Launch of ifac’s Food and AgriBusiness Report 2021
With a robust vaccine rollout and plans to remove the outstanding Covid restrictions afoot, the report shows that optimism levels among Irish Food & AgriBusinesses have seen a significant rebound, up from 55% in 2020 to a 4-year high of 77% in 2021.
The report is the firm’s fourth annual sentiment survey of Irish food and agribusiness SMEs. It was conducted by Amárach Research during June and July 2021.
Reassuringly, with the agri-food industry facing significant challenges related to climate change, 37% of SMEs are putting ESG factors high on their agendas. 87% are taking positive climate change actions and all food and agribusiness SMEs are continuing to invest in climate change initiatives; sustainable packaging continues to be the top trend impacting Irish food businesses, as well as managing waste and by-products.
On the other hand, the findings show that 71% of respondents reported an increase in costs this year, from transport and energy to raw materials and packaging; an issue – in some cases – that could contribute to food price inflation in the coming months.
With the Brexit transition period ending at the start of the year, the real impact is apparent with 64% of businesses saying they have been negatively affected by Brexit; 1 in every 2 businesses cite transport disruption as a major impact of Brexit. Also, COVID-19 has made its mark – 55% of SMEs say the change in consumer habits is the biggest long-term effect of the global pandemic.
97% of businesses intend to maintain or grow employee numbers over the next year. However, conversely and supporting fears that food production may follow the construction, hospitality, retail and care sectors in terms of labour shortages for low paid jobs, over two-thirds are finding it difficult to recruit the right people. This figure has increased since 2020 and is mostly affecting food SMEs. Also, ‘lack of interest in roles’ has become a key factor in recruitment difficulties for 2021, overtaking ‘skills not available’ in 2020. One potential solution is contained in ifac’s practical guide, titled ‘Automation for Food & Agribusinesses’. It outlines how collaborative robots can now take on a wide range of repeatable production tasks allowing owners to redeploy their people to higher-value work.
Interestingly, while bank transfers, cheques and cash still dominate, Paytech is starting to have an impact on the sector. Emerging platforms like Stripe and Revolut are gaining traction and the other banks (pending a Competition and Consumer Protection Commission ruling) are also keen to follow suit with banking payment apps. In 2021, the majority of businesses (83%) use bank transfers to receive payments from customers. Cheques are an important payment method with 72% of agribusinesses accepting this form of payment.
Other key findings of ifac’s 2021 Food and AgriBusiness Report includes:
· While 48% of SMEs have no advisory or board structure in place, 37% are putting ESG factors high on their agendas
· 79% of SMEs do not have a current strategic plan in place guiding their business
· 47% of businesses have no succession plan in place
· 42% of businesses do not invest in formal Research & Development
· The majority of SMEs (83%) use bank transfers to receive payments from customers and cheques continue to feature strongly, driven by 72% of agribusinesses
· Only 3 out of 10 businesses are trading online
· 1 in 4 businesses have tried to access bank finance in the past 12 months; 83% were successful.
Marking the launch of ifac’s 2021 Food and AgriBusiness Report, at an online event covering the emergence of ESG as a senior leadership priority, Minister for Finance and Public Expenditure & Reform, Paschal Donohoe TD said: “Environmental, Social and Governance (ESG) is as commercially relevant today for Irish food and agribusiness SMEs as it is for large corporations and this is a very pertinent report for this entire sector that has played a key role throughout the global pandemic. Covid-19 has renewed our appreciation for our natural environment and accelerated the need to tackle climate change. It’s great to see that 87% of SMEs are taking positive climate change actions mirrored in the Government’s Climate Action Plan with commitments to achieve 7% emissions reductions from 2021 to 2030 and net-zero emissions by 2050.
David Leydon, Head of Food and AgriBusiness at ifac said: “While it is encouraging that optimism levels have bounced back strongly, trends to watch out for are rising costs, recruitment challenges, negative impacts from Brexit, and lower than ideal R&D investment. A real missed opportunity is around the strategic planning process – it’s concerning that nearly 80% of SMEs do not have a current strategic plan in place to guide their business. The climate and biodiversity crisis is here and people are starting to make purchasing decisions based on sustainability and social responsibility. Now is the time for Irish businesses’ operations and sustainability credentials to act as one. This is the first time that our report has a dedicated Environmental, Social and Governance (ESG) section. ESG is now essential for any businesses’ long-term survival and for its ability to attract talent and finance. Also, for the second year running, sustainable packaging has been highlighted as the top trend impacting Irish food businesses and when it comes to the social aspect of ESG there has been an uplift in the number of employers now offering a pension scheme to their staff.”
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