Scotch Whisky (Protected Geographical Indicator)
The final item of business today is a members' business debate on motion S2M-2650, in the name of Mr Andrew Arbuckle, on protected geographical indicator status for Scottish whisky. The debate will be concluded without any question being put.
Motion debated,
That the Parliament believes that EU Protected Geographical Indicator (PGI) status for Scotch whisky would provide a further selling point for the end product; welcomes the fact that this would require the use of Scottish-only grain in the manufacture of Scotch whisky; believes that the industry should apply for PGI status to help ensure the long-term sustainability of Scottish cereal growing, and considers that any such application should be supported by the Scottish Executive.
It is inconceivable that the French would allow champagne to be made with anything other than grapes that were grown in the Champagne area. It is equally inconceivable that the Italians would allow imported pigmeat to be used in the production of their world-famous Parma ham. However, Scottish whisky manufacturers can and do use imported grain in the making of Scotland's national drink.
Currently, distillers can use cereals from any source to make whisky. Although they mostly use Scottish barley, they can buy grain from any part of the world. That is wrong, and the thrust of my motion is that we should change that. If Scottish cereals were required in the making of Scottish whisky, that would ensure that whisky was more authentically Scottish. It would also help to provide the whisky manufacturers with a unique selling point. That is what the wise men and women behind champagne and, closer to home, Newcastle brown ale have realised in achieving protected geographical indicator status for their drinks. One or two of the more enlightened Scottish whisky manufacturers have already cottoned on to the use of home-grown grain as a plus point. The Famous Grouse, for example, is committed to using only home-grown barley.
My proposal would also help Scottish farmers, who would know that they had a market for some of their produce. This week, a Perthshire cereal farmer described his barley crop as the poor relation of his cereal enterprises because of the low prices that are being paid. He went on to say that his cereal crops were the poor relation of his arable enterprise, and the arable sector in Scottish agriculture has been the poor relation of the industry for the past five years. Confirmation of farm incomes in the cereal sector from the Scottish Executive shows that the average farmer lost £4,200 in the past year. Barley growers received £140 per tonne for the grain in 1984; yet, 20 years on, the price is half that.
Under the reformed common agricultural policy, there is no requirement for farmers to produce any crop, and there is a real danger that, unless grain prices rise to economic levels, less grain will be grown in this country. Providing cereal growers with a little more market share than they currently have will ensure that Scottish whisky will be genuinely Scottish and not just a product made with ingredients sourced from anywhere in the world.
The member mentioned the use of cereals such as barley from other countries. Does his view extend to the use of Scottish oak? Would he not allow the use of bourbon or sherry casks, or does he believe that that is a different matter?
When the member starts drinking Scottish oak, he should me let me know. I am talking about whisky.
Scottish farmers pioneered the complete traceability of their grain crops and all traded grain now comes with a farm assurance label. Very few countries can offer anything like that.
Everyone knows that the cost of primary ingredients is only a small fraction of whisky's end price, and members will be pleased to know that the proposal in my motion will not affect the end price of a dram. The closure of maltings such as Muntons in Kirkcaldy and Pauls Malt in Carnoustie over the past year will lead to an increased temptation to source malt for whisky making from eastern European countries where, as a result of lower labour costs and economies on production measures such as farm assurance, the costs of production are much lower.
Although any manufacturing industry should seek every reduction in costs, the case for making whisky solely from Scottish cereals is strong. As I have said, it will give whisky integrity while securing some grain production in Scotland.
Although we would all choose to use Scottish grain in the first instance, what would happen if the crop failed? Would that mean that there would be no production? If so, would the inability to look elsewhere not threaten the long-term livelihood of the people who provide grain?
I will come on to that point, which has been raised.
