Bioeconomy Tool Screengrab

The Bioeconomy in Wales

21st January 2019

Anthesis has been commissioned to support WRAP Cymru to understand the current scope and value of the bioeconomy in Wales, and estimate its potential value in the future, in addition to creating an interactive mapping tool.

Key Findings
The transformative bioeconomy in Wales currently contributes £2.5bn (4%) to an overall gross value added (GVA) for Wales of £59.8bn
The Welsh bioeconomy has grown between 2014 and 2016, with a 4% increase in GVA, 7% increase in the number of jobs and up to an 18% increase in turnover
Currently the bioeconomy sector is characterised by small businesses, with 99% employing less than 20 people
The bioeconomy employs 5% of the Welsh workforce (70,650 people)

Introduction

The bioeconomy challenge has been described as "the economic benefit of embracing these [today's] challenges with biological solutions" (Biotechnology and Biological Sciences Research Council [BBSRC] 2018 ).  Anthesis has been commissioned to support WRAP Cymru to understand the current scope and value of the bioeconomy in Wales, and estimate its potential value in the future, in addition to creating an interactive mapping tool.  This will enable WRAP Cymru to work with others to promote and accelerate an integrated and globally recognised bio-based and biotech economy in Wales.  

Organisations representing other regions of the UK have undertaken similar work, such as BioVale in Yorkshire and Humber and Zero Waste Scotland.  Both are now recognised centres of expertise that have achieved a critical mass that is now driving the bioeconomy in these regions with measurable benefits to the local economies. WRAP Cymru is aware that many of the same elements that exist in Scotland and Yorkshire are already in place in Wales.  This report has collated evidence from a number of data sources and other public domain information, to understand the structure and scale of the bioeconomy in Wales.  

1.1 Definition

The bioeconomy can be defined as ‘the production of biomass and the conversion of renewable biological resources into value-added products, such as food, bio-based products and bioenergy ’ i.e. transformative processes.  There are also a number of other economic activities which supply the transformative element (upstream, such as machinery, power or financial services) and those that add value as downstream users of the transformative activities (including preparation, packaging, transportation and retailing of food or drink products).  

This study has focussed on the transformative activities alone, which are broadly categorised into the following sectors:

  • Agriculture and fishing: 
    • crop production, 
    • animal production and hunting, 
    • fishing and aquaculture;
  • Forestry and logging: 
    • logging, silviculture and other forestry activities,
    • paper and wood product manufacturing;
  • Manufacture of food, beverage and tobacco products;
    • Water and remediation activities:
    • water collection, treatment and supply,
    • sewerage,
    • remediation and waste management; 
  • Professional, scientific and technical activities: 
    • veterinary,
    • biotechnology,
    • bio-plastics,
    • bio-pharmaceuticals,
    • bioenergy; and
  • Other manufacturing such as leather and rubber products.  

The relevant standard industrial classification (SIC) codes have been identified (see Appendix 1) and used to identify relevant businesses in this assessment and the accompanying mapping tool.  

1.2 Metrics

This report is intended to build on the work in the 2016 BBSRC report, which used several different factors to assess the scale of the contribution made by the bioeconomy, for the whole of the UK.  However, some metrics were given at the Welsh level and indicated that the transformative bioeconomy contributed the following to the Welsh economy in 2014:

  • Gross value added (GVA): £2.4bn; 
  • Employment: 4.7% of jobs in Wales were in the transformative bioeconomy (~66,000); and
  • Turnover: £4.4bn.  

Anthesis has updated these metrics for a 2016 baseline and made projections until 2030 as to how each of the sectors could contribute to growth in the bioeconomy in the future.

Findings

2.0 Nature and scale of the bioeconomy in Wales

Office of National Statistics (ONS) data shows that the transformative bioeconomy in Wales consists of a large number of small businesses.  Micro businesses of between 0 and 4 employees comprise 94% of all bioeconomy businesses, with 99% of the businesses having less than 20 employees.

The proportion of the number of bioeconomy businesses within each of the sectors is as follows:

  • Agriculture and fishing: 89.1%;
  • Forestry and logging: 3.8%;
  • Manufacture of food, beverages and tobacco: 1.4%;
  • Professional, scientific and technical activities: 1.2%;
  • Water and remediation activities: 0.5%; and
  • Others: 4.0%.  

The following metrics demonstrate how each of the bioeconomy sectors contribute to the economy of Wales.  The methodology, assumptions and data sources used to estimate these are provided in Appendix 2.  

2.1 Gross value added (GVA)

In 2016, the transformative bioeconomy contributed £2.5bn (4%) to an overall GVA for Wales of £59.8bn.  This was a 4% increase on the 2014 GVA figure stated in the BBRSC report.  It is estimated that the value could grow by 8% to £2.7bn by 2030.

The manufacturing of food, beverages and tobacco is the largest sector at 56.4% of the GVA generated by the transformative bioeconomy.  The professional, scientific and technical activities sector is currently contributing a relatively low proportion at 2.7%, but it is anticipated to grow more than any of the other sectors, thus by 2030 could contribute 8.0%.

The agriculture and fishing sector is the only sector anticipated to decline, but as it contributes only 12% to the GVA, there is still an overall increase predicted for the Welsh bioeconomy through growth in other sectors.  The forestry and logging, and water and remediation services (those related to biowaste) contribute 15% and 13% respectively.

2.2 Employment

In 2016, 5% of the jobs in Wales were identified as being in the transformative bioeconomy, at 70,650.  

For employment, the largest sector is agriculture and fishing which provided 56.5% of the jobs within the transformative bioeconomy in 2016.  However, as this sector is anticipated to decline, and as it is currently the dominant sector in terms of employment, the overall projection is for the bioeconomy to produce a reducing number of jobs within Wales over time (10% reduction by 2030). This is despite increases in all the other sectors.

The largest increase is anticipated to be in the professional, scientific and technical activities sectors at over 200% (2.3k to 6.8k) by 2030.  By 2030 its proportion of the employment could be 10.8% compared to the current 5.2%.

2.3 Turnover

For turnover, a range has been provided due to the nature and breakdown of the data available.  It is estimated that in 2016 the turnover of businesses within the bioeconomy ranged between £3.7 and £5.2bn, with the upper range considered to be an overestimate as this will include businesses not relevant to the bioeconomy.

Again due to current the dominance of the agriculture and fishing sector and the anticipated decline, the overall turnover is anticipated to decrease to between £3.3 and £4.9bn by 2030.

Excluding the ‘potential additional industries’, this shows that the agriculture and fishing sector currently contributes 62.9% of the turnover, but this could reduce to 44.8% by 2030.  All other sectors are expected to increase both in value and as a proportion of the total.

Conclusions

Our analysis shows a growth in the transformative bioeconomy sectors in Wales between 2014 and 2016, in GVA (4% increase), jobs (7% increase) and turnover (up to 18% increase), indicating a bioeconomy in development.

Longer term forecasts (to 2030) suggest an overall continued GVA growth of 8%, with a potential decline in traditional businesses such as agriculture and fishing more than compensated by strong growth in added value sectors such as food, beverages and tobacco manufacture (5% growth), and particularly in technology sectors such as professional, scientific and technical activities (226% growth).  

This is also reflected in strong job growth in developing sectors particularly in in the professional, scientific and technical activities sectors at over 200% (2.3k to 6.8k) by 2030, and turnover growth forecast in the professional, scientific and technical activities, water & remediation services and manufacture of food, beverages and tobacco sectors.

The modelling undertaken does not factor in the impact of any potential policy interventions which could be implemented to stimulate the bioeconomy still further.