SA Agribusiness confidence drops to pandemic levels

Sentiment among South Africa’s agricultural businesses slumped to its lowest level since the Covid-19 pandemic in 2020, as port inefficiencies, poor road and rail infrastructure, and ongoing energy constraints weighed on the outlook.

A confidence index compiled by the Agricultural Business Chamber, known as Agbiz, and the Industrial Development Corp dropped to 40 points in the fourth quarter through December, compared to 50 in the prior quarter.

It was the lowest reading since the second quarter of 2020, during the height of a hard lockdown during the pandemic.

A reading below 50 points implies that businesses in the agricultural sector are downbeat about conditions in the country, Agbiz said.

‘Numerous challenges’

“This pessimism emanates from the numerous challenges facing the sector such as 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,” the chamber said, referring to the local term for power cuts.

South Africa’s economy contracted 0.2% in the three months through September, hobbled by poor logistics and an erratic electricity supply that’d led to almost daily blackouts this year.

The agriculture, forestry and fishing sector, which is an important employer although it’s contribution to overall economic activity is relatively small, shrank by 9.6%.

“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,” Wandile Sihlobo, chief economist at Agbiz said. “The government and private sector should collaboratively work to resolve these constraints to attract investments and boost long-term growth.”