As far as I am concerned, my motion is all about ensuring that one of Scotland's top export earners, which makes more than £2 billion annually, is made from Scottish produce. Murdo Fraser lodged an amendment acknowledging that the Scotch Whisky Association, which represents the distillers, has lobbied hard against this proposal, claiming that it will handcuff them to the Scottish crop. The reality is that, currently, little more than half of the Scottish barley that is grown annually heads for the malting market. Supplies are ample, and the best way of ensuring future ample supplies is to give primary producers some committed support.
The SWA also asks what will happen if there is a poor grain-growing year in Scotland. I should point out that grape growing is a far more fickle process than barley growing, and the French do not seem to have a problem with their champagne production. Moreover, grain can be stored for more than a year and everyone knows that whisky requires several years to malt. That takes the one-year risk totally out of the equation.
Will the member comment on the collapse of the French brandy industry after vines were attacked by disease and producers were unable to source grapes elsewhere? In fact, Scotch whisky took advantage of that collapse.
It is very unlikely that the Scottish barley crop will be totally decimated by disease. However, I am sure that, if that happened, we in the Scottish Parliament would take action to change the situation on a one-year basis.
The SWA claims that the motion is short-sighted. It cannot be denied that the proposal will change distillers' current freedom to buy grain anywhere. However, the motion is not short-sighted but visionary. The SWA also claims that the proposal will put thousands of jobs at risk. That is a "cry wolf" view, and it is not supported by the Scottish beef industry's recent experience. Last year, the beef industry agreed a move that guaranteed that any beef in a butcher's shop with a Scotch beef logo would come from livestock born, raised and slaughtered in this country. When that proposal was first mooted, the cries from the meat processors were very similar in tone and content to those that we are now hearing from the SWA. They said, "We'll lose thousands of jobs." That has not happened; instead, Scotch beef is now gaining a premium in the market and processors are happy with the change. The same can happen in the whisky industry.
The SWA represents various industry players, from multinational giants such as Diageo to small privately owned specialist whisky manufacturers. More than half of the Scottish whisky industry is owned by foreign international companies. Although there is nothing wrong with that, it gives us an inkling that support for the Scottish economy is not a top priority for some—and I underline some—whisky manufacturers. All companies should provide more support for the primary product and producer on which they build their sales and profits.
Annual profits in the Scottish whisky industry were estimated to be more than £500 million last year. I urge everyone to support a motion that will move the Scottish whisky industry to a position where it sources first its barley from Scotland, then all its grain, and then to a position where it applies for PGI status.
I congratulate Andrew Arbuckle on securing the debate. I am grateful to Diageo for its briefing and to the National Farmers Union of Scotland, which helped me to understand some of the complex issues involved. Although I support the aspiration that only Scottish grain should be used in our national drink, I believe that the motion is short sighted and could harm our Scottish whisky industry. I share the concerns of Diageo, which has plants throughout Mid Scotland and Fife, the region that Mr Arbuckle and I both represent. Diageo supports many jobs in the Leven area, where there is high unemployment.
Scottish whisky has had protected geographical designation under European Union law for 15 years. It also benefits from worldwide protection through the World Trade Organisation. I understand from Diageo that 90 per cent of the grain that it purchases originates in Scotland. That was not always the case. Until a few years ago, most of the grain used in whisky production was sourced from elsewhere, particularly from England. The percentage of Scottish grain that is now being used is probably the highest ever.
I do not think that there is an argument for using only Scottish grain. I am persuaded by the argument about what might happen if the crop fails in any one year. If Andrew Arbuckle knows things that we do not about what might happen in the future, he must have another career as a seer. To rely entirely on Scottish grain is certainly not a risk that we should be taking.
I do not claim to be a seer. I just point out the reality that grain can be stored for more than one year and that whisky manufacturing takes a minimum of three years. The one-year crop failure scare that the Scotch Whisky Association is putting about is not relevant to the argument.
It is relevant. The Scotch whisky industry—our major national industry—is telling us that 90 per cent of the grain that it uses originates in Scotland, so I do not think that we have a problem yet. However, if in future the percentage of Scottish grain that was being purchased fell by a lot, the issue should be revisited.
