• 53% of agri-food businesses across the island are growing compared to the average of 39% of all firms
• 18% of agri-food firms have increased employment in the last quarter
• More than half (52%) of agri-food firms are exporting, twice as many as the island-wide average
The latest quarterly Business Monitor Report (January to March 2016) has highlighted that agri-food businesses, which have encountered difficult challenges over recent years, are out performing all other sectors in terms of growth. The island’s biggest indigenous sector is strongly outperforming other sectors in sales, employment, exporting and innovative activities with more than half (53%) growing in the last quarter compared to 39% of all firms. There was a significant gap, when compared to other sectors, in the number of agri-firms increasing their sales (45% versus 29%).
Aidan Gough, Strategy and Policy Director at InterTradeIreland, said: “A recent sector mapping exercise for InterTradeIreland shows that agri-food is a genuinely all-island industrial cluster. There are significant concentrations in every county on the island, North and South, employing in total more than 180,000 people and contributing 12% to our economic wealth.
“The results show that agri-food firms are more innovative than most with only 23% not undertaking any innovative activity in the past three years. New processes, new product development and new branding or design are the most popular innovations and more than two thirds (69%) have collaborated with others in doing this work. Many firms work with customers and suppliers but other players in the ecosystem, such as food consultants or food research centres and colleges, are also popular partners for firms.”
Employment figures are also encouraging for the sector. Aidan continued: “It is positive news that 18% of the agri-food companies questioned reported that they increased their staff numbers in this quarter with a further 27% planning to create job opportunities in the coming year. This favourable job creation picture is particularly applicable to businesses employing more than ten people, where 28% increased employment and a further 32% expect to do so.
“The growth in agri-food firms is most likely related to their strong tendency to be innovative and actively exporting. 52% of agri-SMEs are selling across the border or exporting outside the island, which is twice the number of firms across the full spectrum of sectors.
“ Interestingly many companies have told us that the export pathway towards markets in Great Britain and much further afield in the EU, Middle East and North America, can begin right here on our doorstep by initially trading across the island. In fact, 27% found the experience of cross-border trade influenced them to a large extent to go into other new markets.”
For those agri-food firms with ambitions to grow outside their local market, the main obstacles appear to be concerns about the cost of going into a new market or the impact this might have in terms of management time and resources. Those already exporting find different challenges in new markets with one in six agri-food firms (16%) saying that setting the right competitive price is a major challenge, while 13% cite compliance with regulations and 11% are challenged by financial resources.
Commenting on the InterTradeIreland findings, David Dobbin, Group Chief Executive of Dale Farm Ltd and Member of the Northern Ireland Agri-Food Strategy Board commented: “While agrifood markets are extremely challenging at present, the industry continues to grow, especially in export markets. Competitiveness in terms of costs and product offering are key strategic issues and therefore product and process innovation is key to driving growth and improving financial performance. The industry is moving more and more to a higher skills base deploying new technology and more sophisticated supply chains.“
Aidan Gough concluded: “Many agri-food businesses seem to be in a positive place but they are not complacent. Almost two thirds (62%) are scanning the horizon to see what areas of opportunity might be out there; from developing new premium products to taking advantage of the health and wellness agenda. At the same time, continuing to price products competitively is expected to be a challenge for almost three quarters (72%) of all agri-food firms, while 69% see controlling costs as an ongoing battle. Companies in this sector report the same issues as most firms around overheads and cash flow but a larger number of businesses than normal regard keeping up with innovations and recruiting the right skills as important issues.
“Overall the economic outlook for the island’s agri-sector is extremely promising in what is undoubtedly an extremely competitive global marketplace and it will be interesting to monitor the industry into the future, when many of the businesses will have advanced their growth and development plans even further.’’
A copy of the findings of Agri-food businesses sector findings from the Q1 2016 InterTradeIreland Business Monitor Executive Summary can be viewed at: www.intertradeireland.com/researchandpublications/business_monitor/