After rising for much of last year, the Agricultural Business Chamber of South Africa (Agbiz)/Industrial Development Corporation (IDC) Agribusiness Confidence Index (ACI) fell by 18 points in the first quarter of this year to 49, the lowest level since the third quarter of 2024.

In a media release, Agbiz says the spread of foot-and-mouth disease (FMD), which continues to impose immense financial pressure on the cattle industry; African swine fever in the pig industry; and pressures from lower global prices in the sugar and wheat industries are among the key constraints highlighted by survey respondents as major risks weighing on sentiment.

Moreover, rising concerns about the impact of the Middle East conflict on energy and fertiliser prices also added to the downbeat mood in the sector.

Agbiz notes that the current ACI level of 49 is just under the 50-neutral mark, suggesting that South African agribusinesses are becoming somewhat pessimistic about business conditions in the country.

This survey was conducted in the first week of March and covered agribusinesses operating across various agricultural subsectors nationwide.

The ACI comprises ten subindices and most declined in the first quarter.

The turnover subindex confidence fell by 21 points quarter-on-quarter to 50, which was primarily driven by views from winter crop-growing regions, which recorded relatively poor yields at a time when global wheat prices are under pressure.

“We also have concerns in the beef and dairy industry respondents owing to the ongoing FMD,” says Agbiz.

Similarly, it points out that the net operating income subindex declined by 22 points to 43 in the first quarter of this year. This is the lowest level since the end of 2024 and is also underpinned by similar factors.

The market share subindex deteriorated by 17 points to 54 in the first quarter of this year.

“Most respondents across the various subsectors shared this pessimism, and we suspect that the port inefficiencies in Cape Town also added to the downbeat mood,” says Agbiz.

The employment subindex declined by 14 points to 39 points in the first quarter.

Agbiz says this mirrors the sector's general sentiment, though it is worth noting that the livestock industry is not the biggest employer in agriculture.

Most jobs are in the horticulture, wine and field crop industries.

“Still, the downbeat mood may also reflect the sector's broader mood amid the pressures of FMD and the Middle East issues.”

The capital investments subindex dropped by 20 points to 54.

Agbiz says this major decline is again more about the sector's general mood than about overall activity, noting, for example, that farmers continue to invest in tractors and combine harvesters.

The subindex measuring export volumes deteriorated by 25 points to 50.

Concerns about the impact of the Middle East conflict on logistics, along with rising shipping costs, may be the primary challenges here, says Agbiz.

Aside from these issues, it says the production conditions in horticulture and field crops look promising across South Africa.

Additionally, Agbiz notes that the general economic conditions subindex remained fairly resilient, dropping only by one point to 61 in the first quarter of this year.

It notes that this lasting sense of optimism is consistent with the country's general macroeconomic sentiment following S&P's credit rating upgrades, South Africa's removal from the Financial Action Task Force (FATF) grey list and numerous positive developments stemming from the implementation of Operation Vulindlela.

The general agricultural conditions subindex fell by 31 points to 39 in the first quarter of this year.

Agbiz points out that this is the lowest level since the end of 2024.

It explains that the unfavourable production conditions in the Western Cape during the winter crop season, excessive rainfall in the northeastern parts of the country and animal diseases are the major issues weighing on agricultural conditions.

Agbiz explains that the debtor provision for bad debt and financing costs subindices 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 this year, the debtor provision for bad debts indices weakened by eight points to 39, reflecting tail-end gains from generally large agricultural harvests in the 2024/25 season, mainly in field crops and horticulture.

These better financial conditions continue to support agricultural machinery sales.

The financing costs index declined by 21 points to 62. This was partly owing to the recent decline in interest rates.

Agbiz says the ACI results for the first quarter of this year show that all is not well in South Africa's agriculture.

Agbiz chief economist Wandile Sihlobo notes that the livestock and pig industries are under immense financial pressure because of diseases, adding that these results mirror the challenge at hand.

“What remains key is a speedy vaccination process that will get us off the current worrying path.”

Sihlobo adds that the Middle East conflict also presents new challenges, complicating South Africa’s exports to that region and putting pressure on fuel and fertiliser prices.

“These factors may weigh on the sector as we approach the 2026/27 winter crop season and later in the 2026/27 summer crop season.”