Marginal uptick in South Africa’s agribusiness confidence

South Africa’s agribusinesses are slightly more optimistic about current business conditions in South Africa.

Marginal uptick in South Africa’s agribusiness confidence
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South Africa’s agribusinesses are slightly more optimistic about current business conditions in South Africa.

This was evident in the Agbiz/Industrial Development Corporation (IDC) Agribusiness Confidence Index released earlier this week, which recovered by two index points to 46 points in the third quarter of the year.

According to Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, the uptick had been underpinned primarily by general agricultural conditions, the volume of exports, market share of agribusinesses, and employment figures.

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He said that confidence in general agricultural conditions had increased 11 points from the second quarter to 42 points.

Sihlobo added, however, that it was horticultural firms, financial institutions and other agricultural services companies, rather than farming businesses, that had expressed optimism.

Perceptions about employment in the agribusiness sector improved from 48 in the second quarter to 58 points.

“Although a positive inch-up in confidence is always a welcome development, it is important to be mindful that the Agbiz/IDC Agribusiness Index has been hovering at levels below the 50-point mark for the past five quarters,” he said.

Sihlobo explained that a level below the neutral 50-point mark implied that agribusinesses were still downbeat about business conditions in South Africa.

Individual indexes that showed a decline in confidence were turnover, net operating income, capital investment, economic growth conditions, and financing costs of agribusiness.

Various factors, notably the drought, had led to the subdued confidence in South Africa’s farming sector, he said.

“Although the drought is out of policymakers’ hands, some factors are within their reach. These include clarity on land reform policy and water rights, increased investments in strengthening biosecurity, and shipping port infrastructure.”

According to Sihlobo, these matters should be prioritised in order to ensure an uptick in sentiment, and thereafter an improvement in investment and agricultural economic fortunes.

Jeandré Du Preez is the newest addition to the Farmer’s Weekly team. Originating from a Riversdal farming family, she has farming in her blood. After school she furthered her studies at Stellenbosch and has been working as an agricultural journalist for the past two years. She says she feels privileged to write about an industry paramount to the survival of all South Africans and is inspired by the innovative solutions with which the farming community bridges the many challenges they face. She enjoys being able to combine work with travel and appreciates the modesty and friendliness with which South Africa’s farmers share their accomplishments. She enjoys being able to combine work with travel and appreciates the modesty and friendliness with which South Africa’s farmers share their accomplishments. If she is not writing or visiting farms, you’ll find her relaxing with a good mystery novel or exploring her other passions: travelling and cooking.