I congratulate Andrew Arbuckle on securing the debate, but I believe that he should have thought a bit more about the subject. He should have listened to what he was being told by the major employers in the constituency that he represents, as well as to the NFUS and Diageo.
Although I thank Andrew Arbuckle for bringing the motion to the chamber, I regret that I cannot support the proposition that it contains. I agree with Tricia Marwick that, although the aspiration of using only Scottish grain might be commendable, the suggested method—regulation—is not the best way in which to proceed.
I always welcome the opportunity to talk about the whisky industry, not least because of its importance to the Scottish economy. It is worth reminding ourselves, as the Scotch Whisky Association, Allied Distillers and Diageo have done, that the industry accounts for more than 40,000 jobs and spends £700 million with local suppliers. We should also remember that whisky is Scotland's second-largest export and the fifth-largest export in the United Kingdom. The industry is critical to my constituency, with Allied Distillers employing 800 people at Kilmalid.
Will the member take an intervention?
I have just started, so I will make some progress first.
The central proposition in Andrew Arbuckle's motion is that protected geographical indicator status should apply to Scotch whisky and only Scottish grain should be used in the final product. On that basis, let me focus my comments on three areas: PGI status; the use of Scottish grain; and the weather, which is the subject of conversation the length and breadth of Scotland.
As I understand it, PGI status is usually applied to agricultural products and foodstuffs, not to wines or spirits. Interestingly, PGI status would not of itself require the use of Scottish cereals, which Andrew Arbuckle clearly desires. More important, it would be a dilution of the existing protection of Scotch whisky at an international level. Indeed, that is acknowledged by the European Community, which has separate legislation applying to the spirits industry. The SWA says:
"The legal protection of Scotch whisky is a top priority for the SWA and its members. Our success in this field not only protects consumers, but also benefits distillers and the farmers who provide our cereal needs. It would be bizarre if the Scottish Parliament sought to reduce the legal status of Scotch."
The prospect of using only Scottish grain in whisky is superficially attractive, but in reality it could be disastrous for the industry. It is worth noting that 90 per cent of barley requirements are sourced in Scotland. Other cereals, such as wheat and maize, are also used in grain whisky, but, as I understand it, insufficient amounts of those cereals are grown in Scotland to meet both distilling and other market requirements. A better way forward, surely—
Will the member tell us how many tonnes of barley are grown in Scotland and how many the whisky industry takes?
As it is clear that Andrew Arbuckle is a farmer, he is at a considerable advantage in regard to the tonnage of barley grown. However, I put it to him that a better way of proceeding is through partnership, because I know that Scotch whisky distillers strive to use Scottish cereals wherever possible. After all, the source is closer to their production points and so easier to access. However, the reputation of Scotch whisky is established on the basis that the production process takes place in Scotland.
In effect, the motion could restrict the current supply of whisky, never mind hampering future growth. In expressing its concern to me, Allied Distillers asked how it could provide Scotch whisky to new and developing markets and thereby drive growth in the Scottish economy if it did not have enough cereal. Of course, we are currently successful in accessing new markets in the far east, India and eastern Europe. Is Mr Arbuckle suggesting that we should do anything to hamper that growth or to damage the industry? That is the question.
Finally, let me turn to the weather. I am sure that all politicians would dearly love to promise sunshine such as we are enjoying today on a year-round basis. Alas, we cannot guarantee it. If we could, I suspect that we would be re-elected in perpetuity—a frightening thought.
Let us be sensible. Scotland is a wet country. Sometimes it is far too wet and that can have an impact on our cereal crops. In those circumstances, the motion would place intolerable restrictions on the whisky industry and, ultimately, might cause it harm and cost jobs. I therefore urge the Executive and the Parliament to reject the terms of the motion.
I should declare my interest as an occasional consumer of the product in question. I should also say that I have enjoyed hospitality from Diageo in the past.
