Port woes, drought drive sentiment in SA's agricultural sector to a 15-year low
The index fell to 38 in the second quarter of the year
Business has remained downbeat about agricultural conditions in SA, according to the Agricultural Business Chamber's latest index.
Business confidence in the agricultural sector has fallen to its lowest level since the financial crisis in 2009, according to the Agricultural Business Chamber of South Africa's (Agbiz) Confidence Index. The index indicated that declining confidence had been driven by worsening farming conditions caused by El Niño, port challenges, and infrastructure and service delivery issues.
Sentiment in the sector has renewed its decline after a slight improvement in the third quarter of 2023, with the index dropping from 40 to 38 in the second quarter of the year.
The index, compiled by Agbiz and the Industrial Development Corporation, tracks the sentiments of 25 agribusiness decision-makers about the economy, export volumes, capital investment and general agricultural conditions.
In a statement on Monday, the chamber said "the mid-summer El Niño drought's impact on summer grains and oilseed production is one of the major factors that weighed on the sentiment. The drought coincided with long-standing challenges of inadequate road infrastructure and municipal service delivery.
"Moreover, while the farming community recognises the improvements in Transnet's operations, they highlight the need for continuous work to address the inefficiencies of the ports and rail network."
Amid an ongoing logistics crisis, the World Bank earlier this month ranked the country's ports among the worst in the world. Cape Town ranks last out of 405 ports due to efficiency and declining performance.
Optimism
The index also cited lingering animal diseases and heightened geopolitical tensions as reasons for the overall sentiment decline.
News24 previously reported that the highly pathogenic avian influenza had wreaked havoc in the poultry sector, causing egg prices to shoot up amid a shortage of the product on retailers's shelves.
SA’s largest poultry producer, Astral Foods, recorded a R621 million operating loss amid the outbreak, while SA's biggest egg producer, Quantum Foods, said the risk of the disease is still high within the sector amid the unavailability of vaccines for certain strains of the disease.
According to the index, sentiment in exports also declined by 14 points to 21 for the second quarter of this year, indicating a possible decline in export activity from record export volumes of $13.2 billion (R238.76 billion) in 2023.
Meanwhile, sentiment for economic conditions increased by 9 points to 38. The chamber said the slight recovery was due to improved load-shedding performance and GDP forecasts.
Chief economist for Agbiz, Wandile Siholobo, said: "While the farming sector may have worried about the political outlook at the time of the survey, the reaction to the newly formed Government of National Unity has been widely positive, and the financial markets reaction reflects that optimism."
-NEWS24