1. Background

The Government funded Countryside Stewardship Scheme (CSS) encourages land managers, in practice mostly farmers, to restore and maintain traditional features of the countryside for wildlife conservation and the enjoyment of the public. One of the features for which restoration funding is available is traditional orchards and, as restoration begins to take effect, these will start to produce crops, which have a market potential.

There is a perception that establishing opportunities for the sale or use of the resulting top fruit could enhance renovation of orchards through the CSS.

There is considerable evidence that individuals and organisations are interested in buying this local produce, if it can be successfully marketed, and if viable supply chains can be established to bring it to market.

Our research was aimed at satisfying a number of objectives:

• To quantify the market for local top fruit sales
• To define sales models which could be used to bring buyers and sellers together
• To identify national and local initiatives which might support local orchard supply chains
• To establish a business case for the possible development of a pilot local orchard supply chain in this area

We have not been able to create a clear business case for developing a local orchard supply chain, as we originally hoped. This is partly because of the limited and informal nature of the supplier base, but more positively because there appear to be some valuable opportunities in supplying local schools with fruit, and with small-scale social enterprise organisations. These, if developed, could soon utilise all the available capacity, providing benefits to end users and at the same time putting the fruit to good use.

Our definition for 'local orchard' was fairly flexible. Orchards vary a good deal in size, many of an acre or less and probably originally intended for very local use, but with some larger ones, frequently concentrated in areas such as the vale of Pickering, where there was a tradition of production for market. Trees are usually standards but vary greatly in size and spacing and do not often conform to the widely spaced, very large standards of southern England as described in CSS prescriptions. Typically, the orchards have had little in the way of formal management for many years, and are non-intensive, and usually not sprayed. The orchard floor is usually grass, sometimes with a good deal of tall herb as a result of lack of maintenance. In the larger orchards, sheep are often used to graze the orchard floor, something that has often resulted in severe damage to tree bark and consequent loss of trees. Herbicide or mechanical control is sometimes used but this is not frequent.

The research was carried out during autumn 2004 and winter 2005. Using a structured questionnaire, consumers were interviewed at various Apple Day events and Farmers Markets, or questionnaires were left and later collected. Orchard owners were also interviewed using a structured questionnaire. A range of other organisations was also approached, including public sector organisations, specialist groups and commercial businesses. Information was gathered from interviews, or telephone discussions.

Research was primarily restricted to the Yorkshire and Humberside area, although comparisons with other areas were drawn on where appropriate.

2. Findings

Although we set out to research the market for both fresh orchard produce and added-value products such as juice and jam, the low volume of production in this area has meant that in most cases the following discussion is primarily about fresh apples but with some involvement of plums and pears.

It also became apparent that there was considerable synergy with the wider local food agenda.

2.1 Outline Description of Stewardship Orchards

Orchards in stewardship tend to be typical of local orchards as a whole. Most are situated on farms with apples, particularly cooking apples of the later, longer keeping varieties, predominating.

On estate orchards, a greater variety of apples is to be found with more eating varieties present. Plums and pears are also present in fairly large numbers. The aim of these orchards was to provide fruit in one form or another for as long a period as possible and this could have applications today. Fruit was used fresh, barn stored, or particularly with plums and pears, preserved by bottling, pickling or jamming. Dessert varieties were eaten fresh but most fruit and preserves were used to make substantial pies, puddings and dumplings and as an addition to other foodstuffs.

On some farms, with suitable varieties and careful storage, fruit could be available year round and it was a boast that 'mother would make an old apple pie and a new apple pie in the same week.'

Preserves had an almost indefinite shelf life and continue to be popular although freezing has largely replaced bottling. Bottled fruit however looks wonderful and can if desired be used straight from the jar. It is still sometimes seen as a specialist product for sale.

2.2 Market Opportunities

We identified the following categories for operational supply chains in this region:

2.3 Orchard Produce and Local Food

One of our key findings is that discussion of orchard supply chains must be seen in the context of local food supply chains. There is a strong synergy between orchard produce and local food, which works to the advantage of both. Furthermore, locally grown fruit is comparatively rare in this region (compared to other foodstuffs), so the importance of exploting existing local capacity is all the greater.

We found some evidence that supply chains for orchard produce may be more effective if they are part of a wider local food supply chain. This is driven by economies of scale, and the need to provide consumers or local food service businesses with a 'one stop shop'.