I thank Andrew Arbuckle for raising the issue and for bringing the debate to the chamber in his first members' business motion. The Parliament has debated the whisky industry a number of times—the most recent debate was on my motion about strip stamps, when the Parliament voted to send a message to Gordon Brown saying that it did not approve of the measure. Unfortunately, as we know, he decided to impose the stamps anyway, despite the motion and the vigorous opposition of the industry.
There are many whisky distilleries in Perthshire and throughout Mid Scotland and Fife—the industry is very important in the area that Andrew Arbuckle and I represent. The distilleries produce some of the finest whisky, if not the finest alcohol, in the world. The industry supports more than 40,000 jobs and spends more than £700 million each year on goods from local suppliers.
Andrew Arbuckle's motion essentially makes two points: first, that the Parliament should call for European Union protected geographical indicator status for Scotch whisky; and, secondly, that the manufacture of Scotch whisky should require the use of only Scottish grain. I appreciate that Mr Arbuckle has been lobbied by the National Farmers Union of Scotland and I understand the stance that it is taking, which is in defence of its members' interests. Indeed, I appreciate the concerns of cereal farmers about the farm-gate price of their products. Many of them have made similar representations to me.
However, I fear that, in suggesting solutions, Andrew Arbuckle has paid insufficient attention to the views of the whisky industry, which, as he knows, is very concerned about his proposals. I do not think that we need PGI status for whisky. Acquiring PGI status would do nothing to enhance Scotch whisky but would reduce existing legal protection for Scotch.
Let me set out the facts. The EU spirit drinks regulation—regulation 1576/89/EEC—regulates the production of all EU spirits. The regulation makes it clear that the production process gives the spirit its intrinsic character; consequently, that process needs to take place in Scotland. For Scotch whisky to be called Scotch whisky, it must be distilled and matured here.
The EU regulation that establishes PGI status relates to agricultural products and foodstuffs. Its provisions specifically do not apply to wines and spirits. The regulation states that there is existing EU legislation on spirit drinks
"which provide for a higher level of protection".
At EU level, there are already regulations in place that ensure a higher level of protection for Scotch whisky than PGI status can offer.
I was accused of having been lobbied by the NFUS, which is incorrect. I was lobbied by the SWA but, unlike other members who have contributed to the debate, I did not believe its spin. Can Mr Fraser explain why Newcastle brown ale—a drink—has PGI status?
With respect, that is pretty self-evident. Newcastle brown ale is neither a wine nor a spirit—it is a beer product.
Jackie Baillie made many of the points that I would want to make. We are all in favour of Scottish farmers producing cereals for Scotch whisky. With lower transport costs because of Scottish farmers' close proximity to the distilleries, it must make sense for producers to buy Scottish cereals. That is exactly what has happened. Before the 1960s, Scottish cereals were not commonly used for Scotch, but the situation has changed. Now more than 90 per cent of the barley requirements for the industry are sourced in Scotland. No one can argue that Scottish distillers are not committed to Scotland. However, it is absurd to seek to tie their hands and to force them to depend on Scottish cereals alone. As we have heard, the consequences of that could be catastrophic. Such a measure would place the industry at the mercy of the weather, restrict its ability to compete internationally and threaten the jobs that depend on it.
The Scotch Whisky Association has made reference to what happened to the French brandy industry when the vines were attacked by disease. Due to legal restrictions, the producers were unable to source grapes elsewhere and the gap in the market was filled by Scotch whisky. That was to our benefit, but the restrictions that Andrew Arbuckle is proposing tonight would not be. We should not put these protectionist barriers in place. I regret that I cannot support Mr Arbuckle's motion.
I, too, congratulate Andrew Arbuckle on securing the debate and recognise that his heart is in the right place. He has some worthy objectives—to maximise Scottish added value and to protect a valued Scottish generic brand. However, that brand has been protected in law for 70 years.
There are dangers lurking in the motion. First and foremost, it could make our farmers more vulnerable in the long term. It could tie the industry's hands and constrain it in terms of supply. It could damage the industry's growth aspirations, as a result of bad harvests, and put the supply chain and long-term ramped-up production in jeopardy.
