Only 55% of food and agri-businesses ‘optimistic about the future’

Only 55% of Irish food and agri-business small to medium-sized enterprises (SMEs) are feeling “optimistic about the future” according to a new report.

Today (Thursday, September 10), 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.

According to ifac, the optimism index is at a three-year low; with 55% optimistic about the future compared to 74% in 2018.

Temporary Wage Subsidy Scheme most commonly used support

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

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

Nearly one-third of survey respondents say they would consider selling their business in the next five years – which is a 60% increase on the 2019 figure.

Only 22% of business owners have a clear succession plan in place, along with 36% of businesses having a documented and used strategic plan.

The report also states that a third of businesses tried to access bank finance in the past 12 months – with 87% succeeding. 72% of businesses are funded by re-investing profits.

Brexit a ‘pressure point’ for SMEs

And if the threats posed by Covid-19 weren’t enough, there is further uncertainty looming this year as the end of the UK’s Brexit transition period draws close.

In any scenario, Brexit will have an impact on businesses, and the report has found that only 48% of SMEs believe they are prepared for Brexit – with almost one in five not feeling prepared at all.

According to ifac, medium-sized businesses are more likely to feel prepared – reflecting an “ability to allocate resources to Brexit planning”.

It’s not all doom and gloom for this year, however.

Ifac says that the findings have uncovered some positive signs too, demonstrating the agility and resilience of SMEs across the sector.

Many businesses “reacted quickly to deal with Covid-19” and nine out of 10 expect to be employing the same or more people in the coming year.

The pandemic “accelerated existing digital trends” with a strong move to online; with ifac nothing that there has been a 54% increase in the number of food and agri-businesses who are trading online.

Key findings of ifac’s 2020 Food and Agribusiness Report include:
  • Six out of 10 SMEs utilised one or more of the Covid-19 supports; the Temporary Wage Subsidy Scheme was utilised by 39% of businesses;
  • Optimism levels have dropped to a three-year low; down from 74% in 2018 to 55% in 2020;
  • Nine out of 10 businesses intend to maintain or grow employee numbers over the next year;
  • 34% of businesses do not invest in formal research and development;
  • Nearly one-third of respondents would consider selling their business in the next five years;
  • Only 36% of businesses have a documented and used strategic plans;
  • 54% increase in the number of food and agri-businesses trading online.

Commenting on the report, David Leydon, head of food and agri-business at ifac said that Covid-19 and Brexit have created “an exceptionally challenging environment” for businesses.

“Given the context, it’s no surprise that many have accessed a range of Covid-19 supports during the pandemic,” he said.

“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.”