Nearly half of agri-businesses believe they are not prepared for Brexit

Nearly half of Irish food and agri-business small to medium-sized enterprises (SMEs) feel that they are not prepared for Brexit, according to a new report.

This week, ifac published its 2020 Food and Agribusiness Report, its third annual sentiment survey of Irish food and agri-business SMEs.

The survey was conducted by Amárach Research during June and July of this year – which ifac notes was “a very challenging period for many Irish businesses”.

Given the unprecedented impact of the global pandemic and a country-wide lockdown, positive sentiment among owners and CEOs of SMEs has declined this year.

The impact of the pandemic has been widespread; with six out of 10 SMEs using one or more Covid-19 supports to help manage the impact of the pandemic.

The Temporary Wage Subsidy Scheme was the most commonly used support, with 39% of businesses accessing it.

48% of SMEs not prepared for Brexit

Brexit is another pressure point, with only 48% of SMEs saying they believe that they are prepared for Brexit.

Medium-sized businesses are more likely to feel prepared reflecting an ability to allocate resources to Brexit planning.

The report also found that nearly one-third of respondents would consider selling their business in the next five years – a 60% increase on the 2019 figure.

Commenting on the report, David Leydon, head of food and agri-business at ifac, said:

Covid-19 and Brexit have created an exceptionally challenging environment for our Irish food and agri-business entrepreneurs across the country who make up this sector.

“Yet, despite all the challenges, the agility and adaptability of Irish food and agri-business SMEs has been clear in the recent period with many pivoting to build their digital capacity and trade online.”

Chief executive at ifac John Donoghue added that the food and agri-business sector is “at the very heart of regional Ireland”.

“Entrepreneurs in the industry create employment and opportunity for people who want to live and work in their local communities.

“Covid-19 is here and the impact of Brexit is coming soon; we encourage food and agri-businesses to shore up their defenses, innovate like never before and embrace change.”

Actions for agri-food sector in Brexit readiness plan

Meanwhile, the government has outlined a number of actions it will take to prepare the agri-food sector for the end of the Brexit transition period at the end of this year.

The transition period set out in the Brexit withdrawal agreement is due to come to an end on December 31 this year. The EU and UK are currently engaged in (rather slow-moving) negotiations towards a free trade deal.

If there is no trade deal in place by the end of the year (which looks increasingly likely at the moment), then the EU and the UK will trade on World Trade Organization (WTO) rules, resulting in tariffs on Irish agri-food products entering the UK.

Having a trade deal in place will be the best possible outcome. However, even with a deal, there are going to be a lot of changes to how we trade with the UK.