The Bord Bia CEO sentiment survey, undertaken as part of the body’s annual Performance and Prospects report, shows that the biggest concern among the leaders of Ireland’s food and drink exporters is the cost of labour. Access to labour is the third biggest concern, just behind inflation (see Figure 1).

The increases in the minimum wage over recent years have inevitably caused a rise in labour costs across the industry (see Figure 2).

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The introduction of the auto-enrolment pension scheme this year will add another layer of labour costs for businesses. Taken together, an employee on the minimum wage will be paid 40% more at the start of this year than they were being paid five years ago.

The Government drive to increase the minimum wage has come as a result of increased consumer costs across the economy, with accommodation, energy and grocery prices all significantly higher in recent years.

For most employers this means that they would have had to increase wages anyway in order to keep their employees, regardless of the national minimum wage.

In fact, the vast majority of jobs in the agri-food export sector are paid at rates above the minimum wage, so it is the cost of living rather than direct Government policy which is driving labour costs.

For many food businesses the bigger challenge is getting employees at all. Processors have come to increasingly rely on seasonal immigrant labour, particularly in the meat processing sector. However, there are constraints on the number of visas which are available for non-EU workers.

There was some good news on that front in December when Minister for Enterprise Peter Burke announced an extra 1,000 permits for meat processing operatives.

But that good news came with a sting in the tail as the minimum wage for those non-EU workers will rise to more than €16 an hour from March of this year.

These increased costs inevitably increase the drive towards automation across the industry. For example, Tirlán’s Kilkenny Cheese joint venture with Royal A-ware’s new state-of-the-art facility produces 50,000 tonnes of continental cheese per year, and yet only has around 80 employees.

The move into more high-tech production methods brings its own challenges as food companies find themselves competing for workers in Ireland’s high-tech sector, a place where wages are vastly higher than food-company norms.

Overall, almost 40% of companies surveyed by Bord Bia expect their competitiveness to be eroded over the coming 12 months. This is four percentage points higher than was seen in the same survey last year.

Optimism

Nonetheless, the industry as a whole remains remarkably optimistic about the outlook for 2026. More than half of exporters see growth in UK, Europe and American markets, while no region has expectations for a strong decline of more than 10% among the companies surveyed.

Bord Bia said that the confidence in growth this year is a reflection of the strong customer relationships developed by Irish exporters as well as a degree of recovery in consumer spending in key markets.

The confidence about an increase in exports to the Americas is notable, particularly given the significant disruptions to trade during 2025 due to President Trump’s trade policies.

The trade deal agreed between the EU and the US in August removed much of that immediate uncertainty, and should that deal hold, there should be better prospects for that key market over the next 12 months.

When it comes to investing in the future, there is a mixed picture across food and drink exporters.

Overall, around 40% of respondents to the survey say that they have delayed planned investments due to economic and market uncertainty.

This was most pronounced in the horticulture, seafood and prepared consumer foods sectors. Perhaps surprisingly, drinks companies are least likely to postpone investment.

According to Bord Bia, the pattern of investment suggests that companies are prioritising liquidity, cost control and operational efficiency with larger capital programmes increasingly deferred until greater clarity emerges on inflation, tariffs and regulatory developments.

Comment

In any business, cost control is critical. For food businesses where margins can be exceptionally tight, failure to control costs will inevitably lead to a failure of the business.

It is no wonder then that so many in the sector are increasingly worried about labour costs. The rise in farm-gate prices in 2025 has been a boon for farmers, but it has added to the squeeze on processors.

This squeeze has meant that businesses have had to push price increases onto their customers, both in the domestic and export markets. Food price inflation has become a hot topic both in Ireland and across the developed world.

However, that inflation comes with a sting in the tail for Irish exporters as the increased cost of food – coupled with other rising costs in the economy – means that the cost of labour will only grow further.

Economists call this phenomenon where prices of goods and services rise to meet the inflation-driven increased costs of production as “cost-push inflation”. It is one of the most damaging things to long-term economic growth as it eventually leads to drops in output as firms reach a point where increased costs lead to a fall in sales.

Policy makers are very aware of this problem. In fact, the whole system of global central banks’ primary task is to try to keep inflation low and relatively stable.

There are early signs that 2026 will be the first year since before the pandemic which will see relatively benign global inflation.

If this holds true, then consumer confidence should increase, which in turn will lead to opportunities for Irish exporters.

In such a scenario, those companies will be better positioned to make the kind of longer-term investment decisions which will allow Ireland’s food and drink sector to continue on a stable and sustainable path to long-term growth.