Business optimism in the Irish food and agriculture sector slumped to a five-year low, plummeting 23 percentage points following the onset of the war in Ukraine and the rise of inflation.
A report from agri professional services firm Ifac found 36 per cent of businesses have experienced a 21 per cent or higher increase in input costs. In addition, the cost of stock management has risen dramatically because of disrupted supply chains. Salary expectations are increasingly becoming a barrier, with two-thirds of businesses finding it difficult to recruit the right people.
“This is a tough time for Irish food and agribusiness SMEs following a global pandemic,” Ifac head of food and agribusiness David Leydon said. “One of the biggest challenges is rising input costs and for many to maintain margins this means implementing challenging price increases.”
The report highlights the change in outlook for businesses generally in the past 12 months as fears of an economic slowdown become real. A similar report in 2021 showed business optimism at a four-year high.
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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.
Almost two-thirds of respondents cited the rising cost of raw materials as the biggest threat to growth, while three-quarters of businesses are examining ways to cut costs. Almost two-thirds of those who took part plan to increase prices.
Some 88 per cent of small and medium firms are taking action on climate, with management of waste and byproducts, sustainable packaging and energy-saving initiatives top of the list.
“With obvious competition from more immediate challenges, the importance of environmental, social and governance factors has slipped this year, but it’s encouraging to see that almost 90 per cent of Irish food and agribusinesses continue to engage with initiatives to tackle climate change,” Mr Leydon said.
