Evaluation of the Food Business Investment Scheme and Rural Business Investment Scheme: summary

This report provides a final evaluation of the Food Business Investment Scheme (FBIS) and the Rural Business Investment Scheme – Food (RBISF) which are capital grant schemes with a budget of just under £70 million, collectively funded under the Rural Development Programme (RDP) 2014-2020.

FBIS is designed to help primary producers of agricultural products in Wales add value to their outputs. It does so by providing support in the form of capital grant investment to those businesses who carry out first and/or second stage processing activities, thus increasing their capacity and the demand for primary produce. The scheme is designed to improve the performance and competitiveness of processing businesses to respond to consumer demand, encourage diversification, and to identify, exploit and service new, emerging, and existing markets. RBISF is a smaller capital grant scheme that provides investments to improve and develop food and drink (F&D) processing and manufacturing activities currently not eligible under FBIS.

Applicants underwent a two-stage application process for both schemes, comprising an Expression of Interest (EOI) followed by a full application. The team at the Welsh Government Food Division were responsible for appraising the EOI submissions with Rural Payments Wales (RPW) responsible for scoring and appraising the full applications. The grants could only account for up to 40 per cent of the investment with applicants required to contribute 60 per cent in match funding. One key difference between the schemes is that FBIS can only be used to support projects where the inputs of the processing activity are at least 90 per cent eligible agricultural products sourced from within the EU, whereas RBISF does not have that limitation. The other main difference is in the scale of the grants, with FBIS’ £65m budget and maximum grant offer of £5m (minimum £2.4k), compared with RBISF’s total budget of £3.5m and maximum grant offer of £150k (minimum £5k).

The investments made through FBIS and RBISF are considered flagship interventions by Welsh Government to achieve their policy objectives to generate growth in the sector, increase sustainability and food security through building and advancing capital assets.

The Welsh Government commissioned Wavehill to undertake a final evaluation of both schemes with a focus on assessing the effectiveness of various processes contained within the schemes (application, appraisal, beneficary engagement, and scheme management) alongside an evaluation of the overall impacts, value for money (VfM), and contribution towards Welsh Government and EU strategic policy objectives, before providing recommendations and lessons learnt to help form the evidence that will feed into future decisions relating to investments supporting the food industry in Wales.

A Stage 1 Inception and Evaluation Framework Report was developed in June 2022, based on a comprehensive scoping exercise, which established the approach for the final evaluation. Stage 2 commenced in the Autumn of 2022 with all fieldwork and analysis completed by the Spring of 2023.

Research activities undertaken in Stage 2

• In-depth interviews with Welsh Government officials and stakeholders.
• 65 beneficiaries were surveyed which is equivalent to an overall response rate of 44%.
• 53 non-beneficiaries (i.e. businesses who had applied for support but were unsuccessful or withdrew) were surveyed which is equivalent to an overall response rate of 14%.
• Secondary analysis of Welsh Government Management Information (MI).
• Five case studies to draw attention to specific examples of the impact for businesses.

There were several limitations with our approach, particularly with regards to the economic impact assessment which relied on the use of self-reported data to identify attribution to the schemes. Whilst the non-beneficiary sample was used as a comparison group, there were significant differences in the size and type of businesses within each group which limited the value of the analysis as part of the counterfactual impact assessment. Constructing a control group from secondary datasets was explored as an alternative option, but was not feasible due to data gaps within the MI which constrianed the ability to create a suitable control group. Given these methodological constraints the estimates on economic impact provided should be treated with caution, although they do provide valid indicative estimates on the scale of impact generated.

Delivery output

Collectively, businesses made 520 applications to FBIS with 127 successful, representing a success rate of 24 per cent. Every funding window was oversubscribed with 63% of applications unsuccessful at the EOI stage, demonstrating the demand and highly competitive nature of the process. In total, 469 businesses applied for FBIS grant support with 119 successful (25%) including eight businesses that were successful on two separate occasions. 

Just under £60m of grant funding has been awarded through FBIS at an average of just under £470k for the 127 projects, demonstrating the substantial scale of activity undertaken. Indeed, whilst there is significant variation in the size of grants awarded through FBIS, ranging from £2,459 to £5,000,000, most were sizeable with 54% awarded more than £100k including 11 per cent that were more than £1m.

