The Agricultural Business Chamber (Agbiz)/Industrial Development Corporation Agribusiness Confidence Index (ACI) grew by five points to 67 in the fourth quarter.

This followed decreases for two consecutive quarters.

Agbiz chief economist Wandile Sihlobo cites favourable weather conditions, strong exports and better port efficiency as the key drivers of optimism in the sector.

Ample grains, oilseeds and horticulture harvests, coupled with nationwide vaccinations against foot-and-mouth disease (FMD) could have also contributed to an upbeat mood.

The current ACI level of 67 remains well above the neutral 50-point mark, which suggests that South African agribusinesses are generally optimistic about business conditions in the country, as of the last week of November.

Eight of the ACI’s ten subindices increased in the fourth quarter, while two declined.

The capital investments subindex increased by seven points to 74, which is aligned with the encouraging high-frequency data such as tractor and combine harvester sales, which have remained strong since the start of the year.

For example, Sihlobo says, cumulative tractor sales for the first ten months of this year amounted to 6 122 units – which marked an 11% increase year-on-year. Additionally, the cumulative sales of combine harvesters for the same period were up 8% year-on-year, with 197 units having been sold.

The subindex measuring export volumes surged by 32 points to 75 in the fourth quarter. For Sihlobo this is unsurprising given that South Africa's agricultural exports have remained strong since the start of the year despite significant trade policy shifts and uncertainty.

He elaborates that the cumulative value of agricultural exports for the first three quarters of the year was $11.7-billion, representing a 10% increase from the corresponding period in 2024.

Moreover, the general agricultural conditions subindex increased by four points to 71 in the fourth quarter, which highlights optimism about the benefits of La Niña-induced rains in the 2025/26 season, which has recently started.

The market share subindex increased by 11 points to 71 in the period, with most respondents across the various subsectors having shared this optimism which remains generally aligned with the better agricultural production conditions.

Further, the employment subindex increased by three points to 53, which mirrors the sector's general employment conditions.

Sihlobo reports that the number of farm jobs in South Africa increased by 2% from the second quarter to the third quarter, reaching 920 000.  

The general economic conditions subindex also improved by three points to 62 in the fourth quarter. This is consistent with the country's general macroeconomic optimism following ratings agency S&P's credit rating upgrades, South Africa's removal from the Financial Action Task Force's grey list, and numerous positive developments stemming from the implementation of Operation Vulindlela.

In contrast, however, the turnover subindex decreased by four points to 71, mostly owing to lower prices in the wind-crop growing regions. Nonetheless, the level of 71 is quite good, Sihlobo notes.

Similarly, the net operating income subindex declined by six points to 65 in the quarter under review.  

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.

The debtor provision for bad debts indices fell by three points to 47, reflecting gains from generally large agricultural harvests in the country, mainly in field crops and horticulture. However, the financing costs index grew by 12 points to 82. This was surprising, as the recent decline in interest rates has eased the cost of capital in the country.

In essence, the ACI results for the quarter illustrate generally better conditions in the agricultural sector.

"Still, the recovery of the sector this year will likely be uneven. We see better production conditions in the horticulture and field crops. However, the livestock industry is under pressure owing to FMD outbreaks,” Sihlobo explains.

He suggests that speedy vaccinations against FMD across the 12-million national herd of cattle, including the 7.2-million of commercial cattle, will help the sector’s recovery next year.

Moreover, the La Niña rains will help in horticulture and field crops.

“Also important are the collaborative efforts between business and government on pushing for better management of the municipalities, addressing rural crime, and the release of government-owned land to appropriately selected beneficiaries. This is key for long-term expansion in the sector,” Sihlobo concludes.