On the other hand, it is apparent that local orchard produce can also fill an important gap for organisations wishing to procure a full range of local food produce. Local food supply chains for meat, fish, dairy, and vegetable produce seem to be better developed in Yorkshire and Humberside than is the case with local orchard produce. We think that, before the advent of the railway network and subsequently our extensive road transport system, local production of fruit for local consumption was essential. With greatly improved transport links however, it became possible for fruit production to be concentrated in the most favourable parts of the country and the resulting crop to be easily distributed nationwide. As a result, production for sale from small, local units became less economically viable and resulted in local orchards generally, (including CSS orchards) becoming neglected with their crops ceasing to be exploited.

Local food is often associated with sustainability. Low-intensity orchards have many of the attributes of sustainable food production, in the environmental sense, but at the moment they are not sustainable in the commercial sense. However we have seen that when orchard owners start to see commercial value in their orchards, they are more likely to invest in them.

2.4 Product quality

We found some evidence that consumers equate blemishes and misshapen apples with 'real' food. "If it has blemishes then it can't have come from a supermarket". This is particularly the case with older consumers, whereas younger consumers are more likely to expect fruit to meet supermarket appearance standards.

In the case of local food-service businesses, visual appearance is also of low importance since the products will usually be made into something else (e.g. apple tart).

The key message - which is a real opportunity for anyone contemplating investing in this market - is that consumers can see a value in locally grown produce. Marketing should therefore emphasise the local provenance.

2.5 Organic production not an issue

The orchard owners that we interviewed did not have organic accreditation, or indeed any other food standard accreditation. It was therefore important to find out if this would be a barrier to potential use of orchard fruit. We therefore asked consumers and suppliers about the significance of 'organic' orchard production.

Surprisingly, this seemed to be a non-issue for both suppliers and consumers. One retailer put it more strongly: "People are not fooled by organic - local is more important".

Our consumer survey showed that in fact consumers do attach some value to organic status, but a slightly higher proportion of respondents think that un-sprayed fruit is preferable to organic fruit, and a similar proportion are happy with some pesticide use as long as it is kept to low levels.

It is interesting to see how 'local' is supplanting 'organic' in the mind of the consumer, and this is something which local orchards are well placed to capitalise on. Most of the orchards surveyed are essentially 'untreated'; a situation which has no formal status but which nevertheless appears to have credibility with consumers.

2.6 Local Yorkshire varieties

In general consumers did not have a preference for local Yorkshire varieties. This seems to be partly because the availability of genuine Yorkshire varieties of any orchard fruit is very low, but mainly because consumers attach more importance to 'non-supermarket' varieties. (In essence, this can be considered as a desire for wider choice of varieties and the opportunity to buy fruit perceived to have ripened properly and developed its full flavour potential).

Most of the fruit varieties grown in local orchards are relatively old traditional varieties, or varieties that used to be commercially popular several decades ago but have now fallen out of favour with supermarkets. Consequently the typical range of fruit varieties available from local orchards fits nicely with what consumers appear to want.

2.7 Orchard production capacity in Yorkshire and Humberside

The fragmented nature of local orchards, and the haphazard nature of fruit production on older orchards, means that it has not been possible to obtain accurate figures for the production of orchard produce in this area. We have therefore tried to arrive at some figures using a number of different methods.

The following figures from DEFRA relate to orchards in the CSS in Yorkshire and Humberside.

This data can give no more than a rough indication of overall production capacity. Probably fewer than 25% of local orchards are in CSS and the figures for existing trees have been calculated by us on the basis of the number of trees being pruned rather than direct survey evidence, which was not available.

Proposals in 2004 to classify orchards as agricultural land for EU agricultural support payment purposes will require land use returns which, if the right questions are asked could be used to estimate possible production capacity for given areas. Even so, these returns will apply only to farmland. Estate, local authority and privately owned orchards, will not be included, yet some of these have the most comprehensive ranges of varieties, and collectively they represent considerable potential production. Of course, this is only potential production; not all owners may wish to sell their fruit.

If it were assumed that each tree could produce 20kg of fruit (see section 5.2.2 for more details of this assumption) then the approximate production capacity would be in the order of 40 tonnes. (A traditional orchard box held 40lbs of fruit). This could increase as trees start to benefit from restoration. We are aware of 4 tonnes being harvested in 2004 from a subset of the orchards in North Yorkshire.

As well as these small-scale orchards there are a few semi-commercial operations in the area, including Yorkshire Orchards at Wilberfoss, the orchards at Ampleforth Abbey and Newby Hall. These fall outside the scope of this report, but increase the total production capacity available in the area.

3. Supply chain models for local orchard produce

We looked at a number of supply chain models that have been tried in Yorkshire and Humberside. As noted above, it is important to see local orchard produce in the context of the wider market for local food.

3.1 Farmers Markets

Farmers markets provide a wide range of local foods. We found that farmers markets were popular with consumers, although then are often seen as a specialist purchase rather than part of the regularly weekly shop.

