IRELAND’S farming, food and agribusiness specialist professional services firm, ifac, has published its fifth annual Food and Agribusiness Report 2022, which indicates that optimism levels are at a five-year low for Irish food and agribusiness SMEs.
The report, conducted once again by Amarach Research during June and July 2022, includes the views of those that run some of the most innovative agtech companies and many of the food brands that Irish consumers love – all a vital part of our rural and regional economies.
After living through a global pandemic and following the onset of a war in Ukraine, resulting in the highest levels of inflation for nearly 40 years, the level of optimism among Irish food and agribusiness SMEs has plummeted to a five-year low. This is a drop of 23 percentage points and a significant departure from last year's findings, which showed a marked rebound in optimism levels in 2021 to a 4-year high of 77 per cent.
The findings of this report cement what businesses and consumers are now feeling – that the coming year will be much more difficult. There are several key factors why Irish food and agribusiness SMEs are disillusioned including 36 per cent of businesses have experienced a 21 per cent or higher increase in input costs
In addition, the cost of stock management has risen dramatically because of disrupted supply chains. Also, salary expectations are increasingly becoming a barrier, with 2 in 3 businesses finding it difficult to recruit the right people. And, Brexit continues to impact with travel disruption, tariffs, regulatory changes and reduced access to raw materials from the UK, as well as lead times and cost increases.
David Leydon, Head of Food and Agribusiness at ifac said: “This is a tough time for Irish food and agribusiness SMEs following a global pandemic. One of the biggest challenges is rising input costs and for many to maintain margins this means implementing challenging price increases. Another significant concern on the minds of business owners is rising salary costs coupled with recruiting difficulties – 67 per cent of business owners have experienced difficulty when recruiting and for the fifth consecutive year availability of skills is the main reason why businesses are struggling to hire.
“With obvious competition from more immediate challenges, the importance of Environmental, Social and Governance (ESG) factors has slipped this year but it’s encouraging to see that almost 90 per cent of Irish food and agribusinesses - across all sizes and types (micro, small, medium, family-owned, and non-family owned) - continue to engage with initiatives to tackle climate change.”
Despite the vast list of challenges, the report also tells the story of the responsiveness and resilience of many food and agribusinesses, as 82 per cent of companies have maintained or increased their turnover in the past 12 months. Many companies focused on the future and the huge potential for the sector are proactively managing these turbulent times by taking cost-saving steps, implementing price increases, managing contracts with both buyers and suppliers and actively focusing on cash flow management.