There is a danger that tampering with a protected brand could devalue its image and the provenance that is implicit in Scotch whisky. I am keen that Government should play a supportive role, rather than rushing to legislate. There should be more promotion, showcasing and export effort. The industry should be encouraged to source more from Scotland and to locate more bottling and capacity here, so that the whisky leaves Scotland with maximum added value, delivered by Scottish hands and integrity and diluted, where it must be, by Scottish water.
I follow the drift of the member's argument. Like me, he might have tasted whiskies that have a port wood finish, which displays that not only Scottish ingredients go into the manufacture of whisky. Does he therefore agree that the matter is best left to the market to decide and that whisky distillers could proclaim their brand as being distilled with only Scottish products?
I certainly agree because I am keen for Scotch whisky, like Harris tweed, to augment and flourish over the years so that the industry delivers many more Scottish jobs and is able to cope with the demand from new and emerging markets. I ask members to imagine what the constraints might be if we were to open—as we will do—markets in India and China, or even more potentially massive markets, with greater demand for grain and Scottish added value.
I want the industry to be encouraged, perhaps with Government help, to run more of a healthy open book on the value that it is adding in Scotland so that we can see how much Scottish grain is being used, how much it uses Scottish labels, bottles, packaging, advertising and professional services and how much bottling is done in Scotland.
I noticed recently that the French company, La Martiniquaise, is the owner of the top-selling Scotch brand in France, Label 5. It is investing in a new bottling plant in West Lothian with a view to bottling in Scotland because it is keen to be able to put "bottled in Scotland" on its labels. In other words, the company realises that being able to say that the product is distilled, matured, blended and bottled in Scotland is of real value. We should work with the industry to make sure that that is more and more the case and to make that the pervasive mark of quality Scotch. That is what will drag along demand and boost capacity. There is a lot that we can do to augment Scotch.
I regret that I cannot support Andrew Arbuckle's motion, but I will continue to support our farmers and our industry so that we progress together and create a much better and more augmented market for Scotch whisky that will last and grow.
I join colleagues in congratulating Andrew Arbuckle on securing the debate. I understand that he is relatively new to the chamber, but in the six years or so that I have been here, I cannot recall a motion that has met with such universal opposition. That is borne out of a belief that supporting the motion would do harm to an industry whose worth to the economy and employment in Scotland cannot be overstated, as Jim Mather, Jackie Baillie, Murdo Fraser and others said.
The motion calls for the industry to seek protected geographical indicator status, which would require the use of Scottish-only grain in the manufacture of Scotch whisky. I know that the Scotch Whisky Association has already explained to Andrew Arbuckle—he referred to it himself—the legal position and the consequences of pursuing PGI status and using Scottish-only grain, but perhaps, as other members have done, we should reiterate some of the negative consequences of going down such a route.
Before I do so, let me make one thing clear: Scotch whisky already has extensive legal protection. Indeed, the Scotch Whisky Association, one of the UK's most successful trade associations, employs a team of lawyers whose sole remit is to protect Scotch whisky at European and international level.
I know that MSPs have been issued with the SWA brief, so I will comment only under headings. Scotch whisky is already protected because, as Murdo Fraser and others said, spirit drinks have a higher level of protection under regulations than other foodstuffs.
Scotch whisky has been recognised as a protected geographical designation in European Union law for more than 15 years. PGI status for Scotch would not be legally competent and indeed would dilute existing protection. Like Murdo Fraser, as someone who can declare a personal interest in the product, I would not want the product or its status to be diluted in any way.
I met the Scotch Whisky Association a few weeks ago to hear about the different issues affecting the Scotch whisky industry. During our meeting, one of the main messages that came across from Gavin Hewitt, the association's chief executive, was how much of a top priority the legal protection of Scotch whisky is for the association and its members. Indeed, I have referred to the association's already considerable success in achieving legal protection for Scotch whisky around the globe. That is something that the Parliament should applaud, and we should refrain from doing anything that might affect that work.
