The Agbiz/IDC Agribusiness Confidence Index fell by 7 points to 53 during Q3 2022. Higher input costs, friction in some export markets, the continued occurrence of animal diseases, rising interest rates, more intense geopolitical risk and continued weaknesses in municipal service delivery and network industries contributed to this decline. Despite the decline, the general mark of 53 still indicates cautious optimism in terms of South African agriculture operating conditions.
The biggest drop was in the general economic conditions sub-index, where confidence fell by 19 points to 24. This drop reflects the uncertainty brought about as a result of the most recent global geopolitical tensions, inflation concerns, rising interest rates and a general slowdown in the world economy. Domestic issues such as ongoing load shedding and inefficiencies in network industries have also contributed to the uncertainty.
Furthermore, confidence in general agricultural conditions fell by 11 points to 42. This is the lowest level of confidence since Q4 2019. Agricultural businesses involved in grains, financing and agricultural chemicals were among the respondents with a pessimistic view. This pessimism is expected to change in the coming quarters because the weather outlook points to a weak La Nina system, which could bring moderate rain in the 2022/23 summer season.