CAPE TOWN – The agricultural sector is set to underperform in the 2019/2020 season despite the prospects of predicted adequate rainfall, data shows.
The Agricultural Business Council (Agbiz) confidence index released yesterday rose to 46 in the third quarter, after easing to 44 in the second quarter, still at a level below the neutral 50-point mark, which implies that agribusinesses have a bleak view of business conditions in South Africa.
The Agbiz composite index comprises 10 sub indices, most of which are still generally subdued compared to the long-term average levels since its inception in 2001. Four of the 10 sub indices that make up the composite index underpinned the slight improvement in sentiment in the third quarter. These positive sub-indices were general agricultural conditions, volume of exports, market share of agribusiness and employment sub-indices.
Wandile Sihlobo, the chief economist at Agbiz, said: “It signals a potential mild uptick in SA agriculture gross domestic product in the third quarter, but we generally expect SA agribusiness to under perform in 2019. We see a 2 percent year-on-year contraction in SA agricultural fortunes this year.”
He noted that although the uptick in confidence was always a welcome development, it was important to be mindful that the Agbiz/IDC Agribusiness Index had been hovering at levels below the 50-point mark for the past five quarters.