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The 2021 Irish Farmers Journal/KPMG Agribusiness Report

Findings

  • The explosion of e-commerce within the food supply chain due to COVID-19 is the standout trend of the past 12 months
  • Online grocery shopping effectively doubled last year in Ireland
  • Initial panic-buying put huge pressure on supply chains around the world
  • Significant Brexit concerns remain for the sector 

The Irish Farmers Journal in association with KPMG has launched its ninth annual agribusiness report, ‘Survive & Thrive’, examining how the sector has adapted in the wake of the dual threat of Brexit and COVID-19. The report also explores how increasing focus on the sustainability agenda is impacting the sector in Ireland and what companies are doing to stay ahead of the curve.

Contributors to the report include Kerry Group, Bord na Móna, Lidl Ireland and Northern Ireland, Bord Bia, Ibec, Fane Valley, Coolhull Farm, Kilmullen Farm as well as restaurant owners.

Representing both new and established businesses, contributors share experiences of changing consumer trends over the past year and explain how they have navigated through the worst effects of the pandemic; how their businesses have been affected by the disruption caused by Brexit; and how they are facing up to the probable imposition of tighter environmental regulations in the future.

A truly unique year for the industry

Commenting on this year’s report, Phelim O’Neill, Markets Specialist for Irish Farmers Journal said: “When last year’s Irish Farmers Journal/KPMG Agribusiness report launched, we had just started adapting to doing business during a pandemic, and Zoom calls and webinars were still a relative novelty. While farming, processing and retailing have all functioned throughout the pandemic, sadly the restaurant and hospitality sector has been decimated. In our ninth annual agribusiness report, produced with the support of our partners KPMG, we talk to people in all of these sectors, and we look at how companies are adapting to Brexit. We hope that from reading this report you will gain unique insights into the workings of the Irish agri-food sector in a truly unique year for the industry.”

Tom McEvoy, Partner-in-charge for agribusiness, KPMG in Ireland added: “Irish agribusinesses faced almost overnight shifts in strategy and operations in response to COVID-19 and Brexit, and it’s clear there will be no going back to ‘normal’. It’s likely further changes will impact how we trade and environmental regulations will continue to challenge the industry to re-think and re-model operations. Emerging trends like food assurance will also have an impact, and is an area of significant opportunity given the competitive advantage of our agri sector brand globally. Our advice to businesses is to apply the significant learnings from the past 14 months to start looking around corners and prepare for what’s next, particularly in the sustainability space.” 

Hand holding carrots with backdrop of vegetables

Key findings

Need for high speed broadband

A major lesson from COVID-19 is that high speed broadband is now as essential to rural Ireland as electricity. 

The rise in e-commerce and its effect on the food industry

The explosion of e-commerce within the food supply chain due to COVID-19 was a standout trend, with online grocery shopping effectively doubling last year in Ireland from less than 3% to 5.4%. The significant investment in e-commerce will likely result in continued online provision of food in the future. 

Impact of COVID-19 on the food service industry

Up to last year, Ireland’s food service market had recorded eight consecutive years of top line growth and had become a crucial route to market for many food businesses. The sector was particularly important for Irish beef exports into the UK and accounted for a significant volume of Irish cheese too. As such, the collapse in demand from the food service market last year caused by COVID-19 reverberated right down through the food supply chain and caused a short-term drop in Irish meat and dairy prices at the farm gate.

Consumer trends

Before COVID-19, almost 50c in every euro spent on food in Ireland was spent in a restaurant or food service outlet, meaning Irish consumers were eating out more than ever. Increased cooking at home and panic-buying at the beginning of the pandemic put huge pressure on supply chains around the world. The scale of the crisis in Italy meant pasta was at times in limited supply, as were eggs due to an outbreak of avian influenza. Baking ingredients like flour were also in short supply, as were cleaning materials, due to a 400% to 500% increase in sales volumes as shoppers stocked up on domestic cleaning products. Consumer preferences also shifted with supermarket chain Lidl reporting a 60% increase in sales of premium Angus steak over 2020. The increase in pet ownership, particularly dogs, during the COVID-19 pandemic also led to pet food shortages.  

Online Marts

One of the biggest changes for farmers was the move to online buying and selling of cattle. The local mart is primarily a place for farmers to convert their livestock to cash as well as being a social outlet for those isolated in rural Ireland.

Brexit & trade policies

Ireland is the EU country most affected by Brexit and the consequences of a no deal would have left Ireland with the largest tariff burden in the EU 27, despite having just 5% of EU 27 trade with the UK. This is because if it came to trading under WTO terms and tariffs, agriculture – particularly beef – has the largest tariffs. While the deal avoided that, there remains the cost and inconvenience that non-tariff barriers will bring to Irish exports entering Britain. These haven’t been experienced yet because the UK government have deferred the introduction of full border controls until January 2022.

Northern Ireland Protocol

EU border controls have to be applied at NI ports on goods entering from Britain.

  • On 1 January, a 1kg online purchase of a speciality cheese or meat required the same veterinary certification and inspection process as a 20t container, representing commercial viability challenges for businesses.
  • For the NI protocol to function as intended, there is a need for a risk-based and proportionate set of controls which protect the EU single market but allow business to continue. There is no off-the-shelf solution to this – a bespoke arrangement is required.

Trade Agreements

The other major threat to Irish agriculture from Brexit is UK trade policy outside the EU. It is in the process of concluding trade agreements with Australia and New Zealand, both major exporters of beef and sheepmeat, plus dairy in the case of New Zealand. A UK deal will mean enhanced access for these to the UK market, creating additional competition for Irish exports.

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