Agri confidence hits new low

South Africa’s Agribusiness Confidence Index (ACI) reached a 15-year low in the second quarter of this year.

Engineering News reports the ACI index dropped to 38, the lowest level since the third quarter of 2009.

The index is compiled by the Agricultural Business Chamber of South Africa (Agbiz) and Industrial Development Corporation (IDC).

“The level of 38 suggests that agribusinesses are downbeat about business conditions in the country, with the El Niño-induced drought’s impact on summer grains and oilseed production being one of the major factors that weighed on sentiment,” the publication said.

“The drought coincided with existing challenges of inadequate road infrastructure, municipal service delivery, lingering animal disease outbreaks and heightened geopolitical tensions.

“Uncertainty about the formation of the national and provincial government at the time the ACI survey for the second quarter was conducted may have also added to the downbeat mood among agribusinesses.”

Agbiz says the farming community recognises the improvements in South Africa’s road, rail and harbour operations, but believes more work is needed to address inefficiencies at the country’s ports and on the rail network. There are also expectations of poor summer grain and oilseed harvests, while input costs remain high.

There was a potential for a decline in agricultural exports this year, after record exports of $13.2 billion in 2023.

“Admittedly, Agbiz explains, the first-quarter agricultural exports were robust on the back of strong horticulture, wine and livestock product exports, but the full year’s export activity may be weak compared with the prior year,” the report said.

“There ultimately remains pessimism in the agriculture sector, although some subsectors had an impressive start to the year. Perhaps sentiment in the ACI will tick up following the formation of the new government, which has been positively received in the financial markets,” Agbiz stated.