Business optimism in Ireland’s food and agriculture sector has fallen to its lowest level in five years, falling 23 percentage points after the start of the war in Ukraine and rising inflation .
A report by agricultural professional services company Ifac found that 36% of businesses experienced a 21% or more increase in input costs. Additionally, the cost of inventory management has increased dramatically due to disrupted supply chains. Salary expectations are increasingly becoming a barrier, with two-thirds of companies struggling to hire the right people.
“This is a difficult time for Irish food and agribusiness SMEs following a global pandemic,” said David Leydon, Ifac’s food and agribusiness manager. “One of the biggest challenges is rising input costs and for many, maintaining margins means implementing difficult price increases.”
The report highlights the changed outlook for businesses in general over the past 12 months as fears of an economic slowdown become real. A similar report in 2021 showed business optimism at its highest level in four years.
Brexit continues to impact travel, fares, regulatory changes and reduced access to raw materials from the UK, as well as delays and cost increases.
Nearly two-thirds of respondents cited rising raw material costs as the biggest threat to growth, while three-quarters of companies are exploring ways to cut costs. Nearly two-thirds of those who participated plan to raise prices.
Some 88% of small and medium-sized businesses are taking climate action, with waste and by-product management, sustainable packaging and energy-saving initiatives topping the list.
“With the obvious competition from more immediate challenges, the importance of environmental, social and governance factors has diminished this year, but it is encouraging to see that almost 90% of Irish food and agribusinesses continue to engage in initiatives to address climate change,” Mr Leydon said.