The grant application data shows some drop-off in applications at Stage 2 which is likely linked to some of the issues experienced during the application and appraisal process, with long delays leading to applicants pulling out of the process. These delays were particularly problematic when combined with high levels of inflation, leading to businesses having to pay more than anticipated for their projects, and compounded by the fact the scheme could not commit more funding to account for spiralling costs (only the amount agreed during the EOI stage could be awarded). Several businesses cited frustrations around this.

A decision was made to close RBISF earlier than intended and before the budget could be utilised because of resource constraints within Welsh Government. Twenty eight projects were awarded funding in total, amounting to ca. £811k which is just 23% of the budget that was made available for the scheme. 

Most beneficiaries were microenterprises, although FBIS has also supported larger organisations with 15% employing more than 50 employees. Larger organisations had a higher success rate in obtaining grant funding, which is likely linked to the resourcing required to develop effective applications in what has been described by many as a time-consuming and complicated process.

A large proportion of FBIS beneficiaries were farm businesses, with a quarter reporting they had no previous processing operations (thereby using FBIS to diversify their operations) while a further 15% were seeking to enhance a processing operation on their farm. No subsector was targeted specifically, however five subsectors have been particularly prevalent within FBIS comprising egg processing beneficiaries, dairy businesses, meat products, alcohol and horticulture.

Design and delivery

The design aspects of both schemes have been well-received with regards to the size of the grant, the intervention rate, and the eligible costs and activities. Equally, the rationale for providing grants as small as £2.5k was questionsed, particularly given the resource required to make the application.

Perhaps the main constraining factor within the design of FBIS was that the scheme was only open to beneficiaries who process a primary agricultural product with 90% sourced from within the EU. This explains the composition of the subsectors which primarily focused on dairy, egg production, and meat. Businesses that produce soft drinks and certain types of confectionary and baked goods are all examples of projects that could not be funded under FBIS.

Generally, the schemes were very open in relation to the types of businesses that could access support. There were some mixed views on this within the delivery team. Some suggested that the schemes should be more targeted at specific growth areas to better align with the policy objectives (e.g. by identifying which subsectors are most likely to generate growth for the Welsh economy).

Two main routes were used to promote the schemes. First, the usual Welsh Government channels including various websites and related publications. Second, Welsh Government’s other support projects such as Cywain and Food Innovation Wales were directed to inform the hundreds of businesses they support. The second route was particularly effective as it allowed a mechanism to link other business growth planning and support with the capital investment.

Applicants provided a mixed response when asked about their satisfaction with the application process. The Stage 2 full application process appears to have been more problematic, with several comments alluding to dissatisfaction with the slow turnaround, lack of communication, while there were challenges around the complexity within the process and the time required to develop applications. For these reasons, 58% of beneficiaries felt compelled to access support from external providers to develop their applications including 38% paying for the services of independent consultants, which made the support potentially less accessible to smaller busiensses. Equally it is important to note that, given the scale of grants provided, it was deemed important and reasonable to have a comprehensive application process which scruitinised the bids in detail.

Whilst the application process did require applicants to set out how they would provide strategic benefits around growth, supply chain benefits, sustainability, and fair work, there was no mechanism to monitor progress against those ambitions and ensure they were being delivered. 

A very mixed response was received when beneficiaries were asked about the claims and monitoring process with a wide range of challenges cited comprising timescale issues, difficulties with the IT system, unavailability of support, and that it was too long.

Despite some of the issues reported concerning the various processes within the grant schemes, beneficiaries were very satisfied with the support received overall.

Outcomes and impacts

Many of the FBIS projects had not been completed at the time of our analysis. Despite this, the scheme had already achieved four of the five Key Performance Indicator (KPI) targets focusing on outcomes associated with generating positive economic impacts, such as product development and job creation. A similar theme can be seen in the RBISF KPI achievement data, with the scheme surpassing its targets for jobs created and safeguarded by a substantial margin.

The main outcomes reported by beneficiaries were improvements to their capability through better equipment and facilities; greater sustainability within their business; diversifying their operations, entering new markets or growing existing markets; and increasing their productivity. Beneficiaries were able to supply larger contracts including some that managed to supply national retailers and wholesalers or enter export markets for the first time. There appeared to be a high degree of additionality within these outcomes with the data suggesting that the two grant schemes were highly effective in leveraging investment that would not have taken place otherwise.

The vast majority of beneficiaries had increased their workforce since receiving support and around half attributed at least some of this increase to the support. On the basis of the estimates provided, we can estimate that FBIS created or safeguarded 761 FTE jobs in total. Using the same method, we estimate that RBISF created or safeguarded 65 FTE jobs (net).

