Agribusinesses in Mzansi are optimistic about current operating conditions in the country. This, according to the Africa Agbiz/IDC Agribusiness Confidence Index (ACI), which recovered to 74 points in the final quarter of this year after a slight retreat to 67 in the third quarter.
The survey, conducted over the last two weeks of November, covered agribusinesses operating in all agricultural subsectors across South Africa.
The results are at the second highest level since the inception of the ACI in 2001, Agbiz chief economist Wandile Sihlobo stated, and reflect the favourable outlook about the 2021-2022 production season.
“The higher commodity prices, combined with the excellent weather outlook on the back of a La Niña event, are conducive to agricultural activities and could help farmers offset the higher input costs that farmers incurred at the start of the season,” he said.
The ACI comprises ten sub-indices and all improved from the third quarter of this year.
The turnover and the net operating income sub-indices increased by 10 and 1 points from the third quarter to 92 and 85, respectively. This reflects improved farm incomes on the back of a large harvest in the 2020-2021 season across the field crops and horticulture products, along with generally higher commodity prices. However, especially for grains and oilseeds.
High input costs the only setback
“The one major challenge that most respondents highlighted is the higher input costs, which is reducing profit margins of most farming business. Still, the favourable production outlook for the 2021-2022 season and persistently higher commodity prices suggest that most farming businesses could remain profitable,” Sihlobo pointed out
Meanwhile, after falling by eight points in the third quarter, the market share sub-index improved by 6 points to 77 in the last quarter.
“The financial institutions and the agribusinesses in horticulture and winter crops were amongst the respondents that signalled an improvement in the market share sub-index. At the same time, the rest of the respondents maintained a broadly unchanged view from the third quarter,” Sihlobo said.
Looking at the employment sub-index he pointed out that this had improved by two points from the third quarter to 62.
This is considered to be reflective of the general improvement in agricultural activity on the back of favourable rainfall and farmers having signalled a 5% year-on-year improvement in summer crop plantings this year, as well as general progressive improvement in horticulture production.
A surprise increase
Surprisingly, the capital investments sub-index jumped by 22 points to 79, which is the highest level since the second quarter of 2014.
“Some respondents attributed the improvement in this segment to consolidation in the sector and spending on movable assets, which is reflected in recent robust tractors and combine harvesters’ sales.”
Meanwhile the sub-index measuring the volume of exports sentiment rebounded by 6 points to levels seen in the second quarter of this year, which is 79.
“The sizable harvest from the field crops and horticulture, combined with cooperation amongst the logistics stakeholders and Transnet in facilitating exports, has helped sustain exports at fairly higher levels.”
“This also reflects some normalisation in export activity after the serious challenges Transnet experienced in quarter three,” Sihlobo noted.
Students learn wine grape cultivation
In other news, the learners of Boland Agricultural High School can look forward to gaining first-hand experience in wine grape cultivation, after Vinpro’s Gen-Z Vineyard Project established 40 different wine grape cultivars on the school’s premises this week.
Boland Agricultural High School joined hands with the Gen-Z team last year to start planning and coordinating this new project, after the Junior Agricultural Association expressed a need to plant a demo vineyard.
“The project at Boland Agricultural High School fits in perfectly with the objectives of the Gen-Z Vineyard Project. We are proud to be involved and are excited to see how this project will unlock value for learners and producers in the area,” says Francois Viljoen, manager of the wine industry organisation Vinpro’s Gen-Z Vineyard Project.
Gen-Z aims to connect wine producers, viticulturists, suppliers and researchers with the latest practices, technology and tools in the vineyard by establishing small-scale demo sites across South Africa’s wine grape growing areas.
A total of 21 red and 19 white wine grape cultivars were planted at Boland Agricultural High School, with the aim of seeing how these cultivars would perform in the Agter-Paarl region’s terroir.
“This is the first school where we have established such a demo vineyard, in order to give learners exposure at an early stage, not only to viticulture in general, but to the different nuances in the field in terms of grape variety, terroir and vineyard practices,” says Viljoen. Producers, viticulturists and other stakeholders in the area will also be able to view the vineyards during demonstration sessions.
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