AGRIBUSINESS CONFIDENCE RISES

Following an outstanding recuperation to 51 points in quarter three of 2020, the Agbiz/IDC #Agribusiness Confidence Index rose to points in quarter four, which is its highest level since quarter three of 2014. A level over the neutral 50-point mark suggests that agribusinesses are hopeful about business conditions in South Africa.

The fourth-quarter improvement probably reflects two significant components. Firstly, various high-frequency data show that the vast majority of South Africa’s agriculture and agribusiness areas performed moderately well in a time of unusually raised uncertainty with minimal effect, 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.

 

The Agriculture Confidence Index involves ten subindices. The greater part of these demonstrates an outstanding uptick in the fourth quarter of the year. Confidence regarding the turnover and the net operating income subindices soared by 32 and 35 points from the third quarter to 82 points each in Q4, respectively.

 

For both these subindices, these are the highest levels since the third quarter of 2014. Like the previous quarter, the optimism is 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.

Nevertheless, the positive story of South Africa’s agriculture is only at the aggregate level. The effect of the ban in sales and interrupted exports of wine, tobacco and floriculture amongst other subsectors are beginning to show in the official jobs’ numbers in these specific subsectors and provinces where these subsectors are predominant.

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