However farmers markets were not popular with the orchard owners that we interviewed - they do not have the time to attend them.

3.2 Direct home delivery

Moorsfresh, a local food distribution business based in Pickering, has tried a number of distribution methods. They specialise in supplying local food to business and customers in the North York moors area, and had already identified a demand for locally grown orchard produce.

There is a market for direct home delivery, particularly in the more remote parts of the region, but it is a costly distribution method. This means it is vital to be able to offer a wide-range of local seasonal produce - not just orchard produce. Moorsfresh have also looked at variations on this method, such as delivering to local collection points.

We also spoke with two other local food businesses in the south east of England - County Produce Marketing, and Farm to Fridge. They backed the view that this type of supply chain is commercially viable, but only in the context of supplying a wide range of local seasonal produce. Direct home delivery would not be viable if it were focussed exclusively on orchard produce.

County Produce Marketing, a commercial organisation which supplies 500 lines produced by 70 farms and independent producers in Kent, Surrey, Sussex and Hampshire, with the emphasis on local / regional food sold locally or within the region. The target market is multiple retailers and catering companies. About 25% of the suppliers are fruit and vegetable producers and they have supplied locally grown apples (Cox, Bramley, Braeburn, Empire) and pears (Conference and Comice) and will be looking at plums and cherries in 2005.

The company has received support from local authorities in Kent, Sussex, and Hampshire, as well as the regional development agency SEEDA. There are clearly issues about how far such support can go, given the operating parameters of local authorities, but from the company's point of view the relationships provide value in terms of boosting credibility with its suppliers and customers.

Interestingly, they have recently (February 2005) opened a £100K warehouse and food-handling centre, including cold stores. Jon King, the Managing Director, feels that a central (regional) distribution centre is fundamental to making local food supply chains work in his sector because it allows economies of scale in distribution to customers. Trade customers e.g. catering businesses, will want a delivery that includes not just orchard produce but all their other needs.

The economies of scale, and the importance of being able to provide a 'one-stop shop' means that a supply chain that offers direct home delivery needs to be fairly large, and may need to operate at a regional rather than 'local' level.

3.3 Northdale Horticulture experimental supply chains

Northdale Horticulture, based near Northallerton, is an organisation providing horticultural work experience to adults with learning difficulties. The organisation has a number of work-areas, including plant nursery, woodlands, and landscaping.

During 2004 Northdale Horticulture was asked to participate in a pilot study being run by the North York Moors National Park (NYMNP) into third party harvesting and marketing of fruit from orchards within the national park. One of the authors of this report, Barry Potter, maintained close links with the project. The purpose of the project, which was funded through Sustainable Development Funding, was to demonstrate that harvesting of traditional orchards within NYNMP could generate economic activity and at the same time deliver sustainable environmental benefits.

It is important to note that all the supply chain models with which the team experimented, provided the work experience which is the centre's primary objective, regardless of whether the supply chain was viable in solely commercial terms. One of the conclusions therefore is that this type of 'social enterprise' model can enable innovative supply chains that provide benefit for all partners in the chain, and may be well suited to small-scale local operation.

In September 2004 the team from Northdale Horticulture harvested about 90 x 5kg boxes of Victoria plums, graded them, and supplied them to a local distribution company - Moorsfresh (see above). Northdale Horticulture did not make a commercial return on this first exercise, since the sell price of roughly 70p/kg was almost entirely wiped out by the cost paid to the farmer and the internal costs incurred in the picking and grading operation. However it gave valuable experience for all partners in the process, and demonstrated a fairly simple supply chain, which was workable, albeit not economically viable for one of the participants (Northdale Horticulture).

Model 1

In October 2004 the team moved on to apples and experimented with a different supply chain involving a local box scheme operator. The demand was for 10 x 15kg of apples per week, year-round, at a price of around £1.20/kg. Pears were also requested. This highlighted two key points about the orchard produce market - the excess of demand over supply, and the lack of storage capacity to extend the season.

Model 2

This experiment was also relatively successful, but some other key issues emerged:

• The extreme variability in size of the apples.
• Problems with the high level of demand (both in sourcing necessary quantities and in the resulting workload).
• Lack of storage facilities.
• Problems in identification of apple varieties, a common problem with older orchards. (Orchard owners in CSS are asked to have their varieties identified - this is not always easy but with time it should be achievable for most varieties in most orchards. This should make marketing for a purpose and planning of storage much easier).

Interestingly, these issues did not arise in the plum experiment (size was less of an issue and only one variety - Victoria - was involved).

The team also experimented with selling the apples through their own shop (which also sells nursery plants). The apples were sold in pre-weighed bags, priced at £1 for 6 apples.

