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Ifac, Ireland’s farming, food, and agribusiness specialist professional services firm and a top 10 accountancy firm, has published its sixth annual Food and Agribusiness Report 2023 – the only report containing the pulse of the Irish food and agribusiness SME sector.

The research, conducted in July and August 2023, includes the views of nearly 75 leaders who run some of our food island’s most innovative food businesses and agribusinesses. Each one is an important employer and key contributor to its local economy, enhancing Ireland’s undeniable reputation as an island of incredible food producers.

This year’s findings reveal that plenty of red flags abound for business owners. While 90% of food and agribusiness SMEs have either sustained or grown their turnover – with increased pricing part of the story for nearly half of businesses – net profit has only improved for 3 in 10 businesses.

And, the headwinds keep coming for those who have managed to navigate the past few years with war, economic uncertainty, inflationary pressures, the energy and cost of living crises, and the global pandemic. 44% of respondents are concerned about rising interest rates while personal pensions have taken a back seat – over half (52%) of business owners do not have a personal pension plan, potentially suggesting the current environment is also harming future financial planning.

Numerous other red flags are emerging for companies that could become more problematic over time. Respondents to this year’s survey also highlighted the following:

·       33% of respondents are experiencing late payments from customers

·       35% are experiencing short or medium-term cash flow issues

·       35% of respondents’ products or services are discretionary spends and therefore could be cut

·       26% of respondents are experiencing slowing trade or trade not returning to pre-pandemic levels

·       26% are firefighting daily rather than proactively managing the business.

Recruitment and retention is a constant concern too – 61% of companies are finding it difficult to recruit the right team and 42% see it as a growth threat. Yet despite the challenges, 55% still intend to increase the size of their workforce, and 38% hope to retain their current employees.

Concerning growth, companies focused on the future have their sights fixed on international markets. This is particularly the case for agtech and agribusinesses who now see a dramatic slowdown in the significant growth in dairying of the past decade. 47% of respondents agree that export remains a key avenue for future prosperity. In 2022, there was a 22% increase to €16.7 billion for Irish exports, particularly food and drink. Yet the red flag here is the journey to international sales; 41% face sales and marketing challenges and 39% say finding the right distributor is difficult.

Importantly, environmental, social and governance (ESG) factors are an important part of growing a sustainable business in Ireland for business owners, including reducing their impact on the wider environment. 87% of food and agribusinesses are taking climate change action including using sustainable packaging, investing in solar or other renewable energy sources, and managing waste and by-products, etc. In addition, 50% have ESG on the senior leadership agenda – a notable increase from 30% last year.

Other key findings include:

·       82% of respondents are pursuing cost savings to deal with inflationary pressures

·       75% reported an increase in costs this year

·       42% cite lack of available staff as the biggest threat to growth

·       38% cite rising salary costs as a major threat to their business

·       37% of food businesses are investing in innovation

·       53% see the launch of new products/services as a major growth opportunity

·       And, 79% of respondents are not actively using Artificial Intelligence for their business.

David Leydon, Head of Food and Agribusiness at ifac, said: “The findings this year show that it remains both tough and complex to run an Irish food business or agribusiness. Our SMEs, who remain passionate about producing the very best products Ireland has to offer, are now dealing with a myriad of demands and external factors from recruitment challenges and rising interest rates, to continued cost increases and, in some cases, cashflow issues. Yet for some, their revenues are being maintained or are growing.

“The sector is also taking action on climate change and it’s clear that export has been identified as the biggest growth opportunity. With a 22% increase in Irish exports in 2022, nearly half of the companies surveyed see exporting to new markets as their route to business growth. This is of critical importance for Irish agribusinesses who up to now have focussed on selling services or products to the Irish dairy sector. They need to look much further afield to a bigger international market, because of the slowdown in growth across Irish dairying compared to past years.

“At ifac, we have significant experience working with a wide range of businesses in the food and agribusiness sector and we work together with business owners to overcome obstacles and plan for the future with sound financial strategies. Our team is ready to support SMEs through this relentlessly challenging trading period and help them avoid financial distress.”

Ifac’s Food and Agribusiness Report 2023 is also designed to be a helpful tool for business owners. It contains advice from ifac’s award-winning Advisory Food and Agribusiness team such as dealing with inflation, building a successful export business, developing staff retention strategies, as well as a supports guide. It also features several case studies highlighting replicable ideas and solutions to support businesses from Pearson Milking Technology, Boulabán (ice cream/sorbet), and The Dough Bros (pizza), to Strongbó (agtech), and BiaSol (sustainability).

Also this summer, ifac released a guide to retail for owners, CEOs, and commercial managers of food and drink SMEs to help them position their businesses for success. The ‘Cracking The Retail Code’ guide here provides food and drinks producers with practical knowledge, insights, and tools to help create successful products, and it highlights what retailers look for from new products.

Read the full ifac Food and Agribusiness Report 2023 –  https://www.ifac.ie/food-agribusiness-report-2023

CAPTION:

Pictured at The Dough Bros restaurant in Galway to launch ifac’s Food and Agribusiness Report 2023 are: Ronan Greaney, The Dough Bros; David Leydon, Head of Food and Agribusiness at ifac; Stephanie Walsh, food business consultant with ifac; and Eugene Greaney, The Dough Bros.