- The mood among agricultural businesses is currently the most optimistic it has been in 14 quarters.
- An agribusiness confidence index has surged in the first quarter, recording much stronger optimism about profitability and exports.
- This is despite the potential loss of AGOA.
Despite the potential loss of the African Growth and Opportunity Act (AGOA) trade agreement and US President Donald Trump's insistence that local farmers should move to the US as South Africa is a "bad place to be right now", the mood among agricultural businesses is currently at its most optimistic since 2021.
The Agribusiness Confidence Index, compiled by the Agricultural Business Chamber of South Africa (Agbiz) and Industrial Development Corporation, surged by 11 points to 70 points in the first quarter of this year — its third consecutive increase and the highest level since the fourth quarter of 2021.
The index surveys agricultural businesses on various factors, including exports, turnover, capital investments, profits, financing costs, employment and bad debts.
"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," said Wandile Sihlobo, chief economist at Agbiz.
"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," according to a report by Agbiz. South Africa has been hit by bird flu and foot-and-mouth disease in recent years.
The category for net operating income — an indicator of how profitable farmers are — surged by 28 points to 70 points, the highest level since the end of 2022.
Export sentiment also saw a big improvement. Last year, agricultural exports hit a record high of almost $14 billion, the sixth consecutive year of growth in the sector's export trade. The strong fruit harvests, along with the rebound in livestock and improved grain reserves from the prior season, boosted exports, Agbiz noted.
The Agbiz-IDC Agribusiness Confidence Index also showed that farmers were upbeat about capital investments in the first quarter, which was already reflected in strong tractor and combine harvester sales.
"(While) geo-economic tensions have been rising in recent weeks, farmers are hard at work on the ground and are focused on their businesses," said Sihlobo.
The US, which has been threatening South Africa's expulsion from the AGOA agreement, comprises about 4% of South Africa's farm exports, while Africa (44%) and Asia and the Middle East (21%) make up the majority. Exports to Europe follow closely at 19%.
"It would help for geopolitical discomfort and misinformation around agriculture to ease, especially between SA and the US," Sihlobo told News24.
Clearly, the South African farming sector is thriving and not under siege, and farmers are investing.
Sihlobo notes that South African agribusiness would like to retain its existing access to its main export markets while further expanding to the BRICS markets by lowering tariffs and removing non-tariff barriers.