Model 3

As might be expected this supply chain proved the most effective, in that the 'middle-man' was eliminated, and maximised the return to Northdale Horticulture. The problems of size variability and unknown varieties are also mitigated when selling direct in this way. The in-house catering team also contributed a small quantity of jam made on the premises, including a medlar jam - probably a rarity in this region.

The final supply chain, which Northdale Horticulture experimented with in 2004, was cider production. The possibility of using local apples for production of a local cider prompted a new business start up, 'The Yorkshire Cider and Fruit Press.' Northdale supplied about 2 tonnes of apples for £160, which was used by YCFP to trial several different cider production techniques, employing borrowed production facilities at Cropton Brewery. Some of the product was marketed and was well received by customers.

Model 4

This supply chain is very experimental, but has the potential to give a commercial return to some if not all of the participants. There are a large number of micro-breweries across the country and competition is strong, so Yorkshire Cider and Fruit Press were able to gain a useful advantage by selling cider from a region not normally known for cider production. The advantage to Northdale Horticulture is that the picking operation for cider use is considerably simplified and is essentially a one-off operation, quality is slightly less of an issue, and problems of size variability and apple identification are also not really a factor.

Properly organised and with a better knowledge of demand and outlet types, cider /juice production has considerable potential to maximise utilisation, reduce wastage and thus increase value of the whole crop. Following picking, the most presentable fruit can be graded and selected for those outlets where appearance is most important, the remainder can go for juicing for cider production.

One of the learning points was that the mix of varieties available for the experiment was not necessarily what is required for the best quality cider, since they did not have the high tannin levels typical of cider apples. This has led the YCFP team to consider planting new trees specifically for cider production, and also budding their own trees. This would not replace the demand for existing local fruit supplies but would provide the opportunity to boost tannin levels in the cider by adding tannin rich cider apple juice to the brew. For the time being, cider apples or juice can be bought in.

The picking operations have also brought the Northdale Horticulture team into contact with a number of local orchard owners, many of whom have expressed an interest in paying for ongoing maintenance work in their orchards - since they could now see a commercial outlet for their orchard produce and hence a value in investing further in their orchards.

In addition to the supply chains discussed above, Northdale Horticulture has also considered selling at Farmers Markets, and mail order. There was no time for these avenues to be explored in the 2004 season, but they may be followed up in the future.

In conclusion of this look at how Northdale Horticulture's experiments, some key points stand out:

• The role of a social enterprise in a local supply chain - not only in reducing the overall commercial return that needs to be achieved in the total supply chain, but also as a key player in creating an opportunity where previously there was nothing.
• The advantage of taking a broad view of the supply chain, particularly going back into the production process and taking opportunities for adding value through orchard maintenance.
• Demonstration that a local supply chain specific to orchard fruit can be successful - particularly the 'short' supply chain where Northdale Horticulture were selling direct to consumers. Other evidence has suggested that viable local supply chains would necessitate integration of orchard produce with other local produce in order to achieve economies of scale.

3.4 Orchard gate sales

The shortest supply chain is for orchard owners to sell direct to the consumer at the orchard gate.

However the majority of orchard owners that we interviewed did not see much attraction in this option. This seems surprising, but is easily explained: most of them are not trying to make money out of their orchards and therefore see selling the produce as simply a demand on their time at a busy point in the farming year.

Some orchards have adopted this approach: Yorkshire Orchards in Wilberfoss and the orchards at Ampleforth School. Interestingly, both these orchards are relatively large-scale (by Yorkshire and Humberside standards) and therefore have the production volume to make this approach viable. Also, in both cases (although for different reasons) there is less of an issue with competition from other farm activities at the critical times of year.

3.5 Orchard owners co-operative

The relatively large number and informality of existing orchard supplier base makes them unattractive for supply chain intermediaries to deal with. This is particularly an issue for public sector procurement.

A co-operative would offer orchard owners the opportunity to provide wholesalers and end consumers with a single central point. Refrigerated storage would help and a cooperative might offer the best way of achieving this.

However the only examples we have found of orchard co-operatives are in the south-east of England and are based on the premise that the members of the co-operative see their orchards as an important part of their businesses, which is not the case with the orchard owners we interviewed.

3.6 Online supply chains

Given that the orchard owners we interviewed did no marketing at all, it is perhaps not surprising that they had not considered online media for promoting their produce.

There was some interest from consumers in buying orchard produce online but even Moorsfresh, the Pickering-based local food specialists, only used their website for promotional purposes.

Nevertheless, the barriers to entry to this market are falling all the time. Basic off-the-peg online shop systems can now be purchased for a few hundred pounds, and require little specialist knowledge to create. Online payment services allow small producers with no credit card processing facilities to take payments online, and the Internet has historically been a good opportunity for specialist suppliers of many kinds to find new markets.

