Optimism In South Africa’s Agriculture And Agribusiness Sector

2 December 2020 – the Agbiz/IDC Agribusiness Confidence Index (ACI), which rallied in the fourth quarter of the year to 61, from 51 in the previous quarter. A level above the neutral 50-point mark implies that agribusinesses are optimistic about business conditions in South Africa.

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.

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.