SA’s agribusiness confidence reaches record high in second quarter

South Africa's agricultural sector is experiencing a soaring wave of confidence, with the Agribusiness Confidence Index hitting a record high of 75 points in the second quarter of 2021, up from 64 points in the previous quarter. The Chief Economist at the Agricultural Business Chamber of South Africa, Wandile Sihlobo, joined CNBC Africa to delve into the details behind this remarkable uptick. Sihlobo expressed jubilation over the sector's current state, highlighting the exceptional performance that South African agriculture has been witnessing, which has been propelled by a remarkable combination of favorable weather conditions, increased crop production, and surging commodity prices. He noted that the positive sentiments within the industry are at an all-time high, marking a significant milestone in the history of the Agribusiness Confidence Index. Sihlobo went on to discuss the correlation between record production and heightened prices within the sector, a unique scenario that South Africa has rarely experienced in the past. He underscored the fact that the current surge in confidence is a stark contrast to previous years plagued by droughts, as evidenced by the graph he shared on Twitter during the interview. The index, comprising various sub-indices such as employment, capital investment, and market share export, all reflect a buoyant and optimistic outlook prevailing among agricultural stakeholders during the second quarter of the year. Looking ahead to the upcoming farming season, Sihlobo expressed optimism, citing forecasts predicting a substantial growth rate in the agriculture sector for the year, with some estimates exceeding 7%. He alluded to robust activity in agricultural machinery sales since May 2020, attributing this trend to the flourishing agricultural landscape in the country. However, Sihlobo also cautioned against potential hurdles that could impede the sector's progress, notably highlighting concerns around biosecurity issues encompassing animal diseases like foot and mouth disease, African swine fever, and avian influenza. Additionally, he underscored the ongoing debate surrounding expropriation without compensation in South Africa as a critical factor that could impact future investments and sentiments within the sector. Sihlobo emphasized the importance of addressing these challenges to ensure the continued growth and stability of the agricultural industry in South Africa. While acknowledging the positive long-term weather forecasts that bode well for the upcoming seasons, he stressed the need for vigilance in monitoring risks and uncertainties to sustain the current momentum in the sector. The discussions around potential policy decisions, including those related to land expropriation, remain crucial in shaping the outlook for the agricultural landscape in the country. Sihlobo's insights shed light on both the remarkable progress and the looming challenges that define the current narrative of South Africa's agribusiness sector, underscoring the need for strategic planning and proactive measures to safeguard its growth and resilience.