Like other members, I fully appreciate and commend the intent of Andrew Arbuckle's proposal. I can see how a new requirement that only Scottish cereals should be used in the production of Scotch whisky might appear at least superficially attractive, as Jackie Baillie said. It might appear to provide potential benefits to the arable sector, and I can see exactly where Andrew Arbuckle is coming from, but such a requirement could be damaging, as other members have said. I believe that it would place industry sustainability at the mercy of the Scottish weather—I think we can all agree how unpredictable that is and, goodness knows, climate change will not assist in any way.
There is another issue, and it is not about the weather but about quality. The agricultural community should take heed. In order to maintain Scotch whisky's enviable position as a leading global quality product, the industry has exacting standards for all cereals that it uses. The Scotch whisky industry is on record as saying that it will source as much of the grain as possible from Scotland, but it cannot and should not be required to source grain irrespective of its quality. In good and average harvest conditions, there is little difficulty in sourcing a substantial proportion of the grain that the industry needs from Scottish producers, as Andrew Arbuckle will know. I am informed that some £90 million is spent each year by Scotch whisky producers on Scottish cereals, with more than 90 per cent of barley requirements being sourced in Scotland.
First of all, let me pick up on the statement that I have gained universal opposition. With fewer than 10 members here, "universal" is overstating it.
The minister mentioned the wet weather. Most of the contributions on wet weather have come from west-coast politicians. I invite them to come over to the arable east, where it does not rain and we have never, ever had a crop failure. I ask the minister to tell me of a year when the Scottish barley crop failed.
Andrew Arbuckle himself said that he is not a seer, and I am not a seer. I referred to a hypothetical situation, as other members did. The questions should be asked of Andrew Arbuckle, who proposed the motion, rather than of me. It has to be said that, speaking as a west-coast politician, I would not want to put all my eggs in the Scottish weather basket, with all due respect to the mysterious east. I am sure that the member would agree that in poor harvest years there could be problems with the quantity—he might dispute that—and quality of Scottish grain. To secure the consistent level of production that would be required, the Scotch whisky industry would be forced to source grain from elsewhere. Also, as Jackie Baillie said, we must remember that not only barley is used in Scotch whisky. Other cereals are used in blended whisky, which accounts for 90 per cent of all global sales.
I believe—and I support the industry on this point—that producers must retain the flexibility to source enough raw materials of the right quality to meet the market demand. To put a ban on the use of non-Scottish cereals, which is what Andrew Arbuckle is asking for, would risk the sustainability of the industry. Everyone knows the contribution that the industry makes to the Scottish economy and to creating employment, and I know that he would not dispute that. Without being unkind, I think that his proposal would give the industry's competitors—of which there are many—an unfair advantage in the marketplace. We have already heard references to the French brandy industry.
The Scottish Executive and Scottish Parliament, across all parties, have always worked closely with the Scotch whisky industry. My comment on the motion's unpopularity related not only to the fact that not many members are present for the debate but to the cross-party consensus against Andrew Arbuckle's proposal that I think exists.
We will continue to work with the industry and listen to its concerns, even on issues that are, as Murdo Fraser said, reserved to the United Kingdom Government, such as stamps. Indeed, we stood up for the Scotch whisky industry in that context and were influential. We did so because of the industry's importance to the economy and employment in Scotland.
Jim Mather raised a number of important issues. As further evidence of their importance, I confirm that when I met the SWA recently, I did so in part to discuss a review of the whisky framework document, "A Toast to the Future: working together for Scotch Whisky". With the SWA, we will launch a new framework document in the next few months, which will pick up the points that were made about marketing, support, international competition and other such matters. That approach will help to provide a better path forward for the industry and to protect its important contribution to the economy and employment. Unfortunately, the proposal in Andrew Arbuckle's motion would not do that.
Meeting closed at 17:41.