Exporting to new markets has been cited as the “biggest opportunity” for growth in the year ahead by 41% of Irish food businesses, according to a new report by Ifac.
Ifac’s 7th food and agri-business report published today (Wednesday, September 4), contains insights from over 120 small and medium-sized enterprises (SMEs) in the Irish agri-food sector.
These SMEs are continuing to face a myriad of pressures, from rising costs and climate risks to increased competition and skills shortages, the Getting your business fit for export report shows.
SMEs in Ireland’s food and agri-business sector are “crucial” to Ireland’s economy. In 2023, the industry employed 173,400 people and exported goods worth €18.28 billion to over 180 countries, Ifac said.
Exports
The number one destination for exports among survey respondents is the UK, with 48% exporting to Northern Ireland and 38% exporting to Great Britain. The UK market should be considered first in any export plans, Ifac said.
Emerging markets including South America, Asia and the Middle East also feature as export destinations. Changing consumer preferences and expanding economies in these markets can create strategic opportunities for Irish food businesses, Ifac said.
In total, 48% of businesses already exporting saw their export sales rise in the past year. The survey shows that market entry and distribution (56%), and logistics and supply chains (44%) are some of the most common challenges when exporting to international markets.
While exports can play a “crucial” role in the evolution and growth of any company, with agri-food imports of €13 billion in 2023, the Irish market “should not be ignored”, according to Ifac.
Commenting on its latest food and agri-business report, Ifac’s head of agri-business, David Leydon said the agri-food sector is “poised for further growth”.
“Exporting has always been important for our large food companies and co-operatives; some agri-engineering companies have also made a significant impact internationally.
“Already two-thirds of respondents to our survey are exporting with many more eager to follow their lead. However, there is now a need to accelerate exporting efforts, especially for small and medium companies.“
While the growth of the dairy sector over the past decade created an “attractive growth market” for SMEs in the agri-sector, Leydon said this has now “plateaued”, and for many agri-businesses orientating for export is a “key priority”.
Agri-food businesses
The report found that 81% of the agri-food business owners surveyed experienced an increase in costs, while 38% are facing cashflow issues. Despite these pressures, 64% of businesses are positive about their future performance.
Nearly two-thirds of survey respondents cited cost and availability of inputs as the greatest threat to growth in the year ahead, followed by lower output prices for farmers (35%) and uncertainty with government policy (34%).
The launch of new products or services was identified as the greatest opportunity for growth by 50% of respondents, followed by 48% citing increased demand. The adoption of new technologies was seen as an opportunity by 25%.
Other key findings of the report include:
- 80% have maintained or increased their turnover in the past year;
- 61% avail of Irish government supports and grants, with 32% attending trade missions and fairs over the past year;
- 46% cannot meet the salary expectations of qualified candidates;
- 16% of business leaders feel confident that they have a good understanding of applicability of artificial intelligence for their business;
- 72% have no succession plan.
Innovation is strong within the food and agri-business sector, with half of the business owners surveyed planning to launch new products and services, and nearly one in four planning to invest in research and development.
Sustainability is becoming increasingly important for many Irish businesses, with 90% of agri-food businesses taking climate actions, primarily in the area of energy usage and waste reduction, according to Ifac.
In total, 36% of companies surveyed stated that they have set sustainability targets, while a further 39% said that they are in the process of setting targets. Meanwhile, 72% of those surveyed are not measuring emissions.
Ifac report
The 7th annual Ifac food and agri-business report included a sample size of 124 Irish agri-food businesses. The 2024 sentiment survey fieldwork took place during July and August 2024.
The survey sample was divided into sole trader (12%); micro, under 10 employees (25%); small, 10-49 employees (31%); medium, 50-250 employees (21%); and large, over 250 employees (11%), enterprises.
A range of business sizes by turnover was included, with 77% having revenues up to €20 million and 23% of surveyed agri-food businesses having turnovers exceeding €20 million.