AGRIBUSINESS CONFIDENCE STATIC AT BELOW 50 POINTS IN THE FIRST QUARTER

The Agbiz/IDC Agribusiness Confidence Index (ACI) was unchanged in the first quarter of this year after deteriorating by 10 points to 40 in the last quarter of 2023 to its lowest level since the pandemic.

This first quarter reading was below the neutral 50-point mark, implying agribusinesses remained downbeat about business conditions.

Agricultural Business Chamber (Agbiz) chief economist Wandile Sihlobo said after a few years of solid activity, South Africa’s agricultural sector faced a daunting year ahead, and the index results reflected this.

“There remain aspects that policymakers, with the private sector, could tackle to unlock the growth potential of South Africa’s agriculture. These include addressing the weakening municipalities, deteriorating roads, animal diseases, efficiency in the registration of new agrochemicals and seeds, rising crime, inefficient logistics, and persistent load shedding,” Sihlobo said.

He said that still, with the elections ahead of us, it was unclear if there would be a serious focus on policy matters in the months ahead.

The pessimism in the index was attributed mostly the same factors as in recent surveys, which were yet to be addressed, and new challenges on the weather front.

These include the El Niño-induced drought that is devastating the summer grains and oilseed regions, inefficiencies at the ports, poor rail and road infrastructure, and worsening municipal service delivery. Rising crime, animal disease challenges, uncertain policy ahead of the elections, persistent load shedding and geopolitical uncertainty were also challenges.

The ACI comprises 10 sub-indices, three of which declined in the first quarter of this year, while the rest showed mild improvement.

The turnover sub-index was down by 14 points from Q4 2024 to 52, reflecting the expectations of the poor summer grains and oilseed harvest in an environment where the input costs remain relatively elevated.

The sub-index measuring export sentiment fell further by 7 points to 35, signalling the potential decline in export volumes this year from a record export of $13.2 billion in 2023. The major challenge was a possible poor summer grains and oilseed harvest. Underperforming ports and railways added to pessimism.

The general agricultural conditions sub-index fell by 22 points to 18 in Q1 2024, the lowest level since the first quarter of 2016, the time of the last intense El Niño cycle.

Mild improvements were registered in the net operating income sub-index. Agribusinesses that operated in financial services drove this slight improvement.

The market share of the agribusiness sub-index was up 6 points from Q4 2023 to 59 in Q1 2024.

The employment sub-index was up by 3 points from Q4 2023 to 50, a surprise given the challenging agricultural production levels.

The capital investments sub-index improved by 7 points from Q4 2023 to 50, likely reflecting investments in alternative energy sources.

The general economic conditions sub-index recovered by 20 points to 30, still far from the neutral 50 mark.

BUSINESS REPORT

2024-03-27T17:11:13Z dg43tfdfdgfd