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Imports and Exports

Agri sector expresses confidence about conditions

18 Mar 2025 - by Staff reporter
 Source: SME South Africa
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The Agricultural Business Chamber of SA/IDC Agribusiness Confidence Index (ACI) has risen to its highest level in 14 months, indicating that industry leaders remain optimistic about conditions despite global geopolitical tensions.

According to the Agricultural Business Chamber of SA (Agbiz), which released the latest index data on Monday, the ACI increased by 11 points from the fourth quarter of 2024 to 70 in the first quarter of 2025. This is the third consecutive improvement, placing the index at its highest level since the fourth quarter of 2021.

“The current level of the ACI implies that South African agribusinesses remain optimistic about business conditions in the country as a result of a combination of factors, including the La Niña rains that supported the 2024/25 agricultural season, improvements in port efficiency that supported exports in 2024, and the progress in controlling animal diseases,” Agbiz said in a statement.

The survey, conducted in the third week of February, covered agribusinesses operating in all agricultural subsectors in the country.

It reflects the perceptions of at least 25 agribusiness decision-makers regarding the 10 most important aspects influencing a business in the agricultural sector. These include turnover, net operating income, market share, employment, capital investment, export volumes, economic growth, general agricultural conditions, debtor provision for bad debt and financing costs.

According to the latest ACI, nine of these subindices improved notably in the first quarter of 2025, while one declined slightly.

The turnover subindex confidence was up 14 points to 60 in Q1 2025, with most optimism observed in agribusinesses operating in fruits and winter crops, while others maintained a generally unchanged view from the previous quarter.

Similarly, the net operating income subindex lifted by 28 points to 70 points, reaching its highest level since the end of 2022. The drivers were the same as the turnover.

The market share of the agribusiness subindex was up by three points to 70. Most respondents maintained an essentially unchanged view, with stakeholders in the winter grains regions signalling an uptick in confidence.

The employment subindex rebounded 13 points to 55, which was unsurprising as the sector is recovering from drought and animal diseases. In addition, this year's statutory minimum wage increase was also mild and aligned with industry expectations.

The capital investments subindex was up 13 points to 75.  Sales of tractors and combine harvesters were already strong and showing improvement in the first two months of this year.

The subindex measuring the volume of export sentiment increased significantly by 17 points to 100. This reflected the activity as South Africa's agricultural exports reached a record $13.7 billion in 2024.

The general economic conditions subindex lifted three points to 65, which Agbiz noted could be due to the expected effects of the implementation of Operation Vulindlela.

The general agricultural conditions subindex lifted 13 points to 80.

“This optimism mirrors the positive effects of La Niña rains in the 2024/25 summer season. The production estimates for field crops, horticulture and livestock were also generally optimistic,” Agbiz noted.

The subindices of the debtor provision for bad debt and financing costs are interpreted differently from the other indices. A decline is viewed as a favourable development, while an increase signals growing financial strain.

Financing costs indices declined by four points, reflecting an environment of easing interest rates. However, the debtor provision for bad debt increased by eight points to 50, which is unfavourable and shows that some farmers may still have financial pressures from the last season.

Agbiz chief economist Wandile Sihlobo said the ACI showed that the mood in the sector was positive, reflecting the industry’s recovery after a challenging period of drought and animal diseases.

"It is heartening to see that the geopolitical tensions haven't weighed on the sector heavily. We should build on this optimism for the sector's long-term growth,” Sihlobo said.

“An effort to keep the sector on the positive path requires collaborative efforts between business and government on pushing for the effectiveness of the network industries, better management of the municipalities, further efforts to open new export markets, and the implementation of the Agriculture and Agro-processing Master Plan,” he said.

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