In irradiation of food for sterilisation, is gamma radiation absorbed by the food? If so, can it theoretically cause production of radioisotopes? Or does it ionise atoms in the food?
Answer to a More General Form of Your Question
The answer to the question
Can gamma radiation make non-radioactive stuff radioactive?
is yes, but only if the gamma ray has enough energy. "Enough" is different for all atoms but for most of the lighter ones it's over 2 MeV, and what basically happens if the gamma ray has so much momentum that when it hits a proton or neutron in the nucleus of an atom it can knock that proton or neutron right out of it.
Answer to Your Specific Question
The answer to the question
In irradiation of food for sterilization, is gamma radiation absorbed by the food? If so, can it theoretically cause production of radioisotopes? Or does it ionize atoms in the food?
is no in the grand majority of cases. Either way it ionizes the atoms in the food (That is how it sterilizes after all), but the gamma rays used in most food irradiation are produced by 60Co and therefore have a max energy of ~1.3 MeV. If you recall the answer to the more general question above, these gamma rays are not high enough in energy to cause photodisintegration in any of the light atoms of food.
In some cases however, the radiation is produced in a high energy accelerator. If these energies are high enough, gamma rays can start to actually do things. These high energy accelerators are not really used for food sterilization that much as far as I know, so most of the time the bolded answer above holds true.
See Photo-Fission in Heavy Elements (1947) Phys. Rev. 71, pages 3-10 :
fission should be possible for all heavy nuclei which lie well beyond the minimum of the packing fraction curve, provided sufficient excitation is provided to produce the necessary deformation of nuclear fluid which precedes division of the nucleus. Such excitation can be provided by particle capture or by absorption of a $ \gamma $-ray into the nucleus.
"Packing fraction curve" is an older term for the nuclear binding energy curve, so the reference is saying that gamma ray induced fission is possible for nuclei that are substantially larger than nickel.
On the low end of the binding curve, there is a different process called photodisintegration.
For example, magnesium-25, upon absorbing a photon of sufficient energy, emits a proton and becomes sodium-24.
Even the most stable nuclei such as iron and nickel can be disintegrated by energetic gamma rays.
See Photoneutron Thresholds Phys. Rev. (1951) vol. 84, pages 387-394 for quantitative information concerning how much energy a photon must have to photodissociate a given nucleus.
Generation of radioisotopes outside of those already in your food cannot be done by irradiating it with gamma radiation. Transforming a non-radioactive isotope into a radioactive one involves changing the neutron number, and gamma rays are not neutrons and cannot induce a change in the number of neutrons.