Agbiz/IDC record a decline in faith in business
THE AGRICULTURAL Business Chamber (Agbiz) and Industrial Development Corporation (IDC) agribusiness confidence index has recorded a decline in two successive quarters.
This comes after the third quarter of 2017 reported 54 points, 2 points lower than 56 points reported in the second quarter of 2017.
The second quarter had declined by one point as compared to the first quarter.
The third quarter results of the Agbiz/IDC Agribusiness Confidence Index underline the sector’s reputation of being counter-cyclical.
The index points above 50 shows that there is growth in the agricultural sector while when below 50 points it shows that there is decline.
Agbiz head of agribusiness research, Wandile Sihlobo, said while confidence in other sectors of the economy remained subdued, the agribusiness sector was still optimistic about business conditions in the country, albeit declining marginally in the third quarter.
Quarterly decline Sihlobo said the index had ten sub-indices making up the Agbiz/IDC Agribusiness Confidence Index and the quarterly decline was broad based, with the exception of turnover and capital investment indices.
“Although there are a number of factors driving sentiment of the other sub-indices, the unfavourable weather conditions in the Western Cape province and relatively lower global demand for maize exports were the key drivers of the decline in sentiment in the third quarter of this year,” Sihlobo said.
The index show that confidence in net operating income sub-index had declined further by 5 index points to 63 points in the third quarter of this year. “In part, this shows an expectation of lower profitability relative to the previous quarters, particularly for agribusinesses operating in the horticulture and wine industries,” he added.
The export volume sub-index has a recorded one of the biggest decline during the quarter, down by 8 index points to 50 points, the lowest levels since the third quarter of 2016 which was affected by the drought. “This is largely due to lower demand for maize,” Sihlobo said.