82pc of Irish food businesses are optimistic for the next three years, according to Bord Bia’s Readiness Radar report.
The results are based on a survey of 111 Irish businesses from across food, drink and horticulture, representing an estimated 60pc of the all Irish food and drink exports.
While Brexit and Covid-19 in particular presented significant challenges to the sector, both short and long-term outlook has remained positive and 2020 exports witnessed only a marginal 2pc decline to €13bn (Source: Bord Bia Export Performance and Prospects 2021).
“The food and drink industry has bravely confronted Covid-19 and Brexit disruption”
The industry’s robust response to Brexitt and Covid-19 has reaped rewards, as having overcome the challenges of 2020, much of the sector feels now more prepared and confident for the period ahead.
Brexit turbulence affects food and drink sector
However, the trading environment with the UK and the implications of Brexit remain an issue, as 45pc of businesses surveyed have reported to have seen the value of their exports decline since the referendum in 2016. A stark 90pc of the Irish businesses exporting to Britain report an increase in the costs of doing so post-Brexit, and for 80pc of these margins have been reduced which has led to necessary price increases for British customers therefore impacting adversely on competitiveness.
To help offset some of the impact of Brexit, the businesses surveyed remain focused on the need to diversify into new export markets. The EU was identified as the most significant prospect in terms of market diversification, with bright expectations for Asian markets in particular from larger enterprises and those in the meat, dairy, and seafood sectors. Encouragingly, some 46pc (or €871m) of total export growth since 2016 (€1.9bn) comes from the EU27, while international markets accounted for 43pc (or €817m).
Bord Bia’s Readiness Radar is an expert risk diagnostic tool, designed to analyse the key challenges and opportunities facing the Irish food, drink and horticulture sector. The report analyses the high-level risks facing the industry in key areas such as; Covid-19, the trading environment with the UK, market diversification, talent management, and sustainability.
The report provides crucial insight into how Bord Bia can best support the sector to overcome these obstacles and target new potential opportunities.
“The food and drink industry has bravely confronted Covid-19 and Brexit disruption, however the adverse effects of Brexit on margins and costs signal the significant challenges still facing the sector,” said Bord Bia chief executive Tara McCarthy.
“This year’s Readiness Radar provides us with excellent up to date insight into the biggest risks facing the industry and will allow us to continue to tailor our supports for the sector to help maintain and grow food exports now and into the future.”
Sustainability remains crucial and is by far and away the most significant and the most widely accepted challenge facing the global food and drink industry. 8 in 10 companies consider sustainability spend to be an investment as opposed to a cost, while 3 in 4 have verified sustainability measures in place. Some 85pc of those surveyed are active members of Bord Bia’s Origin Green programme.
When looking at what is driving the sustainability agenda, social responsibility, customer demands and consumer expectations were called out as the top three forces of change. Packaging, responsible sourcing and waste are the current top sustainability priorities for companies, and the sector almost unanimously agrees (95pc) that sustainability will become more important in the next three years.
Finally, attracting, developing and retaining talent also emerges as a “top 5” risk area in the report, as 73pc of businesses consider it to be a risk to future development and growth, with 38pc citing it as a critical or very significant risk.
“The Irish food and drink sector has faced many significant challenges in 2020, and these continue in 2021,” said Minister of State at the Department of Agriculture Food and the Marine, Martin Heydon, TD.
“However, the sector has remained resilient, and the industry’s confidence is reflected in the desire to diversify and expand to new markets, signalling global ambitions for growth. This ambition for market diversification is crucial to mitigate the impacts of Brexit, and to take full advantage of the opportunities in the rest of the EU and in international markets such as Asia.”
By John Kennedy (email@example.com)
Published: 9 June 2021