After living through a global pandemic and following the onset of a war in Ukraine, resulting in the highest levels of inflation for nearly 40 years, the level of optimism among Irish food and agribusiness SMEs has plummeted to a five-year low.
This is, according to ifac’s fifth annual Food and Agribusiness Report 2022, a drop of 23 percentage points and a significant departure from last year’s findings, which showed a marked rebound in optimism levels in 2021 to a 4-year high of 77%.
The findings of the report, titled ‘The big SME squeeze’, cement what businesses and consumers are now feeling – that the coming year will be much more difficult. The report, conducted by Amarach Research during June and July 2022, includes the views of those that run some of the most innovative agtech companies and many of the food brands that Irish consumers love – all a vital part of our rural and regional economies.
There are several key factors why Irish food and agribusiness SMEs are disillusioned including 36% of businesses have experienced a 21% or higher increase in input costs (84% reported an increase in costs this year). In addition, the cost of stock management has risen dramatically because of disrupted supply chains.
Also, salary expectations are increasingly becoming a barrier, with 2 in 3 businesses finding it difficult to recruit the right people. And, Brexit continues to impact with travel disruption, tariffs, regulatory changes and reduced access to raw materials from the UK, as well as lead times and cost increases.
Despite the vast list of challenges, the report also tells the story of the responsiveness and resilience of many of our food and agribusinesses, as 82% of companies have maintained or increased their turnover in the past 12 months.
Many companies focused on the future and the huge potential for the sector are proactively managing these turbulent times by taking cost-saving steps, implementing price increases, managing contracts with both buyers and suppliers and actively focusing on cash flow management.
Read the full Food and Agribusiness Report 2022 – www.ifac.ie/ifacreport