Agbiz said while the improvement in sentiment was a welcome development, the index remained below the neutral 50-point mark, implying that agribusinesses were still downbeat about business conditions. The survey was conducted between 28 February 28 and March 15 and included agribusinesses operating in all agricultural sub-sectors across South Africa.
The index reflected the perceptions of at least 25 agribusiness decision-makers on the 10 most important aspects influencing a business in the agricultural sector (ie, turnover, net operating income, market share, employment, capital investment, export volumes, economic growth, general agricultural conditions, debtor provision for bad debt and financing cost).
According to the survey, after deteriorating to the lowest level since the first quarter of 2010, confidence regarding the turnover sub-index improved by 13 points to 61 in the first quarter of 2019. Confidence regarding the export volumes sub-index increased significantly by 19 to 56 index points in the first quarter of 2019. This optimism stemmed from the horticultural and livestock sub-sectors.
Agbiz said from a horticulture perspective, the Citrus Growers’ Association recently noted that exports could reach a record level of 137 million boxes of citrus fruit in 2019. Moreover, the South African Wine Industry Information and Systems noted the possibility of a relatively larger harvest of wine grapes this year, which should boost exports.
In terms of livestock, while the outbreak of foot-and-mouth disease earlier this year led to a number of countries placing a temporary ban on South African beef exports, the Department of Agriculture, Forestry and Fisheries is engaged in discussions to re-open markets for South African beef on the African continent, as well as to the Middle East.
Although sentiment from the horticulture sub-sector is fairly positive, the general agricultural conditions sub-index fell by 8 points to 32 in the first quarter of 2019.
In addition, the renewed power outages across the country, and disappointing high-frequency data over the past few months suggest that South Africa’s economic fortunes could remain constrained for the better part of this year.