Businesses warn statutory controls risk shortages and undermine investment, urging focus on root causes of rising costs.
The Scottish Government’s recently launched consultation paper on implementing statutory price controls for essential food items has been met with fierce opposition from the nation’s food and drink industry. Industry leaders warn that the proposals lack crucial detail and could lead to severe unintended consequences, including shortages and diminished investment in the sector.
David Thomson, Chief Executive Officer of Food and Drink Federation Scotland, voiced the industry’s strong concerns. “Despite publishing a very lengthy consultation paper running to nine chapters, the Scottish Government still cannot answer some of the most basic questions about its food price cap plans, including which products would actually be capped,” Thomson stated. He added, “These proposals are causing major concern across Scotland’s food and drink supply chain. Businesses that make food and drink in Scotland are increasingly questioning whether the Scottish Government understands, or cares, about the pressures they face and the contribution they make to Scotland’s economy.”
The consultation, which runs until 24th November 2026, seeks public views on introducing legal price caps on “essential food items” sold by large supermarket chains, with a potential list including up to 50 products such as bread, milk, and eggs. The government’s stated aim is to ease cost-of-living pressures for households, particularly those on lower incomes, as food affordability remains a top priority. Business Minister Tom Arthur highlighted the government’s commitment to developing an approach that “works with retailers and protects farmers and food producers.”
However, FDF Scotland, alongside 22 other business and trade associations, collectively urged First Minister John Swinney to abandon the plans, arguing they are “unnecessary, ineffective, and likely to deliver significant adverse consequences.” Thomson elaborated on the industry’s position: “Food price caps will not address the underlying causes of food inflation. Food and drink manufacturers continue to face high energy, labour, commodity, packaging and regulatory costs. Capping the shelf price of selected products does nothing to remove those costs and will simply push them elsewhere.”
Economic Contribution and Inflationary Pressures
The Scottish food and drink manufacturing sector is a cornerstone of the nation’s economy. It represents Scotland’s largest manufacturing sector, contributing significantly to Gross Value Added (GVA) – estimated at £3.9 billion by FDF Scotland in 2024 and £7.0 billion for the broader food and drink sector in 2023 – and employing 44,000 people. The wider food and drink sector accounts for almost 70% of Scotland’s full supply chain turnover.
Food price inflation has been a persistent challenge across the UK, peaking at 19.2% in March 2023, the highest rate since 1977. While this figure has since moderated, it saw a resurgence to 4.9% in July 2025 and 5.1% in August 2025, exceeding overall inflation. Key drivers of these escalating costs include farmgate prices, import costs, exchange rates, and labour and non-labour expenses within food manufacturing. Increasingly, government regulation and policy decisions are also cited as significant factors contributing to food inflation, alongside global commodity shocks and post-Brexit trade friction.
Historical Precedents and Unintended Consequences
Economists generally express strong reservations about the effectiveness of consumer price controls in market economies, citing a propensity for unintended negative outcomes. Price caps, while offering immediate relief, can distort market mechanisms, leading to shortages as producers face reduced incentives to supply goods at artificially low prices. This imbalance can also foster black markets and impact product quality.
You Might Also Like:
SNP food price cap plan focused on cost crisis, says First Minister
£2m lifeline launched to support Scotland’s struggling pig producers amid price crisis
Mother and son land £335k to launch Friday4:30 crisis tool for food and drink brands
Edinburgh Cocktail Week brings A-list spirit brands to the capital
Historical attempts at price controls in the UK, such as those in the 1970s, are widely regarded as failures. During World War II, price controls were only effective when coupled with rationing to manage demand, otherwise leading to shortages and quality issues. More recent voluntary and mandatory price control schemes in European countries like France, Hungary, and Spain have yielded mixed results, sometimes leading to price increases on non-capped items or supply disruptions.
Industry bodies, including FDF Scotland, contend that such interventions risk shifting financial burdens upstream to primary producers, potentially resulting in lower farmgate prices, stricter contract terms, or increased reliance on cheaper imports. This, they argue, could jeopardise domestic food production capacity and weaken national food security at a time when resilience is paramount.
In conclusion, David Thomson stated: “The Scottish Government must listen to the evidence, recognise the risks and drop its plans for food price caps. Instead, ministers should focus on tackling the real drivers of food inflation and creating the conditions for long-term affordability, investment and growth.” The consultation offers an opportunity for all stakeholders to present their perspectives on a policy that seeks to alleviate household financial strain but carries significant economic complexities and potential repercussions for Scotland’s vital food and drink sector.
