Despite the unprecedented challenges facing the Irish food, drink and horticulture sector in 2020, 82% of Irish businesses are optimistic for the next three years, according to a new report.
Launching today (Wednesday, June 9), Bord Bia’s Readiness Radar is a risk diagnostic tool, designed to analyse the key challenges and opportunities facing the Irish food, drink and horticulture sector.
The report analyses the high-level risks facing the industry in key areas, such as: Covid-19; the trading environment with the UK; market diversification; talent management; and sustainability.
The results are based on a survey of 111 Irish businesses from across food, drink and horticulture, representing an estimated 60% of the all Irish food and drink exports.
Outlook has remained positive
While Brexit and Covid-19 in particular presented significant challenges to the sector, both short and long-term outlook has remained positive and 2020 exports witnessed only a marginal 2% decline to €13 billion.
Bord Bia’s chief executive Tara McCarthy added that the “food and drink industry has bravely confronted Covid-19 and Brexit disruption, however the adverse effects of Brexit on margins and costs signal the significant challenges still facing the sector”.
The industry’s “robust” response to Brexit and Covid-19 has reaped rewards according to Bord Bia, as having overcome the challenges of 2020, much of the sector now feels more prepared and confident for the period ahead.
However, the trading environment with the UK and the implications of Brexit remain an issue, as 45% of businesses surveyed have reported to have seen the value of their exports decline since the referendum in 2016.
90% of the Irish businesses exporting to Britain report an increase in the costs of doing so post-Brexit and for 80% of these, margins have been reduced which has led to necessary price increases for British customers therefore impacting adversely on competitiveness.
New export markets for businesses
To help offset some of the impact of Brexit, the businesses surveyed remain focussed on the need to diversify into new export markets.
The EU was identified as the most significant prospect in terms of market diversification, with bright expectations for Asian markets in particular from larger enterprises and those in the meat, dairy, and seafood sectors.
Some 46% (or €871 million) of total export growth since 2016 (€1.9 billion) comes from the EU27, while international markets accounted for 43% (or €817 million).
Speaking today, Minister of State Martin Heydon said that ambition for market diversification is “crucial to mitigate the impacts of Brexit, and to take full advantage of the opportunities in the rest of the EU and in international markets such as Asia”.
Sustainability remains crucial
Sustainability remains crucial and is by far the most significant and the most widely accepted challenge facing the global food and drink industry, Bord Bia said.
Eight in 10 companies consider sustainability spend to be an investment as opposed to a cost, while three in four have verified sustainability measures in place.
Some 85% of those surveyed are active members of Bord Bia’s Origin Green programme.
When looking at what is driving the sustainability agenda, social responsibility, customer demands and consumer expectations were called out as the top three forces of change.
Packaging, responsible sourcing and waste are the current top sustainability priorities for companies and the sector almost unanimously agrees (95%) that sustainability will become more important in the next three years.
Finally, attracting, developing and retaining talent also emerges as a ‘top five’ risk area in the report, as 73% of businesses consider it to be a risk to future development and growth, with 38% citing it as a critical or very significant risk.