Agribiz confidence worsens

Hitting its lowest level since quarter two in 2020 during the height of the Covid pandemic and harsh lockdown restrictions, the Agbiz/IDC Agribusiness Confidence Index (ACI) has now deteriorated by 10 points to 40 in Q4 this year.

Chief economist at Agricultural Business Chamber of South Africa, Wandile Sihlobo, said the Q4 2023 reading was below the neutral 50-point mark which meant SA’s agribusinesses were downbeat about the business conditions.

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The survey was conducted between the last week of November and the first week of December and covered businesses operating in all agricultural subsectors across the country.

Sihlobo said this doubt emanated from the numerous challenges that faced the sector, such as intensified delays and inefficiencies at the ports, deteriorating rail and road infrastructure, worsening municipal service delivery, increased geopolitical uncertainty and persistent episodes of load shedding.

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The survey outlined 10 subindices/subindex the ACI comprised of, and eight declined in Q4 2023. Sihlobo said this excluded the debtor provision for bad debt and financing costs subindices, which were interpreted differently from other subindices.

A view of the subindices revealed, among others:

• In turnover and net operating income: Subindices were down by seven and 12 points from Q3 to 67 and 47 in Q4 2023, respectively.

This downbeat mood mirrors the prevailing concern that while El Niño could be mild, the agricultural output will likely be lower than the previous bumper season, weighing on incomes.

• Market share of the agribusiness: Subindex is down by five points from Q3 to 53. Except for the respondents in the summer crop regions, most held a generally unchanged view from the previous quarter.

Still, this was overshadowed by the concerns about summer crops, thus causing the deterioration in market share sentiments.

• Employment: Subindex fell by 12 points from Q3 to 47. This is unsurprising in an environment with concerns about the sector’s outlook.