10 Sep 2020 | 02.52 pm
Agribusiness Confidence Hits Three-Year Low
ifac 2020 Food and AgriBusiness Report
10 Sep 2020 | 02.52 pm
Confidence levels in the agribusiness sector have fallen to a three-year low, according to professional services firm ifac.
The 2020 Food and AgriBusiness Report from ifac shows that the optimism index stood at 55% when the research was carried out in June and July, as compared to 74% in 2018, reflecting the impact of the global pandemic and the countrywide lockdown.
The impact has been widespread, with six out of ten 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 four of ten agri enterprises availing of the scheme.
Brexit is another source of concern, and only half of SMEs in the sector were prepared for it. Medium sized businesses are more likely to feel prepared, reflecting their greater ability to allocate resources to Brexit planning.
But it’s not all bad news, says ifac, with positive signs “demonstrating the agility and resilience of SMEs across the sector”. Many 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 online. There has been a 54% increase in the number of food and agribusinesses trading online and among SMEs top priorities are measures to tackle climate change from managing waste and by-products to choosing sustainable packaging and energy-saving initiatives.
Head of food and agribusiness David Leydon said: “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 affects every part of businesses, not just front-end online trading but also all associated processes.
• Download 2020 Food and AgriBusiness Report
“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.”
Some other key findings in the report are:
- Food companies are more likely to have increased online trading over the past year, up from 29% to 46%. Agribusinesses trading online also increased from 17% to 25%
- 51% of businesses reported a decline in turnover up from 19% in 2019
- 34% of food businesses see sustainable packaging as the top trend affecting their 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 five years, a 60% increase on 2019. Only 22% of business owners have a clear succession plan
- 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% of those succeeding, while 72% of businesses are funded by reinvesting profits.
Photo: ifac chairman Sean Clarke (left) with agriculture minister Charlie McConalogue (centre) and David Leydon