The Agribusiness Confidence Index (ACI) increased by 11 points from the fourth quarter last year to 70 in the first quarter of this year.

The index, which is compiled by Agricultural Business Chamber (Agbiz) and the Industrial Development Corporation (IDC), recorded its third consecutive improvement, placing the ACI at its highest level since the last quarter of 2021.

The current level of the ACI suggests that South African agribusinesses are optimistic about business conditions in the country, particularly as a result of the La Niña rainfall experienced in the 2024/25 season.

Agbiz and the IDC say improvements in port efficiency also supported exports last year, while animal diseases remained under control in the last few months.

Nine of the ACI’s ten subindices improved in the first quarter, including the turnover subindex which increased by 14 points to 60 and the net operating income subindex, which increased by 28 points to 70.

The main drivers of these increase were optimism in agribusinesses operating in fruits and winter crops.

The market share of agribusinesses subindex improved by three points to 70 in the first quarter, with stakeholders in the winter grains regions signalling a particular uptick in confidence.

The employment subindex increased by 13 points to 55 in the first quarter, while the capital investments subindex was up 13 points to 75. The ACI finds that tractor and combine harvester sales continued to grow in the first two months of this year.

The volume of export subindex increased by 17 points to 100 in the first quarter, reflecting that South Africa’s agriculture exports had reached a record $13.7-billion in 2024.

The general economic conditions subindex increased by three points to 65 in the first quarter, which could be owing to the expected effects of structural reforms in the country.

Moreover, the general agricultural conditions index increased by 13 points to 80 in the first quarter, which mirrors the positive effects of the heavy rainfall in the 2024/25 summer season and high production projections for field crops, horticulture and livestock.

In the first quarter, the financing costs subindex declined by four points to 75, which is a positive development in line with easing interest rates.

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

Agbiz chief economist Wandile Sihlobo says the mood in the agriculture sector is upbeat and reflective of the recovery in the industry following a challenging dry and disease-ridden season in the prior year.

“It is heartening to see that the geopolitical tensions have not 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,’ Sihlobo concludes.