This type of supply chain also appears to fit well with the working model of many of the small orchards that we interviewed, in that (putting it simplistically) it can be seen as a fairly passive marketing method.

3.7 Online directories and brokerages

Whilst full-scale online shopping for orchard produce may not be viable for some time, the online medium could already have a role to play in enabling orchard supply chains.

The innovative Yorkshire Cider and Fruit Press, which plans to source a substantial part of its fruit for juicing from local orchards, already envisages an online system for suppliers to register the availability of their crop with the Press which plans to collect directly from suppliers. Online registration of crop can provide an up to date picture of crop availability at a given time and facilitate planning of routes for collection.

On a broader front, one of the key barriers to orchard supply chains - widely stated by consumers, supply chain intermediaries, and even orchard owners - was the lack of market information.

The biggest challenge appears to be competition between online local food directories. Local authorities in particular seem keen to promote online directories of local food, and the end result is that the information is sometimes diluted.

4. Public Sector Food Procurement

4.1 Summary

Local authorities and other public sector organisations such as the NHS have permanent procurement teams that carry out ongoing tasks such as tendering and contract management in order to supply schools, hospitals, prisons and other agencies with food for catering. These teams are exposed to initiatives from various central government departments, and attempt to integrate them within existing contract arrangements.

The growing importance of local food is starting to have an impact on public sector procurement, but the existing procurement arrangements are a major barrier to progress. In general these arrangements attempt to achieve best value for public money, but pre-date the new awareness of the costs of food-miles.

As well as local food, many public sector agencies are involved in the public health agenda, where fruit has a key role to play.

Putting these two strands together - local food and fruit - it is clear that there should be a good opportunity for local orchards to work with public sector procurement teams.

However a significant obstacle to progress is that the public sector procurement agencies and local orchard owners have very different views on how low the barriers to participation in a supply chain can be set. Even though attempts are being made to simplify the bureaucracy, the orchard owners that we have interviewed have no interest in formal accreditation schemes or detailed contracts, or meeting very precise grading and size specifications. It is debateable whether simplifying the bureaucracy is sufficient; perhaps a different perspective is required.

Although there is considerable enthusiasm, none of these organisations has yet managed to implement a regional supply-chain that can move large quantities of produce to hundreds of outlets, whilst ensuring that produce is only used within an area local to the grower. Even where the procurement bureaucracy has been pared-down to a level where small-scale producers might become involved, there is still no way to ensure that their produce is only distributed locally.

4.2 East Riding Council

We spoke with East Riding of Yorkshire Council, who currently have a framework contract with a single large catering supplier, which aims to meet demand from their customers (East Riding and North Lincolnshire schools plus a range of other leisure and catering sites) and provide Best Value. This type of arrangement is typical of a modern efficient conventional supply chain. Introducing the concept of local food into this operation - such as local seasonal orchard produce - will raise a number of issues.

Nevertheless the Council is very keen to re-orientate their catering procurement in line with local food and is working with Bishop Burton College, which specialises in agriculture and horticulture, to see how local food can be integrated into the supply chain. Since the contract covers a wide geographical area, a key intention is toidentify local suppliers in each area.

Prices for orchard produce are set weekly using standard industry prices from the Fresh Produce Journal.

One of the key issues with both the schemes outlined below is that ways need to be found to allow small-scale producers such as CSS orchards to engage with large-scale procurement requirements. Our research with orchard owners has shown that they are generally not interested in packaging and marketing their produce since they have other priorities. This points to a role for a supply chain intermediary that can pick and pack, then deliver to local public sector outlets as part of a wider contract.

4.3 Public Sector Food Procurement Initiative

The Public Sector Food Procurement Initiative (PSFPI), run by DEFRA, aims to develop a more sustainable supply chain for schools, hospitals, prisons and other public sector organisations. In Yorkshire and Humberside, Yorkshire Forward has commissioned research into ways in which public sector supply chains can be developed in the region, to the benefit of local businesses and public sector organisations. The key objectives of the study, which will be completed in May 2005, are to:

• identify opportunities for matching supply and demand within the region,
• identify opportunities to reduce waste, and
• identify models that could distribute the produce in a sustainable way

Like the National School Fruit Scheme (see below) PSFPI is heavily constrained by existing procurement arrangements, although its emphasis on sustainability may give more flexibility for developing local suppliers in preference to non-UK sources. However steps are being taken to try to involve smaller suppliers, and a common model (also being considered by SUSTAIN in London) is to try to establish small distribution hubs where local suppliers can sell their produce to the main contract-holder. A crucial weakness is that once fruit enters this supply chain, its origins become anonymous and there is currently no way to ensure that it ends up at a destination local to the point of supply or that end consumers can have the satisfaction of knowing the origin of the produce they are eating.

