EIT Food, the food-focused investment arm of the EU’s European Institute of Innovation and Technology, recently released a report aiming to identify unmet needs of small and medium-sized enterprises (SMEs) working in the agrifood industries across the continent.
The report analyzed qualitative insights from 100 agrifood SMEs and support organizations from Iceland, Ireland, and the UK.
Here are some of the report’s key findings:
- Agrifood SMEs tend to be “mission-led” and “purpose-driven.”
- They often lack specialized SME business support, due to the particular challenges of developing innovative new products and services in the relatively niche agrifood sector.
- SMEs require investment and support on different levels, aside from access to resources, to develop their products and markets.
- Among the identified unmet needs were restricted access to scale-up facilities and technological proficiency.
Industry & investor support lacking
The EIT Food report suggests that agrifood SMEs focus most of their time and effort on multiple aspects of their business, including — but not limited to — profitability. Investors, on the other hand, typically prioritize returns over all else.
But returns on agrifood investments can take longer to materialize compared to other sectors, largely because of regulatory and technical challenges, the report states. This makes it particularly difficult for agrifood SMEs to raise funding.
Other snags they face include a lack of support for navigating the funding landscape, complex regulations, and market validation – particularly for niche products.
Such SMEs also tend to lack time and other resources that would allow them to engage in strategic development and business planning.
Across the countries covered in the EIT Food report, it was found that specialized SME business support was often found to be insufficient for agrifood SMEs.
Mitigating the challenges
“There are particular challenges around providing tailored support for small ‘farm to fork’ businesses. Most innovation support agencies have to support a wide range of sectors,” Jayne Brookman, director, EIT Food North West, said in a statement.
“Our aim is to help to create easier access to new technologies and markets and tailored business support to enable these agrifood businesses to attract investors and develop sustainable, scalable businesses. EIT Food’s North West regional office can play its part by connecting SMEs to the international networks and the available agrifood business expertise that these businesses have told us they want.”
While a lot of help is available for European SMEs, custom-fitted solutions for agrifood businesses aren’t as commonplace.
EIT Food suggests the introduction of specialist support for agrifood innovators, such as:
- Extending existing networks to incorporate innovative agrifood SMEs and specialist service providers.
- Leveraging extended networks and broker introductions to provide access to technology, facilities, and funders.
- Providing access to high-quality resources and tools for professional development, for both technical and business workers.
- Providing specialist training on business innovation and strategy for agrifood SMEs.