The analysis of turnover data provides strong evidence of growth generated by the FBIS scheme support in particular. The vast majority of businesses had seen an increase since receiving support and, on average, beneficiaries estimated that around a quarter of their turnover could be attributed to the impact from the support received. 

There also appears to have been some supply chain impact, with 21% of respondents reporting a higher proportion of their expenditure is made in Wales following the support and 33% reporting a higher proportion of sales from outside of Wales relative to before the support. The evidence of beneficiaries expanding their markets beyond Wales is important in supporting the Wales-level returns from the schemes i.e. by reudcing the potential for displacing the market share of Welsh competitors.

On the basis of the data provided, and after accounting for the five additionality factors that should be considered for economic impact assessments, we estimate that FBIS has generated ca. £76m, RBISF has generated ca. £928k and, together, the two schemes have generated ca. £77m in GVA net additional impact. This assessment involved some important assumptions and simplifications – and changing these would have potentially significant impacts on the estimates generated through such illustrative calculations.

In total, 41% of beneficiaries reported that their projects have generated positive environmental impacts with respondents typically citing energy efficiencies within their new processes, the introduction of renewable energy and switching to lower carbon technologies, and improvements to their recycling processes and improved waste management. These positive benefits do need to be balanced against increased production and geographic markets. 

There has been good alignment between the impacts from these schemes and the strategic objectives set out by Welsh Government, particularly with regards to the growth objectives, increased reputation and standards, and some evidence of positive environmental impacts. There are some areas, however, such as fair work and environmental sustainability where the scheme perhaps lacked a mechanism to ensure these would be achieved.

FBIS delivered against its RDP Priority Focus Area – to ‘improve the competitiveness of primary producers by better integrating them into the agri-food chain through quality schemes, adding value to agricultural products, promotion in local markets and short supply circuits, producer groups and organisations and inter-branch organisations’ – on two levels: a) through the support provided to farm businesses to diversify and grow or develop new operations, and b) the indirect benefit to primary producers resulting from the growth generated for the food manufacturing and processing businesses that they supply to.

Our evaluation finds that the FBIS and RBISF interventions have supported millions of pounds of investment in the processing infrastructure, leading to improved equipment and facilities, thereby enabling businesses to grow over the time period considered. Combined, the schemes have played an important role in helping Welsh Government achieve their growth ambitions for the sector. Accordingly, these schemes have shown the value of supporting F&D businesses to invest in their production processes and continuing to do so in future, although the rationale for support should be reviewed at the appropriate time to ensure this remains relevant.

Recommendation 1

Welsh Government should continue to provide appropriate capital support to F&D businesses, effectively targeting support to maximise the potential value generated.

Whilst the schemes do appear to have generated positive environmental impacts, this also needs to be balanced against potential adverse impacts from increased production and expansion to geographic markets. Whilst we are not able to quantify these impacts, the available evidence would suggest that, on balance, the schemes appear to have contributed positively.

Recommendation 2

Future schemes should consider introducing mechanisms to better monitor and control for the environmental impacts of the projects supported. Consideration could also be given to commissioning a separate research study specifically on the positive and negative environmental impacts of these schemes.

Recommendation 3

Any future schemes should ensure that more robust monitoring processes (e.g. including the capture of business age, historic and annual turnover data) are implemented to enable more refined estimates of economic impacts.

The evidence shows that the two schemes have generally been well-designed with regards to the grant parameters. That said, there was some suggestion that the minimum threshold should have been higher. The main constraining factor within the design of FBIS, however, was the RDP requirement around limiting the support to businesses that process primary agricultural product, thereby preventing other, perhaps more appropriate subsectors from accessing the support. This was due to the RDP Priority Focus Area used to fund the scheme, which perhaps displays some tension between those strategic objectives and those of Welsh Government.

Recommendation 4

There should be a more coherent understanding of the strategic objectives within the next capital grant scheme, linked to a clear assessment of the rationale for intervention applying at that time as reflecting market developments. We recommend that Welsh Government should clarify those objectives at the earliest opportunity and communicate the objectives with all personnel responsible for administering the new scheme. This would also be an opportunity to have a more considered position on the environmental objectives and how these align with policy objectives around economic development.

Recommendation 5

If it has not been adjusted already, the limitation around only supporting businesses who process a primary agricultural product should be removed from the next scheme (unless adding value to agricultural products remains a core priority).

Generally, the schemes were designed to be open to all eligible businesses and did not target specific cohorts of businesses. This has led to significant investment in some subsectors, such as egg production and microbreweries, that policy officials have highlighted as a weakness with concerns around investment into sectors that do not provide the intended strategic value.

