Business confidence in farming sector recovers slightly

Business confidence in the agricultural sector remains subdued despite showing some slight recovery in the second quarter of 2016.

The Agbiz/IDC Confidence Index recovered by four index points to rise to 47 in the previous quarter.

An index below 50 indicates a contraction in agribusiness, thus a 47 index point suggests that agribusinesses are still pessimistic about business conditions in the country.

According to Agbiz, there has been a steady decline in confidence levels since the second quarter of 2014 which had an index of over 65 points.

Low and declining confidence levels could, in part, be attributed to the impact of the drought on the farming sector.

But the latest results showed that perceptions of agribusiness have improved in the majority of sub-indices except export volumes and economic growth prospects, according to Agbiz.

The Agbiz/IDC Agribusiness Confidence Index is constructed on a quarterly basis and reflects the perceptions of at least 20 agribusiness decision-makers.

Agbiz stated that confidence regarding the country’s economic growth is at its lowest level since the second quarter of 2008 when it stood at four index points.

Looking ahead, Agbiz stated that agricultural conditions could improve in the coming months. A number of weather forecasters suggest that there is a 65% chance of La Niña occurrence towards late spring through the summer season of 2016/2017, which should see rainfall patterns return to normal.