My aim in this blog post is to highlight the prevailing optimism in the South African agriculture and agribusiness sectors. No indicator captures this sentiment better than the Agbiz/IDC Agribusiness Confidence Index (ACI), which rallied in the fourth quarter of the year to 61, from 51 in the previous quarter. [1] A level above the neutral 50-point mark implies that agribusinesses are optimistic about business conditions in South Africa.
As the official statement we put out earlier this morning says; the fourth quarter improvement likely reflects two important factors. Firstly, various high-frequency data show 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 the COVID-19 crisis and related lockdown restrictions.
Secondly, there is strong optimism about the 2020/21 production season on the back of expected higher rainfall across most regions of the country. This fourth-quarter survey was conducted between 11 and 20 November and covers agribusinesses operating in all agricultural subsectors across South Africa.
You can access the full official statement and headline data of the ACI by clicking here.
Exhibit 1: Agbiz/IDC Agribusiness Confidence Index
Source: Agbiz Research, South African Weather Service
(Note: Shaded areas indicate periods when rainfall across South Africa was below the average level of 500 millimetres)
[1] The Agbiz/IDC Agribusiness Confidence Index reflects the perceptions of at least 25 agribusiness decision-makers on the 10 most important aspects influencing a business in the agricultural sector (i.e. turnover, net operating income, market share, employment, capital investment, export volumes, economic growth, general agricultural conditions, debtor provision for bad debt and financing cost). It is used by agribusiness executives, policymakers and economists to understand the perceptions of the agribusiness sector, and also serves as a leading indicator of the value of the agricultural output while providing a basis for agribusinesses to support their business decisions.
Follow me on Twitter (@WandileSihlobo).