4.4 National School Fruit Scheme

This national scheme, funded by the Department of Health, was extended to Yorkshire and Humberside in 2004 and entitles children between the ages of four to six in LEA-maintained schools to a free piece of fruit every day. The scheme has recently been re-badged as the School Fruit and Vegetable scheme - SFVS, with vegetables now included in the programme.

On the surface this scheme represents a tremendous opportunity for local small-scale orchards and schools to get together, with benefits to all parties. In practice, like most other public sector food procurement programmes, it is effectively impenetrable to small-scale local orchard growers.

Nevertheless the scheme appears to have been broadly successful. The National Foundation for Educational Research is conducting an evaluation that is due to report in February 2005.

Procurement is organised by the NHS Purchasing and Supply Agency (PASA) on behalf of the Department of Health. The contracts ensure complete traceability back to the original producer, and include various quality standards such as pesticide levels. Sourcing and distribution is managed using a two-tier system. The Tier One suppliers are large mainstream fruit and fresh produce suppliers, who supply the Tier Two regional distribution companies. The latter each handle on average three deliveries per week to about 900 schools.

Unlike the broader PSFPI, the SFVS seems to fit much more closely with orchard produce because the emphasis is very much on fruit, and this removes the complication of incorporating all the other food products which are needed in a typical public sector catering situation. The ideal is perhaps bilateral arrangements between individual schools and nearby orchards, where educational as well as nutritional benefits can be achieved.

Unfortunately the procurement arrangements for SFVS are heavily oriented towards large-scale contracts, where the required compliance with EU procurement rules, quality standards, and consistency of supply can be achieved. A grower or group of growers would need to tender for a regional area and meet a number of formal criteria. These requirements are far too onerous for small-scale fruit growers and may in any case militate against the local variability and distinctiveness that is considered to be one of the main strengths of local produce. Given the scale of the project (involving the distribution of 440 million pieces of fruit) this is perhaps not surprising. The Department of Health did consider other models, including allowing schools to source their own suppliers, but it was felt this would put an excessive administrative burden on schools. (Ironically, schools which have opted-out of LEA provision, and hence are most likely to be choosing their own suppliers, are excluded from SFVS).

The scheme has been criticised for not promoting the use of local fruit. In answer to a Parliamentary question (17/11/2004) the Secretary of State for Health advised that 52% of apples and 89% of pears supplied by the scheme were sourced from non-UK origins. The Secretary of State did not have any information on the percentage of fruit sourced from suppliers within 25 miles of the school supplied, but expressed a desire to maximise locally grown produce for the scheme. The existing procurement arrangements are one of the key obstacles to this, as they prevent the contracts specifying that local fruit or sustainable orchards should be used. (To put this in context, the UK is only about 8% self-sufficient in fruit).

In an effort to address this issue, the Government Office for Yorkshire and Humberside is trying to engage with local producers, starting with a series of open meetings in the second quarter of 2005.

East Anglia Food Link, whose mission is forging links for a sustainable local food system in the east of England, has done a lot of work on sustainable public procurement. It carried out a study in February 2004 into the SFVS, funded by a number of government agencies, with a particular emphasis on sustainability and local food issues.

The aim was to carry out 'a feasibility study to examine the potential and operation of locally focused supply networks for the Schools Fruit Scheme with accompanying education and training programmes'.

Some of its recommendations have particular resonance with the issue of enabling local orchard growers to engage with SFVS:

• The study identified the tendering process as the key issue in 'opening up' SFVS to smaller suppliers.
• It recommended that SFVS should look more closely into opportunities for schools and clusters to put fruit supply in a wider context, including opportunities to include educational activities.
• It suggested that tender specifications should be allowed to include named producers with whom a school could develop closer relationships.
• The study also made a number of recommendations. It highlighted the need for tendering specifications to be less bureaucratic and more appropriate to the product, and identified scope for simplification without compromising safety.

In conclusion, from the perspective of local orchards in Yorkshire and Humberside, there is currently very little opportunity to build a supply chain around SFVS, however attractive the general concept might be. In the longer term the recommendations of groups such as East Anglia Food Link might help to open up SFVS to local orchard growers, and we think this is a tremendous opportunity both for local schools and for orchards in the CSS.

4.5 Healthy Schools

The healthy schools programme is run as local partnerships between LEAs and PCTs. Research commissioned by the Department for Education and Skills found a small but widespread improvement in educational attainment in 11-year-olds in those schools that were part of the healthy schools programme.

