Farming confidence index at 6-year high

THE AGBIZ/IDC Agribusiness Confidence Index (ACI) lifted in the fourth quarter to 61 points, the highest level in more than six years, on increased optimism about the sector, despite the Covid-19-related uncertainty. The index was above the neutral 50-point mark from the previous quarter’s recovery of 51 points.

The chief executive of the Agricultural Business Chamber (Agbiz), Wandile Sihlobo, said yesterday that most of South Africa’s agriculture and agribusiness sectors performed relatively well in a year of unusually elevated uncertainty, with minimal impact at an aggregate level from Covid-19 crisis and the lockdowns.

The fourth quarter survey was conducted between November 11 and 20 and covered agribusinesses operating in all agricultural sub-sectors across South Africa.

The ACI comprised 10 sub-indices and most showed a notable uptick in the fourth quarter. Confidence regarding the turnover and the net operating income sub-indices soared by 32 and 35 points from the third quarter to 82 points each in the fourth quarter, respectively. For both these sub-indices, these are the highest levels since the third quarter of 2014.

Similar to the previous quarter, the optimism was mainly supported by firms operating within the field crops, horticulture, livestock and financial services owing to a large harvest in 2019/20 and anticipated good season in 2020/21.

The sentiment regarding the employment sub-index rebounded by eight points from the third quarter to 41 points. This was a preliminary indication that agricultural employment could recover somewhat in the coming quarters.

The sub-index measuring export sentiment improved by five points from the third quarter to 60 points in the fourth quarter, as exports continued to soar on the back of large supplies and the relatively weaker rand.

Confidence regarding general agricultural conditions jumped by 15 points to 94 points in the fourth quarter. This was the highest level since the inception of the ACI.