Agribusiness confidence highest in 14 months

Estimated reading time: 4 minutes

The Agbiz/IDC Agribusiness Confidence Index (ACI) increased 11 points from the fourth quarter of 2024 to 70 in the first quarter of 2025. This is the third consecutive improvement, placing the ACI at its highest level since the fourth quarter of 2021, a year of La Niña rainfall that boosted agricultural output.

The current level of the ACI implies that South African agribusinesses remain optimistic about business conditions in the country. This optimism is a result of a combination of factors, including La Niña rains that support the 2024–25 agricultural season, improvements in port efficiency that supported exports in 2024, and the progress in controlling animal diseases. This survey was conducted in the third week of February, covering various agribusinesses operating in all agricultural subsectors across South Africa.

Discussion of the subindices

The ACI comprises ten subindices; nine improved notably in the first quarter of 2025, while one declined mildly. Here is the detailed view of the subindices:

• The turnover subindex confidence is up 14 points from the fourth quarter of 2024 to 60 in the first quarter of 2025. We observed most optimism in agribusinesses operating in fruits and winter crops, while others maintained a generally unchanged view from the previous quarter. Similarly, the net operating income subindex lifted by 28 points to 70 points in the first quarter of 2025, its highest level since the end of 2022. The drivers were the same as the turnover.

• The market share of the agribusiness subindex is up by 3 points to 70 in the first quarter of 2025. Most respondents maintained an essentially unchanged view, with stakeholders in the winter grains regions signalling an uptick in confidence.

• The employment subindex rebounded 13 points from the fourth quarter of 2024 to 55 in the first quarter of 2025. Provided the sector is recovering from drought and animal diseases, a positive change in sentiment about employment possibilities is unsurprising. Moreover, this year’s minimum wage increase was also mild and aligned with industry expectations.

• The capital investments subindex was up 13 points in the first quarter to 75. The high-frequency data, such as tractors and combine harvester sales, are already strong and show improvement in the first two months of this year.

• The subindex measuring the volume of export sentiment increased significantly by 17 points to 100 in the first quarter of 2025. This reflects the activity as South Africa’s agricultural exports reached a record US$13,7 billion in 2024.

• The general economic conditions subindex lifted 3 points to 65 in the first quarter of 2025. This recovery in the mood about the economic conditions could be due to the expected effects of the overall implementation of Operation Vulindlela.

• The general agricultural conditions subindex lifted 13 points to 80 in the first quarter of 2025. This optimism mirrors the positive effects of La Niña rains in the 2024/25 summer season. The production estimates for field crops, horticulture, and livestock are generally optimistic.

Changes in interpretation

• The subindices of the debtor provision for bad debt and financing costs are interpreted differently from the abovementioned indices. A decline is viewed as a favourable development, while an increase signals growing financial strain.

• In the first quarter of 2025, the financing costs indices declined by 4 points in the first quarter of 2025 to 75, which supports the sentiments. In an environment of easing interest rates, this subindex’s decline is aligned with expectations.

• However, the debtor provision for bad debt increased by 8 points to 50, which is unfavourable and shows that some farmers may still have financial pressures from the last season.

Concluding remarks

Overall, the ACI results for the first quarter of 2025 show that the mood in the sector is upbeat, reflective of the recovery in the agricultural industry following a challenging season of drought and animal diseases. “It is heartening to see that the geopolitical tensions haven’t weighed on the sector heavily. We should build on this optimism for the sector’s long-term growth. An effort to keep the sector on the positive path requires collaborative efforts between business and government on pushing for the effectiveness of the network industries, better management of the municipalities, further efforts to open new export markets, and the implementation of the Agriculture and Agro-processing Master Plan” concludes Wandile Sihlobo, chief economist of the Agricultural Business Chamber of SA (Agbiz) – Press release, Agbiz