salmon producers to play their part in reaching this goal. Farmed salmon is Scotland s largest food export, internationally recognised as the premium product in its class and for its animal welfare and environmental standards. The industry has been awarded Protected Geographical Indication status by the European Commission and 60-70% of its salmon are covered by Freedom Food, the RSPCA s animal welfare and food labelling scheme. Its reputation built on its provenance, superior quality and the integrity of its supply chain has always been strong, especially in the UK and EU markets, and in the US. With consumer demand at home and abroad for higher welfare products growing and global demand for aquaculture increasing strongly, the industry has successfully entered new markets in recent years. salmon. Across Scotland it is estimated some 3,960 jobs are supported by SSPO members alone with 3,548 of those within the Highlands & Islands. With over one third of last year s capital spend by the industry made in the Highlands and Islands region, and over 50m paid out in salaries, there is no doubt that as an industry it sustains employment in many of our most fragile rural communities. This on top of the strong contribution it makes to the UK balance of trade, and Sustainable Employment: for the third year in succession, direct employment by members of SSPO has increased. A further 76 new jobs have been created since the last survey, a 3.6% percentage increase. 88% are full time jobs. Sustainable Investment: a 30% increase in capital investment since the last reporting period reaffirms the industry s huge financial commitment to its future. In 2012, a total of 61.7M was invested by SSPO members. The economy of the Highlands and Islands has benefited to the tune of 145 million. 145m PAGE THREE We have seen major investment going into new production facilities, with some 62m being invested last year, which will put the industry on course to achieve the target of 220,000 tonnes by 2020, identified as a key target in Scotland s draft National Marine Plan. Taking efficiencies into account we estimate that the industry will need to employ some 30-35% more than it does today to reach that target. The Scottish salmon industry has grown over its forty year history from a small production of just 14 tonnes to the production of some 158,000 tonnes and an estimated value of 584.7m in It has gone from over 100 companies being involved in the industry to the current 27 and over 90% of production being generated by just five companies. Scotland is the third largest producer of Atlantic Salmon in the world and can continue to play a valuable role in meeting the domestic and international demand for the key role it plays in the deserved positive recognition Scotland gets for its food and drink sector. The reputation that Scottish salmon has built up is much deserved and SCDI recognises the commitment the industry has to good stewardship and to protecting and building that reputation going forward. Fraser Grieve Highlands & Islands Manager Exports: Recent revisions to national figures indicate that exports of whole, fresh salmon rose again in 2012 to an all time high, this against a backdrop of overall decline in total exports of Scottish food and drink. Significant increases were noted in emerging markets, such as the Middle East and the Far East (64% and 95% respectively). Communities: the success of the industry is reflected in the success of the communities it helps to sustain. For the sixth year running, the total gross pay received by the employees of the industry has increased significantly to a total of 61.5 million. When the Scottish Government s income multiplier is applied, the economy of the Highlands and Islands has benefited to the tune of 145 million. Local suppliers and services in the Highlands and Islands have been supported by an industry expenditure of 213 million, an increase of nearly 50%.

4 Sustainable Investment Employment For the third year in a row, direct employment by SSPO members has increased, to a total of 2,200 people. The vast majority (90%) of employees are located in the Highlands and Islands. An additional 39 jobs have been created in the five Local Authority regions of north and west Scotland, bringing the total in these regions to 1,978 jobs. In 2012, salmon farming in Scotland employed a total of 28 young people on modern apprenticeships 5 in engineering and 23 in aquaculture. In addition, one member company has enrolled nine young people on National Progression Awards in aquaculture, which enables candidates to use their experience of the sector to further their career or as a pathway to further study. PAGE FOUR Capital Investment Nothing demonstrates an industry s commitment to its long term sustainability more than the capital funding it invests in the future saw capital invested by the salmon industry grow by 14 million to a staggering total of 61.7 million. Just over one third of this total ( 21 million) was invested in the Highland region. Suppliers and Services In addition to capital investment, there is an ongoing spend on suppliers and services to maintain current production. This figure rose by 7 million this year to nearly 443 million. In the last five years, the salmon farming industry has spent 1.8 billion on suppliers and services. This is a significant day to day contribution to the economy of the Highlands and Islands. For the third year in a row, direct employment by SSPO members has increased. PAGE FIVE There has also been an increase of 37 jobs in other parts of Scotland, bringing this total to 222. A key measure of the success of any industry is its economic sustainability, which is reflected in its employment record. With employees on average remaining in their position for 8.57 years, the industry stands out as one of Scotland s most trusted employers. 77% 14% of businesses plan to increase staff of businesses plan to stay the same In the last five years, the salmon farming industry has spent 1.8 billion on suppliers and services. Modern Apprenticeships and Training The industry invests heavily in training the workforce, particularly young people entering this growing industry for the first time. This is reflected in the figures for national youth training schemes adopted by the industry.

5 Exports Scottish salmon exports rose by 64% to the Middle East and by 95% to the Far East. Communities Recent revisions to national figures indicate that exports of whole, fresh salmon rose again in 2012 to an all time high, this against a backdrop of overall decline in total exports of Scottish food and drink. The USA remained the top export destination, while in two emerging markets performance improved very significantly compared to 2011 results the Middle East by 64% and the Far East by 95%. The salmon farming industry s work with Scottish Development International in targeting key export markets has been very successful. We now export to over 60 countries worldwide and even in more mature markets, such as the EU and USA, we have maintained buoyant figures in challenging market places PAGE SIX The people of the Highlands and Islands of Scotland are vital to the success of the industry. They have shown great loyalty to the industry, with the average employee length of stay being 8.57 years. The industry, in turn, has developed this loyalty by providing high quality, long-term careers with specialised training requirements. Total gross pay to employees increased to 61.5 million. With 88% of this total going to rural Scotland, this represents significant income for remote communities. For the future, the people of the Highlands and Islands can have confidence that this industry is sustainable, with around 85% of all companies planning to grow over the next five years and 77% planning to increase the number of staff they employ over that period. PAGE SEVEN

6 Regional Breakdown The third successive annual increase in investment, a rise in direct employment and the increase in sales value is great news for rural economies and the Scottish economy as a whole. Scott Landsburgh, Chief Executive, Scottish Salmon Producers Organisation Shetland Employment: 412 (-1%) Capital investment: 11 million (-12%) Salaries: 10 million (-5%) Western Isles Employment: 289 (+9%) Capital investment: 7.5 million (-22%) Salaries: 7 million (+15%) Orkney Employment: 115 (+26%) Capital investment: 3.5 million (+26%) Salaries: 2.5 million (+26%) PAGE EIGHT Local suppliers and services in the Highlands and Islands have been supported by an industry expenditure of 213 million, an increase of nearly 50%. Highland PAGE NINE Employment: 676 (-1%) Capital investment: 21 million (+36%) Salaries: 21 million (+18%) Argyll & Bute Employment: 486 (-1%) Capital investment: 5 million (+19%) Salaries: 10 million (-2%)

7 Scottish Salmon Producers Organisation Limited, Durn, Isla Road, Perth PH2 7HG Tel: , Fax: Web: