Wandile Sihlobo, the chief economist at the Agricultural Business Chamber of SA (Agbiz), shared several reasons for optimism about agriculture in South Africa.
Like other economic sectors, South Africa's agricultural industry has shown signs of growing optimism since the start of the Government of National Unity, boosting confidence in its future direction.
The Agbiz/IDC Agribusiness Confidence Index (ACI), a sentiment indicator for business conditions in agriculture, which was released last month, rose by 10 points to 48 in the third quarter, Sihlobo noted. Although the index is still below the neutral 50-point mark, the 10-point increase is an encouraging sign of positive momentum.
One key factor supporting this improvement in sentiment is the country's more stable electricity supply.
"South Africa’s horticultural production—including fruit, vegetables, and floriculture—relies on irrigation and requires a steady energy supply. Additionally, about a third of field crops depend on irrigation and benefit from improved energy supply. Major energy consumers in the sector, like the livestock, poultry, dairy, and aquaculture industries, also depend on stable electricity," Sihlobo said.
He added that while renewable and alternative energy sources have increased, greater stability in national energy supply has been instrumental.
Sihlobo also highlighted that the 2024-25 summer season has begun with relatively lower input costs, another reason for optimism. Fertilizer prices, for example, were roughly 10% lower year-on-year in rands, improving the financial outlook for farmers, as fertilizer accounts for about one-third of input costs for grain farmers in South Africa.
Herbicide and insecticide costs have also fallen, with herbicide prices down by around 20% and insecticides down by roughly 15% year-on-year as of August 2024. These declines, aided by a stronger rand and global price reductions, help alleviate operational costs for farmers, Sihlobo added.
Lower fuel prices during a high-usage planting period also favourably impact farming operations, he noted. Additionally, the possibility of La Niña-induced rainfall in the 2024-25 summer season provides a positive agricultural outlook for South Africa.
Looking ahead, Agbiz anticipates that better agricultural production conditions will support job creation in the sector and help stabilize consumer food prices going into 2025. “
While these factors create optimism for agriculture, South Africa’s long-term growth—and job creation—depends on the Government of National Unity’s ability to address challenges in network industries, improve municipal functions, manage animal diseases, and expand export markets amid global trade shifts,” Sihlobo said.
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