The Agribusiness Confidence Index (ACI) decreased by two points to a headline level of 63 in the third quarter, with respondents having cited foot-and-mouth disease (FMD) outbreaks and trade friction with the US as main concerns in the agriculture sector.

The index, which is compiled by Agricultural Business Chamber of South Africa (Agbiz) and the Industrial Development Corporation, also finds that poor service delivery by municipalities and slow progress on government’s part to release land to beneficiaries with title deeds are hindering agriculture expansion.

The market share subindex decreased by six points to 59 in the third quarter, while the employment subindex declined by five points to 50.

The capital investments subindex decreased by eight points to 67 in the third quarter, and the export volumes subindex decreased by 17 points to 43.

The general agricultural conditions subindex decreased by 13 points to 67; however, the turnover subindex increased by 20 points to 75 in the third quarter.

Similarly, the net operating income subindex increased by six points to 71 in the third quarter.

The general economic conditions subindex improved by eight points to 58.

The financing cost subindex decreased by 14 points to 71, which is a positive move reflecting the current environment of easing interest rates, while the debtor provision for bad debt subindex remained unchanged at 50.

The current level of the ACI implies that South African agribusinesses are optimistic about business conditions in the country, with positive aspects having been favourable 2024/25 summer rains and improvements in port efficiencies.

Survey respondents were also optimistic about the winter crop season, which bodes well for the 2025/26 harvest.

The recovery of South Africa’s farming sector will likely be uneven this year, with the livestock sector remaining under pressure, while other subsectors are likely to grow.

Agbiz chief economist Wandile Sihlobo says the dominance of geopolitical concerns in respondents’ views illustrates the strong dependence of South Africa’s agriculture sector on export markets and the need to diversify them.

He deems access to new markets as critical, particularly in China, India and Saudi Arabia, as well as the retention of the EU, the UK, Africa and Asian markets that the country already exports to.

“Also important is the collaborative efforts between business and government on addressing biosecurity issues, as well as better management of municipalities and the release of government-owned land to appropriately selected beneficiaries,” Sihlobo states.