BEHIND THE HEADLINES: Is Welsh Government backing food industry?
6:03pm Tuesday 15th April 2014 in News
Rogerstone's Avana Bakeries will be closing and that there will be a number of job losses. Pictured is Avana company logo on one of the pedestrian gates. (5198346)
THE food industry was dealt a massive blow last week as Avana Bakeries confirmed the closure of their site in Newport putting around 650 jobs at risk.
The Rogerstone business said it would shut in the summer after its main client Marks and Spencer announced it would switch suppliers in a multi-million pound deal.
The high-street retailer pulled the plug on a contract which had represented up to 85 per cent of Avana’s trade and instead awarded it to a firm in Oldham.
The Federation of Small Businesses Wales pointed the finger of blame at the Welsh Government, saying it had failed to support the food industry in the country.
Labour MP for Newport West, Paul Flynn, also voiced concerns about the business collapse, saying “blameless workers” had found themselves at the receiving end of “vulture capitalism”.
The Welsh Government immediately branded the claims made by the Federation as “wholly inaccurate”.
But can any government in a capitalist economy realistically be expected to step in and rescue a failing business, which is, by definition, expected to generate profit?
The president of Newport Chamber of Trade, Alan Edwards, indicated that any business venture was responsible for its success or failure.
Mr Edwards co-runs the Vacara fish and chips shop in Newport City Centre.
Mr Edwards, 65, said: “You set up a business and you assume certain risks.
“We don’t get any special support.
“You just have to accept the state of the economy. That’s the way it is.
“If you can’t operate on your own and survive, the market is telling you that they don’t want you.
“The Government can look at where the future jobs are.
“Jobs come and jobs go.
“Thirty years ago, there was a boom in the steel industry in Newport – Not now.
“It’s very difficult to see what they can do except look to make the economy more flexible.”
He added: “We find that our catering industry at the moment is pretty low.
“Everybody finds it difficult to be 100 per cent operational.”
His colleague Richard Ellis, the Chamber of Trade secretary, felt that Avana Bakeries did not have the best business model as they have relied almost entirely on a contract with Marks and Spencer.
However, he argued that governments, even in market economies, have a duty to support failing companies, in particular when large numbers of jobs are at risk.
Mr Ellis, 37, said: “Avana put all their eggs in one basket. It quite often happens with large retailers.
“They win a contract and they become dependent on them.
“Their business was not very well structured.
“It is very worrying. Lots of employers have gone under over the last few years.
“It could be that the government could provide an emergency loan.
“The government helps banks. Now they’re making an awful lot of money and they’re getting bonuses.
“You could argue that in cases like these where a significant number of jobs are at risk the government have a responsibility to help.”
Even small businesses sympathised with the plight of Avana Bakeries.
Mike Turner, of AD Turner butchers at Newport Market, said the impending closure was a “massive blow”.
Mr Turner, 45, said: “We’re surprised. There should be a lot more for the food industry this side of the bridge, but there seems to be more on the other side in England.”
He added: “Not enough is being done for small businesses.
“As usual the big boys are winning. The government talks to the Big Five.”
Lee Smith, of the Market Bakery at the indoor market, acknowledged that trading conditions had been difficult but felt the Government had also helped by applying reduced business rates over the last two years.
Mr Smith, 47, said: “The market has been tough in general.
“We seem to be through the worst. I don’t think there is much the government can do for small businesses.
“I used to pay £20 to £30 in rates and now it’s gone down to zero. It all helps.”
The Lyceum Tavern in Newport, which serves pub food, felt the Government could help to stimulate the industry by cutting alcohol taxes and also ditch proposals to ban e-cigarettes in public places.
Pub owner Tony Cole, 58, said: “Taxes on beer should come down.
“They’re on about banning e-cigarettes. This is not going to help.
“E-cigarettes are bringing people back in and there is nothing wrong with them as far as I am concerned.”
Last week, the Welsh Government insisted that it recognised the importance of the Welsh food industry to the economy and communities and maintained it was working hard to ensure the success of Welsh food businesses.
A spokesman said that “significant progress” was being made with a six per cent growth in food and drink sales in 2013 and a combined turnover for agriculture, fishing and food manufacture of over £5.2billion.
The Welsh Government also stressed that it was talking to the owners of the Avana Bakeries to explore all options to safeguard employment at this site and investigate new business and employment opportunities in the area.
A spokesman added: “The minister for natural resources and food, Alun Davies, has set out his proposals to support the Welsh food and drinks industry in the new draft action plan and has made a commitment to deliver a 30 per cent increase in turnover by 2020.
“A central part of this plan is building on what is already an efficient system of business support for our food and drinks industry that is based on specific producer needs and supporting their development and business growth.”
The Abergavenny Food Festival attracts more than 30,000 visitors a year and represents a significant boost to the industry.
Its organisers acknowledged the government had opened up a dialogue with the food industry in recent months, in particular through its new Action Plan, which is part of strategy called 'delivering growth'.
Festival chief executive Heather Myers, 46, told the Argus: “It seems to me they are beginning to listen.
“It has been a struggle getting funding for the food festival but we feel we’re in a dialogue now.”
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