This week ifac’s Food and AgriBusiness team launched their third annual report containing a sentiment survey of Irish food and agribusiness small and medium-sized enterprises (SMEs). It was conducted by Amárach Research during June and July 2020; a challenging period for many Irish businesses.
As expected, and given the unprecedented impact of the global pandemic and a country-wide lockdown, positive sentiment among owners, MDs and CEOs of SMEs has declined this year. The Optimism Index is at a three-year low; 55% are optimistic about the future compared to 74% in 2018.
The impact of the pandemic has been widespread with 6 out of 10 SMEs using one or more of the 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 this.
Brexit is another pressure point with only 48% of SMEs prepared for Brexit. Medium-sized businesses are more likely to feel prepared reflecting an ability to allocate resources to Brexit planning.
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 9 out of 10 expect to be employing the same or more people in the coming year.
The pandemic has accelerated existing digital trends with a strong move to online; there has been a 54% increase in the number of food and agribusinesses who are trading online as digitalisation increasingly affects every part of Irish businesses. Additionally, among SMEs top priorities are measures to tackle climate change from managing waste and by-products to choosing sustainable packaging and energy-saving initiatives.
Key findings of ifac’s 2020 Food and AgriBusiness Report include:
6 out of 10 SMEs utilised one or more of the Covid-19 supports; the Temporary Wage Subsidy Scheme was utilised by 39% of businesses.
Only 48% of SMEs believe they are prepared for Brexit. Almost 1 in 5 are not prepared at all.
54% increase in the number of SMEs who are trading online - 37% of SMEs are now trading online. Food companies are more likely to have increased online trading over the past year, up from 29% to 46%. Agribusinesses also increased from 17% to 25% trading online.
Optimism levels have dropped to a 3-year low; down from 74% in 2018 to 55% in 2020.
51% of businesses reported a decline in turnover up from 19% in 2019.
9 out of 10 businesses intend to maintain or grow employee numbers over the next year
34% of food businesses see sustainable packaging as the top trend impacting their food business; when dealing with climate change 71% are purchasing sustainable packaging and reducing use of plastic, 78% are managing waste and by-products, 61% are working with environmentally conscious suppliers and 56% are investing in energy-saving initiatives.
34% of businesses do not invest in formal R&D.
Nearly one-third of respondents would consider selling their business in the next 5 years – a 60% increase on the 2019 figure. Only 22% of business owners have a clear succession plan in place.
Only 36% of businesses have a documented and used strategic plan.
A third of businesses have tried to access bank finance in the past 12 months with 87% succeeding. 72% of businesses are funded by re-investing profits.
Marking the launch of ifac’s 2020 Food and AgriBusiness Report Minister for Agriculture, Food and the Marine, Charlie McConalogue TD said:
“This is a very timely report from ifac as it highlights some of the key issues facing sector. Over the coming months, dealing with the twin challenges of Covid-19 and Brexit will be very challenging for the food and agribusiness SME sector.
“As part of the country’s essential services, the whole of the agri-food sector has played a key role through the Covid-19 pandemic. This is a resilient sector and it is encouraging to see that 9 out of 10 businesses intend to maintain or grow employee numbers over the next year. It is also positive to see the range of climate change actions being undertaken by businesses. These efforts will be supported by the Government’s Brexit Readiness Action Plan which will kick-start a comprehensive Government Communications campaign to highlight the importance of Brexit readiness for businesses.
“I wish ifac well with this Report and I look forward to working with my colleagues across Government to support the sector over the coming year.”
David Leydon, Head of Food and AgriBusiness at ifac said:
“Covid-19 and Brexit have created an exceptionally challenging environment for our Irish food and agribusiness entrepreneurs across the country who make up this sector. Given this context, it’s no surprise that many have accessed a range of Covid-19 supports during the pandemic, particularly the Temporary Wage Subsidy Scheme.
“Yet despite all the challenges, the agility and adaptability of Irish food and agribusiness SMEs have been clear in the recent period with many pivoting to build their digital capacity and trade online. Embracing digitalisation has become a must-do at this stage; it now impacts every part of businesses, not just front-end online trading but also all associated processes.
“While investment in automation is still low, a quarter of those surveyed believe investment in new technology and automation will be one of the long-term impacts from Covid, helping them to save costs, build resilience, and redeploy their teams to higher-value work. It’s evident that sustainability is more important too – both in terms of communicating our Irish food credentials but also the climate change measures being taken by each food and agribusiness – managing waste and byproducts, purchasing sustainable packaging, and choosing environmentally conscious suppliers being the most common measures.
“At ifac, we use our financial expertise and sectoral knowledge to support and help drive growth throughout this sector and our report is packed with timely advice for SMEs to plan the way forward for their businesses. We have always believed that planning is everything – taking the time to plan how your business will evolve and grow is worthwhile and will make a sustained difference to the future of your business.”
John Donoghue, Chief Executive at ifac said:
“The food and agribusiness 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. We support their endeavor, understand their challenges, and help them to drive their businesses forward. We bring sound advice and our expertise gained in 45 years of serving the sector.
“Covid-19 is here, and the impact of Brexit is coming soon; we encourage food and agribusinesses to shore up their defenses, innovate like never before, and embrace change. Our annual ifac Food and Agribusiness Report is required reading for people who want to build a great business in the sector. We hope it will help guide owners and leadership teams on their journey to a prosperous and rewarding future. Many thanks to our survey respondents and everyone involved in the production of this year’s Report.”
To download the full report please click here.