Balancing success with caution

The 2025 Food and Agribusiness Report, now in its eighth year, is based on the views of food and agri-business leaders in Ireland. The report revealed that optimism levels have returned to their highest levels, with 80 per cent of business owners feeling optimistic about business performance over the next 12 months. While this is positive news, it is not the whole story.
David Leydon, head of growth and agri-food consulting at Ifac told Irish Farmers Monthly: “Eight out of 10 businesses have reported an increase in costs again this year.  These cost increases have consistently impacted margin every year since the Covid-19 pandemic. Nevertheless, 80 per cent of business leaders are optimistic about their company performance over the next 12 months.”
On some of the other report findings, he said: “We found that 77 per cent of agri-food businesses surveyed do not have a clear succession, or leadership transition plan in place. Food and agri-business companies need to do more in the AI space to identify where it can make a material difference to business margins.
“Two in five businesses have no formal marketing strategy or rely on a reactive approach. That’s on the low side and needs to be improved. We also see that one in five businesses are not focusing on market research as much as they should be and are missing out on valuable data and growth opportunities.”

Challenges and tariffs

Returning to some of the challenges facing businesses, the report found that two of the top three challenges remain the same as in 2024 – input costs and staffing. Sixty per cent of businesses cited the cost of inputs as a challenge to growth. This was followed by trade tariffs (48 per cent), while staffing shortages were the third most common concern (40 per cent).
Karol Kissane, who is head of public sector services and economics at Ifac, dealt with the topic of tariffs in the report. He highlighted that the standardised 15 per cent tariff rate that has been introduced on a broad range of goods imported to the US from the EU – while many goods going in the opposite direction have had tariffs lowered – marks a major turning point in transatlantic trade relations.
“One-third of survey respondents consider tariffs as one of the most concerning macroeconomic factors, with 38 per cent saying uncertainty around trading tariffs is one of their biggest challenges to sales outside Ireland,” he said. Sixty-six per cent of respondents exporting to the US said uncertainty around trading tariffs is one of their biggest challenges to sales outside Ireland. Karol continued: “While the new 15 per cent ceiling on many goods simplifies the regime, it still represents a cost increase for many companies previously trading under the Most Favoured Nation rate, which averaged circa 4.8 per cent on exports to the US. For Irish exporters in sectors such as agri-food, drinks, food-processing equipment, dairy technology and machinery, the new tariffs introduce pressure on margins and pricing, he wrote.

UK advantage?

While the UK secured a lower tariff deal with the US of 10 per cent – versus the EU’s 15 per cent – this does not mean they are paying less across the board, as Karol explained in the report: “The EU’s new 15 per cent tariff agreement with the US is an all-inclusive ceiling, covering existing Most Favoured Nation (MFN) duties, unlike the UK’s 10 per cent rate which adds on top of MFN tariffs. In practice, this means the EU often faces a lower effective tariff than the UK. For example, EU cheese exports face a flat 15 per cent tariff while UK cheese exports face 10 per cent plus the existing 14.9 per cent MFN rate, totalling nearly 25 per cent. While some UK products may see marginal advantages, the EU deal secures broader, more predictable market access across many key goods.”

Implications

Commenting on the implications for Ireland, Karol wrote: “Irish-US trade topped €72.6bn in 2024, with Irish agri-food and drinks and high-value agri machinery and components playing a significant role. Agri-food and drinks alone accounted for over €1.9bn of exports to the US in 2024. The 15 per cent tariff may dent some subsectors but could also enhance stability and prevent future trade wars. For businesses, the real challenge is adapting quickly. Those who embed trade resilience into their models through cost control, contract discipline, digital tracking, and proactive pricing will come out stronger.”

Exports

On the exports side, the report revealed that 89 per cent of businesses are maintaining or growing international sales. In 2024, the value of Irish agri-food exports increased by 5 per cent to €17bn according to Bord Bia, maintaining the upward trajectory seen in previous years. This is reflected in the survey with 56 per cent of respondents seeing a growth in their international sales in the past 12 months. Half of the respondents export to the UK, and one in four to the US. However, 66 per cent of those exporting to the US cite tariffs as a top challenge.

Burns Farm Meats - case study

The Ifac report included case studies of agri-businesses that handled export pressures well. For example, Burns Farm Meats, an eighth-generation family business based in north Sligo, empasised stringent internal cost discipline, yield optimisation, and margin focus. Their experience shows that when export margins tighten, internal efficiency becomes your first buffer.
According to the report, Burns Farm Meats produces a range of meat products for wholesale foodservice and retail. Cathal Burns and his brother Diarmaid have been running the business since 2022, when they took over from their father Gerald. In Ifac’s report, Cathal discussed how the business has been handling price increases, which he said have been hugely impactful over the last few months as the price of beef and lamb have increased.

The increases have given them cause to look at the efficiency of their whole operation, from the procurement and slaughtering side of the business through to chilling, deboning, packing, and logistics, he said. Commenting on the company’s loyal customer base, Cathal said that the company tries to pass on savings made to them wherever possible. “Every cost-saving measure can be used to reduce the burden on the end consumer. We have a very loyal customer base; we try to pass on savings wherever possible. We analysed the way we were breaking down beef and lamb carcasses and tried to maximise each part to generate as much as possible from each animal,” he explained. He added that the company has started to build a database of each animal it debones, looking at the breed, age, weight (pre and post slaughter), the farm the animal has come from and the meat yield. “This information helps us to make better informed decisions when buying cattle and lambs for the business.”
Over the last 12 months the company has had to raise the prices of all its products, said Cathal. “We had to re-negotiate a number of government contracts at the start of the year because of how fast the price of beef increased from January to April. Increasing prices to wholesale and food service businesses was not an easy subject to broach with our customers.” He said they have put a huge emphasis on costing and pricing because the had to raise prices to stay profitable. “We have a limited number of products so we cannot operate a margin mix strategy to keep our price to the customer low in that way, so keeping in constant contact with our customers is vital,” he said.

At the time of interview for the Ifac report, Cathal said they were carrying out an operational and financial review of the whole business with Ifac. They had stopped slaughtering pigs and processing wild game to concentrate on beef and lamb, which had  them to increase the volume getting to the plant.” A change to carcass deboning also enables them to slaughter double the amount they could do 12 months ago, in half the time.