SA’S AGRI CONFIDENCE plummets amid market disruptions

Despite improved output and export earnings, agribusiness confidence has fallen to the lowest level since the 2009 financial crisis, due to the impact of the COVID-19 global pandemic. Lindi Botha reports.

The Agbiz/IDC Agribusiness Confidence Index (ACI) fell from the 50-point mark in the first quarter of the year to 39 in the second quarter. A level below the neutral 50-point mark implies that agribusinesses are downbeat about prevailing business conditions in South Africa.

The 10 sub-indices that make up the index all showed a significant decline in the second quarter of the year, with most reaching their lowest levels since 2009. This followed despite the fact that South Africa’s agriculture and food sector has, for the most part, been operational during the lockdown period to contain the spread of the coronavirus disease (COVID-19).

Wandile Sihlobo, chief economist at Agbiz, said the impact of the ongoing COVID-19 crisis on the economy had been severe. “While South Africa’s agriculture sector could register an improvement in output in 2020 compared with the previous year, and also an increase in export earnings, the cloud of uncertainty around the pandemic could continue to keep sentiment depressed. The capital investments confidence sub-index fell six points from the first quarter of 2020 to 38 in the second quarter. The downbeat sentiment is in part due to general challenging financial conditions amid the COVID-19 pandemic. In the agricultural machinery business, the negative sentiment is somewhat in line with continuous poor sales in the first couple of months of this year.”

He said that confidence in net operating income halved between

On a positive note, most agribusinesses maintained a generally unchanged view, with those in agricultural insurance and financial services showing an uptick. While confidence in employment levels reduced from 47 points to 36, the reduction was not as drastic as with other sub-indices.

Sihlobo said this was perhaps an indication that agricultural employment would not take a huge knock, as the sector had remained operational and was expecting bumper harvests in the case of summer grains and citrus.

Continued operations