Agribusiness confidence declines significantly in third quarter – index

10th September 2018 By: Marleny Arnoldi - Creamer Media Online Writer

Agribusiness confidence declines significantly in third quarter – index

Photo by: Creamer Media

The Agbiz/Industrial Development Corporation (IDC) Agribusiness Confidence Index has fallen below the neutral 50-point mark, declining by six points to 48 in the third quarter of the year – the lowest level since the second quarter of 2016, which was a drought year.

Agbiz states that while the deterioration in the past would typically be underpinned by unfavourable weather conditions, this time around things are different. The agricultural conditions are fairly favourable across the country; therefore, the root of the pessimism is lingering policy uncertainty and weak economic growth.

Agbiz Agricultural Business Chamber research head Wandile Sihlobo comments that there has not been evidence pointing to disinvestment yet, with farmers and agribusinesses taking a “wait-and-see” approach.

The index recorded 58 in the first quarter, and 54 in the second quarter. 

With the results now below the neutral mark, it essentially means that agribusinesses are somewhat downbeat about business conditions in South Africa, says Agbiz.

The deterioration in confidence in the third quarter was mainly underpinned by five out of ten subindices that make up the overall Agbiz/IDC Agribusiness Confidence Index. These subindices include turnover, employment, capital investment, the volume of exports and economic growth.

Conversely, the subindices measuring net-operating income, the market share of businesses, general agricultural conditions, debtor provision for bad debt and financing costs, improved somewhat.