School tuck shops are encouraged to sell health food - such as orchard produce. This is one of the few areas where schools are free to make their own purchasing decisions and likely to be well suited to the low-volume informal arrangements which small orchards or a consortium could supply.

As with the SFVS, and the East Anglia Food Link study, the real opportunity is to bring food and education more closely together. This was a theme touched-on by the recent Jamie Oliver TV programmes 'Jamie's School Dinners' - Channel 4, March 2005 and has been advocated by Common Ground, an organisation which promotes local distinctiveness and has been instrumental in developing Apple Day as an annual celebration of orchards and apples. The CSS includes funding for educational visits, and there may be opportunities to encourage low-key links between schools and small local orchards.

Analysis of Results

This section has not yet been converted to a format for display online but we hope to do so eventually. In the meantime please contact the authors for further details.

6. Conclusions and Recommendations

6.1 Conclusions

Given that our starting point was the perception that renovation of orchards through the Countryside Stewardship scheme could be enhanced by establishing opportunities for the sale of the resulting top fruit, it is encouraging to see clear evidence of strong consumer demand for raw orchard fruit, as well as interest from other organisations. Whilst this of itself is not sufficient to create a sustainable supply chain, it is a promising starting point.

As things currently stand, orchard owners are receiving CSS payments for implementing their CSS orchard management plans, and this does not oblige them to do anything with the resulting fruit - even though most are willing to do so. In seeking ways to obtain a value from the fruit it is important to consider how the orchard owners can be motivated to enter into sustainable arrangements, which will ensure good long-term outcomes.

a) Looking at the evidence we have collected, it seems important that if fruit from CSS orchards is to be put to good use, the supply chain must be commercially viable. This does not necessarily mean that everyone involved must make a profit directly attributable to the produce, but unless all partners are getting a clear benefit (e.g. covering their costs) the supply chain will not be sustainable.

To put this another way, unless the widespread evidence of consumer demand and the benefits of meeting this demand, can be brought to bear on the orchard owners, the potential fruit production will not be fully utilised.

b) There is very little data about the number of orchards in this region, or detail about their composition that would facilitate estimates of supply capacity, and this is a constraint on the development of effective supply chains. In the case of CSS orchards, there is at least information on locations, but only circumstantial information about production capacity (we are aware of about 4 tonnes from the 2004 season in North Yorkshire). In fact, the owners themselves often have little idea of their production.

In the case of non-CSS orchards, the situation is even less clear - although an opportunity exists to gather more data now that orchards on agricultural land will qualify for agricultural support payments and will therefore presumably figure in agricultural returns and statistics.

Where public funding is being made available, it could be argued there is a case for specific data to be included in annual returns. The most useful information is the species, variety, rootstock, and age of each tree - but it will be necessary to accept approximations as this level of details is unlikely to be available for older trees.

• For mature trees, the numbers by species i.e. apples, pears, plums and cherries. Apples to be divided into dessert and culinary if known. Plums to be sub-divided into plums, gages and damsons if known. Variety and rootstock to be requested if known.
• For mature trees, the numbers by species i.e. apples, pears, plums and cherries. Apples to be divided into dessert and culinary if known. Plums to be sub-divided into plums, gages and damsons if known. Variety and rootstock to be requested if known.

Whilst being sensitive to the needs of orchard owners, data about the orchards and produce available on a geographic basis, could be made available to schools, public sector procurement agencies, and commercial businesses as a way of encouraging the development of local supply chains.

c) There could be an important synergy between schools and orchards. Whilst our research has indicated that some orchard owners are unwilling or unable to allow visitors to their orchards, and this must be respected, most were at least keen to see the fruit put to good use somehow. The region currently produces only 5% of the total UK fruit production, which means that it is very difficult to meet any of the potential demand from the School Fruit and Vegetable Scheme and Healthy Schools initiatives with locally grown fruit.

We think encouraging some low-key linkage with local schools is one of the best ways of using the fruit from CSS orchards, and is well suited to the informal nature of these orchards. It may provide some income that will help to make the supply chain sustainable without being a burden to the owner, and yet keeping procurement costs low for the school. It also gives the opportunity for valuable educational benefits as well as nutritional benefits.

Whilst CSS orchard owners are under no obligation to supply their fruit to anyone, DEFRA may feel it has some responsibility to facilitate links between CSS orchards and local schools, in order to make better use of the fruit that is available and thus increase the viability of CSS agreements.

We think the following steps would help:

• More proactive direction in the regional CSS guidelines about use of fruit, perhaps as part of orchard management plans
• Better information on the location of CSS orchards
• More promotion of the existing CSS funding for school visits, as a way of fostering awareness between schools and local orchard owners

A simple indicator could be used to track progress in this area - number of school visits per orchard, or quantity of fruit supplied to local schools.

