DAVID LEASK and CATE DEVINE

SCALLOPS from the Hebrides. Beef from Aberdeenshire. Raspberries from the glens of Angus. New potatoes from Ayrshire. Few doubt the quality of Scotland's produce. But far from all are able to enjoy it.

The nation has a £7.3bn food, drink, farming and fishing industry that supports tens of thousands of families. It also, according to the most recent figures, suffers nearly 2000 cases of clinical malnutrition every year, a disease normally associated with the developing world, and ranks second only to America in the world league table of childhood obesity.

The Scottish Government yesterday launched the final stage of a consultation that aims to define, for the first time, a national policy on food and drink. One of its main quandaries: how can ordinary Scots, with some of the worst diets in Europe, benefit from the astonishing wealth and variety of the nation's larder?

Richard Lochhead, Cabinet Secretary for Rural Affairs and the environment, yesterday summed up the national paradox. "I am proud of Scotland's role as a major food and drink producer with a worldwide reputation for products that can be trusted and represents outstanding quality," he told food industry leaders at the Royal Highland Show. "Yet, in many ways we are a nation of contradictions.

"We have healthy natural ingredients on our own doorstep, yet, when as a nation we look in the mirror, we can see our health record is at the wrong end of the international league table. And much of the healthier ingredients in our own local larder are absent from our diet."

The new policy, when finalised, will cover everything from the farmyard to the kitchen table. It is as much about the nation's health and environment as about the nation's agribusinesses. And it won't see Scotland in isolation. The country is not immune to dramatic swings in world prices that have seen food riots across poorer nations in recent months.

Mr Lochhead, as part of the second and final stage of consultation, has ordered an inquiry into the affordability of food as world prices soar for commodities such as wheat, rice and that key input for any food business - fuel.

Food prices in Scotland are currently rising 7% a year, twice as quickly as average inflation. When Mr Lochhead launched the first stage of his policy consultation last year the average price of a loaf of bread in Scotland was 90p. Now it is £1.20. In the same period the price of a half-dozen eggs has jumped from £1.20 to £1.60.

Food inflation comes just as customers are being squeezed by higher borrowing costs and mortgage repayments and rocketing petrol prices.

Some of Scotland's high-end producers are worried. Will consumers sacrifice better cuts of meat or premium cheeses as they brace themselves for the credit crunch? Will environmental and healthy eating messages be lost as shoppers count their pennies?

Glen Allingham fears they will. In 2000 the Elgin-born potato farmer became the first Scot to grow garlic commercially. Half is sold in Scottish supermarkets and delicatessens, half in English stores.

"What worries me is that if we now have a shortage of money the supermarkets will not hesitate to get rid of local produce," he said. "They'll try to hold their prices as the crunch kicks in, and they'll be looking to pay their suppliers less - and that's unsustainable."

Mr Lochhead's government, meanwhile, will look at ways of leading by example.

The state - in all its guises - is a major purchaser of food and has had some success in promoting healthy eating (Scottish children rank second in fruit consumption out of a sample of 41 countries, partly thanks to schemes providing fruit at schools).

Mr Lochhead said a new catering contract would put greater emphasis on healthier menus and using fresh, seasonal produce. His administration will also help create a world-class health and nutrition centre by supporting the merger of Rowett Research Institute and Aberdeen University.

Many quality producers depend on foreign markets. Exports of food and drink have hit £4bn a year, including Scotch.

But how do shoppers at home know they are buying Scottish? Mr Lochhead said: "We want to make it easier for Scottish consumers to identify and trust the "Scottish" label on their supermarket shelves and eating out menus."

Jim McLaren, president of National Farmers Union Scotland, praised the direction the new policy is taking as "exciting and ambitious". Farmers remain concerned with low farmgate prices, soaring fuel costs and red tape. But they took some heart from Mr Lochhead's determination to tackle labelling.

Mr McLaren said: "The Scottish flag is being increasing used by food retailers to demonstrate support for local produce." However,, he added, progress on labelling has been "frustratingly slow".

Cue Martin Wishart. Mr Lochhead has enlisted the Michelin-starred Scottish chef and contributor to The Herald to act as consultant for a high-profile campaign to improve the quality and visibility of Scottish produce served in Scotland's restaurants.

"We need to make more people aware of what we have," Mr Wishart said. "There's a surprising lack of knowledge about Scottish produce. It's obvious that all other government initiatives have been ineffective but it seems to me this one is achievable."

The supermarkets are watching carefully. Some are wary about new Scottish rules, on, say, labelling, that might trip up their UK-wide distribution networks.

Fiona Moriarty, director of the Scottish Retail Consortium, said: "We look forward to working with the Scottish Government to identify those issues where there are genuine benefits to customers and food supply in Scotland from a distinctive Scottish approach, while highlighting areas where consistency with UK and EU policy is required."

Mr Wishart, finally, has a tip for reducing the cost of Scottish produce for ordinary Scots. The more we buy, he suggested, the more farmers will produce and the cheaper their products will become.

We've found the big retailers are supportive of localness'

"SCOTTISH produce needn't be more expensive," says Robert Graham, managing director of Graham's Family Dairy of Bridge of Allan, Scotland's largest independent dairy company.

Graham's branded organic and non-organic milk, butter and cream is sold at Waitrose, Tesco, Sainsbury's, Asda and Lidl in Scotland, as well as smaller independent stores, and the company supplies many own-label dairy products across the UK.

The family-owned company employs 300 at the farm and in depots across the central belt, and works with 50 farmers across Scotland to produce 365,000 pints of milk a day. Some 80% of turnover is from milk, with butter and cream each representing 10% of turnover.

"We've found the big retailers to be supportive of localness, of Scottish produce and of our business generally. Sainsbury's, for example, have stopped selling English butter in Scotland, and our products are the same price as their English counterparts were.

"We are a good example of how easy it can be for more retailers to do the same thing, though some are putting more effort and focus into Scottish produce than others."

He believes that making the price of Scottish produce affordable is largely the responsibility of the retailers, but welcomes the Scottish Government's stated intention of continuing to engage with them.

"Supermarkets are a huge part of the nation's food spend, and it's good that Richard Lochhead and his team are engaging the entire food chain in the national food and drink policy," he said yesterday at the Royal Highland Show, where Graham's launched a new premium-product range.

"The wins are there to be had for the Scottish food and drink industry, and the Scottish Government has a huge part to play in that."

But he insists consumers have had and continue to have an important role to play, too.

"They want Scottish produce and that's helping the drive to source more. Scottish food and drink is good value, and I don't think it will be as affected by the credit crunch as perhaps the housebuilding industry might be."

There is no denying that premium Scottish products are always going to be more expensive.

Mr Graham says: "People aren't looking to backtrack with their principles. Once they've made a decision about buying local and organic, they're not likely to change back.

"They prioritise their spending to suit. Even with the credit crunch, people who prefer to buy local will continue to do so. It's a choice you make for life."