80% in agribusiness sector use AI, but half have no governance procedures

Ifac Food and Agribusiness Report finds change in relation to AI adoption, supply-chain risk, and export exposure, is progressing without proper controls

David Leydon, Group Head of Growth and Agrifood Consulting at ifac with Karina Pierce Dean of Agricultural Science and Head of School, UCD. 

Four and five businesses in the food and agribusiness sector now use AI, but only half of businesses have procedures in place to govern its use.

The Ifac Food and Agribusiness Report, an analysis of the sector carried out each year, says that change, particularly in relation to AI adoption, supply-chain risk, and export exposure, is progressing without proper controls.

"AI adoption has advanced ahead of governance, and supply-chain disruption has highlighted how few businesses have formal risk monitoring in place," said Ifac groukp head of growth and agrifood consulting David Leydon. "Across almost every theme in this year’s report, the message is consistent, change is outpacing the structures businesses have in place to manage it."

AI use has jumped from 21% three years ago to 80% today, yet 48% have nothing in place to govern its use and 89% have no designated person or team responsible for it. Lack of internal expertise is the principal barrier to AI adoption.

Nearly half of businesses (49%) experienced a significant supply-chain disruption over the past year. Only 11% introduced formal supplier risk monitoring or scenario planning as a response to disruption. "Many have responded by holding additional stock, which offers some protection but ties up cash and increases carrying costs," the report noted.

58% of businesses increased revenue over the past 12 months, but only 38% increased net profit, indicating rising costs eating into margins.

The Ifac report said 38% of businesses plan to increase headcount over the next 12 months. Some 65% of food and agribusinesses are optimistic about their performance over the coming 12 months, down from 80% last year. "Businesses are less confident about the wider environment than they were 12 months ago, but they continue to plan for growth. The challenge now is achieving profitable growth rather than growth at any cost," said Mr Leydon.

Cost increases have affected nine out of 10 businesses in the past year, the highest level in nine years of the report. "With people, energy, compliance and transport costs all rising, owners need a clear understanding of where margin is being made, by market, product, customer and channel."

The report found that succession remains a "persistent weakness". Only 25% of business owners have a clear succession or leadership transition plan in place, with a further 39% having begun the process, meaning three in four businesses still do not have a completed plan. 

The report found that 68% of respondents would still recommend the agrifood sector to the next generation.

Supply chain: risk exposure remains high Nearly half of businesses (49%) experienced a significant supply-chain disruption over the past year, only 11% introduced formal supplier risk monitoring or scenario planning as a response to disruption. Many have responded by holding additional stock, which offers some protection but ties up cash and increases carrying costs.

Exporting: existing exporters deepening international activity 61% of businesses currently export, and among these, the proportion generating more than half their turnover internationally rose from 24% to 32% this year. New product development remains the leading growth opportunity, with 63% of food manufacturers identifying it as their top priority for the year ahead.

Margin and financial visibility: a widening gap 58% of businesses increased revenue over the past 12 months, but only 38% increased net profit, indicating that rising costs are eroding margin. Financial visibility also remains a concern, while half of businesses receive monthly management accounts, one in four still receive formal figures only annually.

People and organisational readiness 38% of businesses plan to increase headcount over the next 12 months, although skills shortages, salary expectations and rising employment costs remain significant issues. Broader organisational preparedness is also a concern, 58% have no crisis communications plan in place, while sustainability activity, though still strong at 35% taking more action than last year, continues despite reduced formal reporting pressure.

The report's keynote interview features Professor Karina Pierce, newly appointed Head of the UCD School of Agriculture and Food Science, who discusses the capabilities the next generation of agrifood leaders will require, including technical expertise, communication, judgement and the ability to work effectively with technology.

ENDS For further information or to arrange an interview, please contact:

Claire at [e-mail] / 085 800 1275 Nicola at [e-mail] / 086 200 9691 Photo caption David Leydon, Group Head of Growth and Agrifood Consulting at ifac with Karina Pierce Dean of Agricultural Science and Head of School, UCD.