Sixth annual KPMG Agribusiness Irish Farmers Journal report shows Agribusinesses are spending more money on R&D
The sixth annual KPMG Agribusiness Irish Farmers Journal report, published this week, shows an increase in spending on R&D. Three years ago less than 30% of companies spent between 2-4% on R&D. Today that has increased to half of agribusinesses surveyed spending 2-4% on R&D.
Agribusinesses have identified innovation as the most important driver of growth in their business with 41% of respondents saying that innovation was the most important - up from 20% three years ago. But it’s not easy to innovate, with 40% of respondents cite innovation as the biggest challenge. While there are three types of innovation – process, product and business model innovation, the majority of agribusinesses surveyed are targeting process innovation followed by new product development. The biggest challenge to successful innovation is finding the right people, with 40% of companies identifying this as the key challenge. Over the last three years, innovation has overtaken scale and integration along the supply chain as the second most competitive advantage behind reputation and brand strength for agribusinesses surveyed.
Agribusiness has seen huge acquisitions in the food industry. For example, Kraft/Heinz, Monsanto/Bayer, Syngenta/ChemChina, Danone/Whitewave, Sainsbury/ASDA. There is now an increasing awareness of the need to grow outside of acquisitions. The ability innovate is seen as key to this. Farm to fork supply chain disruption caused by changing consumer trends. We are seeing a shift in what a food is defined as (fake meat, milk etc), how it is consumed, how it is bought and this is affecting how the food is produced- increased emphasis on ethics and welfare. This is forcing the traditional primary producers to adapt new business models. The rise against the use of antibiotics, the availability of chemicals, and the environmental impact of farming. Yet consumers are still asking farmers to produce more food to feed a growing population while consumers are asking for perfection in the supermarket along with more choice.
The KPMG Agribusiness Irish Farmers Journal report also looks at:
Commenting on this year’s report, David Meagher, Partner-in-charge for agribusiness KPMG said “Irish agribusiness faces an exciting yet challenging time. Issues such as Brexit loom large on the agenda, however the opportunities provided by innovation and technology are also the focus of agribusiness leadership. Staying relevant to consumers whilst remaining profitable will be the ultimate acid test in the near to medium term.”
Eoin Lowry, Agribusiness Editor Irish Farmers Journal said: “Innovation in agri-food has always ensured that the world has enough food to eat. While it is encouraging to see that investment in R & D in the sector has increased, the industry must continually seek new ways of growing, processing and distributing food - particularly given the challenges of Brexit, population growth & climate change.”