Scotland’s food and drink manufacturers hit by unprecedented rise in fuel costs

Scotland's food and drink manufacturers expect their fuel and energy costs to rocket by an average of 84 per cent following the invasion of Ukraine, an industry body has said.

The Food and Drink Federation (FDF) Scotland said those currently on fixed price contracts with energy providers are braced for "shock rises" as these come to an end.

One company anticipated a massive hike in costs of up to 400 per cent, a survey of FDF members found.

The figures are contained in evidence submitted to Holyrood's net zero, energy and transport committee, which will discuss energy price rises today.

Food and drink manufacturers are braced for rising energy costs

Scottish Conservative MSP Liz Smith said the “twin blows” of the pandemic and the ongoing energy crisis are putting “unsustainable pressure on businesses across the country”.

She said: “Scottish businesses urgently need greater support from the SNP Government in order to survive this difficult period.

“That means that any policies which will put an even greater burden on struggling enterprises must be halted or reconsidered.

"For example, the powers to allow local authorities to introduce the hated workplace parking tax should be reversed.

“However, the SNP must also go further and pledge to support Scottish businesses directly, by ensuring more government money is spent locally.

“The Scottish Conservatives have called for a ‘Scotland First’ procurement policy, which would ensure that more public money goes back into the Scottish food and drinks industry, to support local businesses and protect local jobs.”

The FDF said there is no “quick fix” solution that businesses can deploy to mitigate against energy price rises.

It added: “We urge the committee not to view energy price rises in isolation.

“Our industry faces rising commodity prices, ingredient and raw material shortages and the longer-term impacts of the huge increase in the cost of fertiliser and another potential CO2 shortage.

“The ongoing global impact of the pandemic is resulting in major disruption to global logistics pushing costs yet higher.”

The industry body called on all parliamentarians to “urgently remove complexity and cost from upcoming regulation across the policy landscape”.

It said: “Businesses must be able to focus on keeping afloat and feeding shoppers.

"From new packaging rules to restricting promotion and marketing of food and drink in Scotland, we urge the committee to pause, reflect and consider whether regulation is fit for purpose — and whether now is the time to pass additional costs to families and businesses across Scotland.”

SNP MSP Natalie Don called on Chancellor Rishi Sunak to bring forward new measures to ease the pressure on businesses.

She said: "Control over energy prices is reserved to Westminster but so far, despite repeated calls for further action, the Tories have sat on their hands whilst energy prices and food bills skyrocket.

"Food and drink businesses in Scotland have already been hammered by Brexit and now are suffering the consequences of the Tory cost of living crisis.

"It is incumbent on the Chancellor to bring forward real measures that will ease the pressure on firms or else we could see some close down as they cannot cope with skyrocketing costs."