Business sentiment among SA farmers was unmoved by geopolitical tension and the potential elimination of the African Growth and Opportunity Act (Agoa) in the first quarter, with agribusiness confidence at its highest level since 2021.
The agricultural business chamber (AgBiz) reported an 11-point increase in its latest agribusiness confidence index (ACI) between the three months to end-December and the first quarter, marking a third consecutive quarterly improvement.
Based on a survey of executives in at least 25 agribusinesses from various subsectors last month, the index showed improvements in nine of its 10 categories including turnover, operating income, fixed investment and general agricultural conditions.
AgBiz attributed farmers’ optimism to a combination of factors, citing higher exports last year on improved port efficiency, progress in controlling animal diseases and La Niña rains, which drove a recovery in the industry after a challenging season of drought.
The figure has shown that the mood in the local industry is upbeat, said AgBiz chief economist Wandile Sihlobo, despite mounting fears over the damage that US President Donald Trump could do to SA farmers if he decides not to renew Agoa this year.
“It is heartening to see that the geopolitical tension hasn’t weighed on the sector heavily. We should build on this optimism for the sector’s long-term growth,” said Sihlobo.
Earlier this month agriculture minister John Steenhuisen warned that the ramifications of Trump not renewing the Agoa would be “devastating” for the sector, particularly citrus exports, which enter the US tariff-free under Agoa.
SA’s citrus exports last year, which amounted to more than 102,000 tonnes at a total value of R1.7bn, would have incurred a tariff penalty of R35m without Agoa, putting SA at a disadvantage to competitors such as Spain, Morocco and Egypt.
Steenhuisen reiterated a warning by the Citrus Growers Association (CGA) that losing Agoa would shrink SA’s share in US citrus markets and put pressure on farmers and exporters’ tight profit margins.
“Citrus farms employ thousands of seasonal labourers, many of whom would face job insecurity or wage reductions if export volumes drop,” said Steenhuisen, adding that it would have knock-on effects on logistics providers, packaging facilities and suppliers of farm inputs such as fertilisers, pesticides and equipment.
CGA CEO Boitshoko Ntshabele estimated that the citrus industry could create 100,000 jobs by 2032 if it added 95-million 15kg cartons to its exports, but that “increased market access is crucial”.
Local citrus exporters also face significant logistics constraints stemming from inefficiency at SA’s ports. A recent study by the Bureau for Food and Agricultural Policy estimated that inefficiencies in logistics cost the domestic citrus industry R5.27bn last year.
Sihlobo said that while SA’s agriculture was export-orientated, its export markets and products were varied. The EU, Asia and the UK all represented sizeable markets and he argued that there was more potential for expansion in the Middle East.
Africa remained an anchor, absorbing nearly half of SA’s agricultural exports, and “requires continuous engagements to strengthen relations. This is ideal to avoid the friction we observed with the vegetable export ban in Botswana and Namibia”, he said.
“An effort to keep the sector on [this] 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,” he said.
Further interest rate cuts were also expected to provide farmers with some relief, with the ACI’s debt provision for bad debt sub-index worsening in the first quarter, suggesting that agribusinesses still faced financial pressures from last season.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.