Similar steps could be taken for orchards that will become eligible for support payments, following the recent change in agricultural support payment rules.

d) Perhaps the key barrier to supply chains for local orchard produce in this region is the lack of supply chain intermediaries. Potential users of orchard produce such as greengrocers or public sector procurement agencies want to get their supplies from a single source. Equally, orchard owners for the most part would prefer to see someone else harvest the crop and take it away.

The reasons for the lack of intermediaries are partly down to the supply chain costs. We have found that distributors or greengrocers are prepared to pay about £1.20 per kg for apples from local orchards, and that consumers will pay about £1.60 per kg (although there is considerable elasticity in these figures). This implies that, using apples as an example, the growing, picking, grading, transport costs, and storage from the orchard need to be achieved at a cost of less than this.

There is a lack of data on these costs for low-intensity orchards, but some evidence, particularly from the Northdale Horticulture experience with the North York Moors National Park project, that some supply chains are not commercially viable because of these costs. (However the involvement of this kind of social enterprise can clearly bring down the overall supply chain cost to the point where it is viable, because of the additional non-commercial benefit).

The lack of information about local orchards is also a factor though. Potential supply chain intermediaries such as Moorsfresh are well used to seeking out small local food producers, but better information on the location and capacity would help. The principle barrier however remains the cost of picking and packing the fruit.

Our main recommendation at this stage is that if more information were publicly available about orchards, including locations, capacity, and willingness to supply, then interest could be stimulated in these intermediary activities. In addition, if orchard owners were provided with more information about low-cost fruit storage methods, perhaps as part of their CSS orchard management plans, the pressure to move the fruit immediately after picking might be reduced. Consideration could be given to making the construction or conversion of buildings for fruit storage a fundable category with CSS.

There could be some value in cataloguing all orchards in the region, through a combination of data-gathering methods, including working from farm returns / CSS applications, coupled with on-site sampling, perhaps of a proportion of known orchards, to build a more accurate qualitative picture. We think this should be down to the individual tree level if possible. This may or may not be a cost-effective exercise - but the current lack of information certainly hampers better use of local fruit resources.

e) One of our objectives was to produce a business case to pilot a supply chain for local orchard produce in the Yorkshire and Humberside area. Our findings so far suggest that there is no single option that is more appropriate than others. Rather than start from first principles, we think it would be more effective to build upon the North York Moors National Park project of 2004, which involved Northdale Horticulture. An extension of the first pilot project could cover the following aspects:

• Scalability, including more precise costing of labour inputs at various points
• Storage trials, examing methods and low-technology low-cost solutions suitable for this region
• Pilot some further marketing models (such as mail-order sales, which were not tried in 2004) as well as scaling-up some existing ones
• Developing links with local schools through the Healthy Schools initiative

We understand that Northdale Horticulture may wish to continue the initiative in 2005, possibly on a larger scale and involving other social care providers.

f) It is important to note how the attributes of the current supply and demand for local orchard produce might change over time. Currently we have a strong level of demand from consumers, along with a potentially large demand from public sector organisations (particularly schools). However, lack of awareness and information between suppliers and consumers has meant that most of the demand goes un-met. At the same time we have a small supply not so much because currently there is a lack of crop per se but reflecting the fact that historically, this has not been a major fruit-growing area and such orchards as exist are mostly small and have seen little investment. If ever they were, they are no longer geared to feeding their produce into supply chains.

If some of the measures in this report are implemented then small-scale viable supply chains will start to connect the demand to the supply. From our evidence it seems that this could fairly quickly lead to the existing supply (which is currently not utilised) being taken up, with better quality fruit being sold directly to consumers or local schools, and lesser grades being used for juice / cider. We have also noted that the existence of supply chains will lead some orchard owners to invest in their orchards, and this could fairly quickly (within a few years) increase productivity. This is an excellent outcome, and seems readily achievable, although harvesting and distribution remain an issue.

However, the slack that is currently in the supplier base will soon be taken up, and the underlying lack of capacity will be exposed. This might lead to further plantings, either through the intervention of commercial businesses, or through the intervention of public sector organisations that wish to be able to purchase orchard fruit within their local region.

6.2 Recommendations

The objective is to better utilise the fruit available from CSS orchards and other unrestored orchards in the region, in ways which are sustainable and promote use of the fruit within the area of production where possible. Based on the results so far we think the following steps should now be taken:

6.2.1 Acquiring, cataloguing and presenting information about local orchards

7. Interviews / Discussions / References

Orchards

Fruit and Orchard References