Rising input costs and staff recruitment are the two biggest threats facing food and agribusinesses, according to a new report on the health of the sector.
The latest Food and Agribusiness Report for 2023, published by the Irish Farm Accounts Co-operative Society (Ifac), has highlighted a number of “red flags” for businesses in the sector.
Ifac, a specialist farming, food and agribusiness professional services firm, is a separate entity to the Irish Fiscal Advisory Council, the State budgetary watchdog which shares the same acronym.
Ifac surveyed 73 companies in the food and agribusiness sector during July and August 2023. These ranged from microbusinesses of under 10 employees to large businesses with turnovers of more than €20 million.
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Inflationary pressure was the most common concern for businesses, as 45 per cent said they are facing the threat of rising costs of raw materials. However, this has fallen by 18 percentage points since 2022.
Some 75 per cent reported increased costs this year, with 82 per cent of respondents pursuing cost savings.
A third of businesses said they are experiencing late payments from customers, while 35 per cent are experiencing short- or medium-term cash-flow issues.
A quarter of respondents said they are “firefighting daily” rather than proactively managing their business.
The report also found that 61 per cent of companies are finding it difficult to recruit the right team, as 42 per cent see recruitment challenges as a growth threat.
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The report found that 90 per cent of businesses have sustained or grown their turnover, partly due to increased pricing for nearly half of respondents, while net profit has improved for only three in 10 businesses.
Meanwhile, 87 per cent of businesses are taking climate change action including sustainable packaging, investing in renewable energy and waste management.
David Leydon, head of food and agribusiness at Ifac, said that exports are the “biggest growth opportunity” for businesses, as 47 per cent see it as a key avenue for future prosperity.
In 2022, there was a 22 per cent increase in Irish exports to €16.7 billion, particularly for food and drink. However, 41 per cent of respondents said they face sales and marketing challenges, and 39 per cent said finding the right distributor is difficult.
“This is of critical importance for Irish agribusinesses who up to now have focused 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,” said Mr Leydon.