Recommendation 6

Welsh Government should consider applying a more targeted approach in the next grant scheme either through the marketing channels utilised or by applying a greater weight towards high growth sectors or types of projects during the appraisal process. This should be supported by an evidence-led assessment of market conditions and potential feeding into the scheme design and targeting.

Larger businesses had a higher success rate during the application process. This appears to run in contrast with Welsh Government’s key policy focus around increasing the base of medium-sized firms within the sector by supporting micros and small businesses to take the next step.

Recommendation 7

Welsh Government should consider introducing specific mechanisms to ensure the support is more targeted at micro and small businesses. One approach could be to ringfence a proportion of the funding (e.g. 60 per cent) for those business size cohorts. Another could be to reduce the maximum grant limit.

The vast majority of beneficiaries did have strong growth ambitions and a clear plan for growth prior to receiving support, whilst a large proportion already had an accreditation, thereby demonstrating their readiness for growth. In that sense, the schemes have managed to engage with an appropriate set of businesses which is consistent with the vision articulated by Welsh Government policy officials about the need to “back the winners”. The point on accreditations is key as microenterprises with serious ambitions about developing into larger businesses generally need to be accredited.

Recommendation 8

The next scheme could incorporate a requirement for businesses to either be accredited or commit to acquire an accreditation to be eligible for support, as a way of ensuring the investment reaches the businesses that are best placed for growth.

The schemes were well-promoted, as testified by the scale of applications coming through. The most significant issues have been experienced in the application, appraisal and claims processes as well as general business engagement. Some of the main frustrations concerned the application process, primarily Stage 2 with reports of long delays and poor communication.

Recommendation 9

Future schemes should prioritise steps to avoid delays in the approval process (e.g. by reviewing the two-stage application process and / or by ensuring there is greater resource to accelerate the process). Consideration could also be given to having a more flexible approach. This could, for example, include a mechanism to increase grant funding in line with inflation when there is a long lag from the EOI to the purchase of capital items (although this would not prevent some of the other issues that occur with delays such as the market conditions, competitors etc. which can affect the strength of the business case).

There were also issues around the complexity within the application process and the resource and ‘knowhow’ required, leading to many appointing external consultants which potentially gave an unfair advantage to businesses that could afford to take such measures. 

Recommendation 10

The application process should be further considered to enable the efficient and fair collection of the necessary information to support effective assessment of applications. The process should either be simplified to ensure that businesses can carry it out on their own, or there should be a consistent level of support to all applicants to make the scheme as accessible as possible and provide a level playing field.

The high additionality identified in this evaluation scheme would suggest the appraisal process has been effective in ensuring that those businesses that can fund the projects themselves do not receive the support. Indeed, there was a specific element within the appraisal process that considered the question of additionality specifically.

Recommendation 11

The next scheme should retain similar practices around appraising whether projects could be delivered without public funding (and make further improvements where appropriate).

Another element introduced to the next scheme is formalising the concept of signing an economic contract at the time of applying for support. We believe that this is a sensible addition which, if done well, should ensure that beneficiaries follow through on delivering some of the broader strategic objectives around fair work and sustainability.

Our evaluation found issues around time delays, unavailability of support and lack of communications during the claims process as well as the application stage. Additionally, the IT system deployed for the scheme has been another source of frustration and led to further delays.

Recommendation 12

Management of the claims process should be strengthened in the next scheme where additional resource should be the main priority.

 There is good alignment between these capital grant schemes with other support provisions within the sector that focus on business development support, upskilling, and innovation.Most beneficiaries have received support from some of those other services, thereby taking advantage of the complementarity they bring as a package. However, these engagements have been sporadic.

Recommendation 13

Welsh Government should consider further integration of the schemes to standardise the type of support businesses receive that sits around the grant funding. For instance, one simple action could be to inform all businesses of the support available from other providers during the initial engagement. The team could also work alongside another provider such as Business Wales or Cywain to create dedicated support for all applicants should they need it.

Report authors: Ioan Teifi, Endaf Griffiths

Views expressed in this report are those of the researchers and not necessarily those of the Welsh Government.

For further information please contact:
Research, Monitoring and Evaluation Team
Welsh European Funding Office
Welsh Government
Cathays Park
Cardiff
CF10 3NQ
Email: research.evaluation@gov.wales

Social research number: 10/2025
Digital ISBN: 978-1-83715-164-6