Improvement in Agbiz/IDC Agribusiness Confidence Index

After remaining below 50 index points for five consecutive quarters, the Agbiz/IDC Confidence Index recovered by 13 index points to 60 index points in the third quarter of this year.

Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, told Farmer’s Weekly that confidence was mainly attributed to hopes of a La Niña weather system that would lead to improved rainfall and a possible increase in employment opportunities for seasonal workers.

The index was at its highest level since the third quarter of 2014, a recent Agbiz press release said.

According to Sihlobo, data from 20 agribusinesses were used to compile the index.

Confidence levels of South African agribusinesses with regard to agricultural conditions in general increased by 33 index points to 55 from the previous quarter, on the back of the La-Niña weather system forecast, the release said.

However, the Australian Bureau of Meteorology had since revised its forecast for a La-Niña system occurring from the 65% of its previous estimate to 50% currently.

Sihlobo said the Australian Bureau of Meteorology based its outlook on data from weather models and revised the outlook every month.

According to release, seven out of 10 sub-indices in the survey showed a contraction, with the exception of economic growth prospects, agricultural conditions, and employment sub-indices.

Perceptions about employment in the agribusiness sector improved marginally in the third quarter. This recovery is partly due to the sector approaching production season, which will result in increased activity, which could lead to seasonal job opportunities, the release said.

Net operating income, market share of the business sub-index, capital investment, export volumes, debtor provision for bad debt, and financing costs indexes all decreased, the release said.

Confidence in South Africa’s economic growth rebounded by 26 index points to 30 from the second quarter of 2016.

“We believe that this improvement was influenced by the recovery in South Africa’s real GDP figures, which showed that the economy grew by a seasonally adjusted, annualised rate of 3,3% quarter-on-quarter following a contraction of 1,2% quarter-on-quarter in the first quarter of the year,” the release said.

Winter crops are in good condition throughout the country, and this had contributed to the improved sentiment about agricultural conditions.