Andrew Brolly, ifac fractional CFO service, James Loughran, MD Loughran Brewing Stores and Leinster Enviromentals, David Leydon, Head of Food and Agribusiness, ifac, and Amy Ward Whelan, ifac Food and Agribusiness Consultant.
The latest ifac report finds that expanding internationally is high on priority list for Irish agrifood SMEs.
90% are taking climate action as global expansion becomes a priority
75% have set or are setting sustainability goals
64% of Irish food and agribusiness SMEs are positive about the future
81% report rising input costs
72% have no succession plan
Titled ‘Getting your business fit for export’, our 2024 report - contains insights from the leaders of over 120 companies that are crucial for our economy. These SMEs are continuing to face a myriad of pressures, from rising costs and climate risks to increased competition and skills shortages. 81% of the business owners surveyed reported an increase in costs and 38% say they are facing cashflow issues.
Despite these pressures, 64% of respondents are positive about their future business performance; a significant increase from 54% in 2022, which followed a difficult period after the global pandemic and the Russian invasion of Ukraine.
Most promising is the appetite for further growth through exporting internationally. More than two-thirds of the agrifood companies featured in the report are already focused on exporting to reach new customers, with many more SMEs eager to follow their lead. And while the effort required to develop a successful export business can’t be underestimated, the potential rewards can be significant.
Innovation is also strong within the Irish food and agribusiness sector. Half of the business owners surveyed plan to launch new products and services, and nearly one in four plan to invest in research and development. When it comes to emerging technologies, only 16% of business leaders have a good understanding of the applicability of artificial intelligence for their business. Some are using AI, particularly for research and marketing, but ifac advises a considered and strategic approach, and keeping the business case front and centre for any investment.
Sustainability remains a central focus - 90% are taking climate actions, mainly for energy and waste reduction, while75% of businesses have set or are currently in the process of setting sustainability targets. Additionally, 44% of companies are receiving requests for sustainability information from customers and this is likely to grow over the coming years as increased regulation takes effect.
Once again of note, succession planning requires more attention. Just 23% of respondents have a clear plan in place for the safe transfer of their businesses in the future.
Other key findings include:
Business performance
80% have maintained or increased their turnover in the past year
When it comes to growth, 63% cite the cost and availability of inputs as the biggest threat and 23% say access to and the cost of finance are the biggest challenges
Food focus
41% of food businesses see exporting to new markets as the biggest opportunity for growth in the next 12 months
Global growth
50% of business leaders cite market entry and distribution as the biggest challenge to sales outside Ireland
Funding
61% of businesses avail of Irish Government supports and grants, with 32% attending trade missions and fairs over the past year
Recruitment
While 38% plan to employ more people over the next 12 months, 3 in 4 find it difficult to recruit the right people
46% cannot meet the salary expectations of qualified candidates
Artificial Intelligence
Only 16% of business leaders feel confident that they have a good understanding of applicability of AI for their business. Further piloting is also needed where the business case is strong.
David Leydon, our Head of Food & AgriBusiness, said:
“The agrifood sector is poised for further growth and the biggest takeaway from this year’s findings is the focus on expanding internationally through export. 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. However, there is now a need to accelerate exporting efforts, especially for small and medium companies.
“For SMEs in the agri sector, the scaling and growth of the dairy sector over the past decade was very welcome and created an attractive growth market. However, this has now plateaued, and for many agribusinesses orientating for export is a key priority.
“For food businesses, given that the Irish market is smaller than the combined Manchester/Liverpool/Birmingham market in the UK, the potential for accelerated growth is undeniable if the product-market fit is correct.”
John Donoghue, our CEO, said:
“As a top ten accountancy and tax advisory firm, our annual Food and Agribusiness report adds great value to our growing SME business offering. It highlights the opportunities and solutions to tackle the challenges agrifood SMEs are facing and it facilitates invaluable discussion about the sector.
“Our award-winning Food and Agribusiness team with its deep industry knowledge and a full range of specialist services, has the foresight and ability to identify growth opportunities for SME owners. We have particular expertise in succession planning and can assist SMEs to develop detailed strategies for long-term growth and asset retention, thus providing peace of mind.”
fac’s Food and Agribusiness Report 2024 is also a useful tool for SMEs. It contains expert advice from ifac's specialist advisory Food and Agribusiness team such as dealing with cashflow issues, upcoming sustainability regulations, how to fund your business, preparing for auto-enrolment, how to expand internationally including an export-ready checklist (page 32), as well as a helpful supports guide.
