The fall in the Agribusiness Confidence Index (ACI) followed a more modest two-point decline in Q2 and is a worrying sign as agriculture has been one of the few bright spots in an economy which is now being waylaid once again by Stage 6 power cuts. 

Vladimir Putin’s war in Ukraine may have triggered a surge in the prices of key agricultural commodities, but it has also fanned the flames of farm input cost inflation. The harvest that is being reaped remains bitter. 

On top of soaring costs, Agbiz noted that sentiment was weighed by “persistent animal disease challenges”, rising interest rates – commercial farmers borrow a lot – geopolitical risks and “ongoing weaknesses in municipal service delivery and network industries”. If you think urban roads are in rough shape, try some of the rural roads which are vital arteries to connect produce to markets. Just don’t try them without a big Hilux. 

The survey was conducted in the first two weeks of September, so it is as fresh, if not fresher, than much of the stuff in your local Checkers. 

The index comprises 10 subindices, and seven declined in Q3, but the numbers are all over the show in a revealing way. 

“The turnover subindex fell by 14 points to 79 in the third quarter of 2022. This current level, however, is well above the long-term average, signalling that many farmers and agribusinesses continue to benefit from strong crop prices,” Agbiz said. 

So, commercial farmers expect prices for their products to remain elevated, which will keep them planting. But confidence simply goes pear-shaped when the wider economy is viewed from the field. 

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“The general economic conditions subindex fell by 19 points to 24. These results mirror the current environment of uncertainty triggered by recent geopolitical tensions, inflation concerns, rising interest rates, a general slowdown in the global economy, and more domestic issues such as the persistent load shedding and inefficiencies in the network industries, among other factors,” Agbiz said. 

And remember, the survey was taken just before Stage 6 rolling blackouts were triggered again. 

Still, the outlook is not all grim, and at least the broad index remains in marginally positive territory.  

For one thing, the current stage of the La Niña weather system is seen heralding good rains for the summer grain crop season. 

“Looking ahead, the prospects of a weak La Niña provide a good foundation for an excellent rainy season,” said Agbiz Chief Economist Wandile Sihlobo. 

“This moderation in sentiment suggests that 2022 could show contraction in South Africa’s agriculture gross-value added. Still, this does not mean the sector is in terrible shape. The base in 2021 is high and we see slightly lower harvests in some field crops this year.” 

An improvement would certainly be welcome. 

The agriculture sector only accounts for roughly 2.5% – it varies from quarter to quarter – of South African GDP, but that hardly captures its importance. It is the wheel that turns a lot of other economic activity, is crucial for food security in a country with high rates of poverty and hunger, is a key source of hard currency from exports, and a big employer with huge potential for emerging farmers if the right policies can be sown. 

What happens in the platteland has a direct bearing on the rest of the country and economy. DM/BM