The Agbiz/IDC Agribusiness Confidence Index (ACI) deteriorated by 10 points to 40 in the fourth quarter (4Q) of this year to reach its lowest level since the second quarter of 2020, which was at the height of the Covid-19 pandemic hard lockdown restrictions.
Critically, the reading was below the neutral 50-point mark implying that South African agribusinesses were downbeat about business conditions in the country.
The index attributed the pessimism emanated from the numerous challenges facing the sector such as the intensified delays and inefficiencies at the ports, deteriorating rail and road infrastructure, worsening municipal service delivery, increased geopolitical uncertainty and persistent episodes of load-shedding.
This survey was undertaken between the last week of November and the first week of December, covering businesses operating in all agricultural subsectors across South Africa.
In Q4 2023, the debtor provision for bad debt was down by 5 points to 37, which was a favourable development.
Meanwhile, the financing costs indices increased by 7 points to 13, signalling that agricultural firms were still worried by the elevated interest rate in an industry where farm debt is hovering around R200 billion.
Wandile Sihlobo, the chief economist of the Agricultural Business Chamber of South Africa (Agbiz), said while South Africa's agricultural sector had a generally good season this year, with gains illustrated by robust employment conditions and export volumes in the first three quarters, the outlook was worrying.
He said the Agbiz/IDC ACI's Q4 results indicated that more work was needed to improve the operational conditions in the farming and agribusiness sector.
"The key constraining issues to South Africa's agricultural growth potential include the weakening municipalities, deteriorating roads, rising crime, inefficient logistics, and persistent load- shedding," Sihlobo said.