Productivity & Prosperity in the Natural Economy
Alliance for the Natural Economy stakeholders have a shared goal of achieving substantially improved outcomes in our natural economy, including global challenges such as food security
How to properly capture what we value for society and the natural economy in our understanding of productivity, was a key theme that emerged from the presentations and round-the-table discussion at the latest of SRUC’s dinner debates, held under the auspices of the Alliance for the Natural Economy at the Farmers Club in Whitehall on 9 November 2023.
The evening built successfully on last year’s inaugural Alliance round-table event at Scotland House in London which focused on natural capital, as well as March’s innovation and technology-themed session at Scotland’s National Museum in Edinburgh.
The latest conversation ranged from how we measure productivity and increase the value added by industries in the natural economy, to some of the specific policy measures that can be adopted to drive the change and improvement we need to see in the face of global challenges like food security and climate change.
Leading the first part of the discussion, our guest speaker Prof Don Webber from the University of Sheffield sought to challenge assumptions about productivity and how it can be measured and increased. Are the metrics that governments use to measure and compare productivity, like GDP and GVA, leading to dysfunctional outcomes that can dis-incentivise agri-food production from operating sustainably?
Prof Webber’s pioneering economic modelling suggests old ways of thinking about productivity as a “one-dimensional problem” with simple measures fail to grasp the complexity of what is really a “2D” problem. He pointed out that in the case of farming, productivity can be boosted if we either increase output or reduce intermediate costs or charge more for goods. All three of these approaches can be viable depending on the farmer and their circumstances. Therefore, the ways in which they interconnect can be complex and nuanced.
Moreover, very often farmers’ ability to alter these variables is not in their control. Volatile prices and the market power of those selling to – and buying from – farmers, plus factors like the power of advertising, have a significant influence on market demand that in turn can have a huge impact on productivity.
So how can we best approach the task of improving the productivity of agri-food producers if we are aware of these factors? Demand-side measures like complementarity (i.e. diversifying the market for products) can have an impact. So too can the promotion and recognition of key attributes, like provenance or organic production to increase the selling power of produce. Related to this is investment in persuasive advertising to get consumers paying higher prices for farmed goods.
Yet there was acknowledgement in our discussion following Prof Webber’s presentation of a current “attitude gap” among consumers, particularly here in the UK, that expects food in supermarkets to be inexpensive, yet which paradoxically places a value premium on produce from overseas.
The role of government and how policymakers can influence these factors was explored in the evening’s second presentation, by Prof Nicola Holden, Food Security Challenge Centre Lead at SRUC. Prof Holden sought to bridge any gap between the “raw economics” proposed by Prof Webber and real-world policy interventions.
Prof Holden has recently been appointed a policy fellow by the Scottish Government, putting her on the front line of policy-development in Scotland’s diverse natural economy. She discussed how it and other governments had to face the consequences of a global food system under significantly increased pressure from contemporary factors like war and climate change that may only worsen over time. Focusing in particular on how food resilience can be improved to positively influence human health, she discussed how healthy food can be produced more sustainably in the teeth of such challenges.
Her view is that we need to pursue a ‘One Health’ approach which, if scaled up, can help to deliver planetary health solutions, as well as provide better nutrition for populations. Case studies of best practice in Scotland, often at community and grassroots level, showed what could be achieved. For example, a family business supported by SRUC has diversified into farming venison as a sustainable, healthy source of protein that is mostly underutilised.
Yet such businesses face challenges, such as the incapacity of abattoirs to process the animals at scale. Similarly, hemp and seaweed producers are growing natural products with clear health benefits for consumers. However, potential barriers like lack of clarity over markets, and government confusion over regulation, present risks to producers and prevent the development of efficient supply chains.
So how do we address these challenges?
In plenary discussion there was a useful acknowledgement of a certain tension between the aims of researchers in the natural economy proposing solutions to issues like productivity growth, and the capacity of policymakers to accommodate their wishes. For Nicola Holden, grassroots initiatives often pointed the way forward because they showed what could work.
At the same time, however, policymakers may feel compelled, often by populism, to prioritise short term political gain or ideology over the adoption of measures that scientists hypothesize as effective. Of course, we as researchers need to be cognizant of challenges and barriers and get better at understanding economic costs, particularly those associated with levelling up productivity.
Yet perhaps the most fitting response to these challenges that was teased from a vibrant discussion, was the idea of researchers and their institutions pulling together from a sense of collective responsibility to push forward constructive, innovative solutions to global challenges.
That, in a nutshell, is the essence of what the Alliance seeks to achieve: the coming together of leading institutions, businesses and policymakers from across the UK with a shared purpose to achieve substantially improved outcomes in our shared natural economy. As an institution that is advancing rapidly on its own path to achieving university college status in the year ahead, we are hugely grateful for the support of our peers as we seek to deepen and strengthen collaboration through the Alliance in 2024.
SRUC Vice-Principal for Enterprise and Knowledge Exchange
Posted by Dr Susannah Bolton on 20/11/2023