The Agbiz/IDC Agribusiness Confidence Index (ACI) increased 11 points from Q4 2024 to 70 in Q1 2025. This is the third consecutive improvement, placing the ACI at its highest level since Q4 2021, a year of La Niña rainfall that boosted agricultural output. The current level of the ACI implies that South African agribusinesses remain optimistic about business conditions in the country. This optimism is a result of a combination of factors, including La Niña rains that support the 2024-25 agricultural season, improvements in port efficiency that supported exports in 2024, and the progress in controlling animal diseases. This survey was conducted in the third week of February, covering various agribusinesses operating in all agricultural subsectors across South Africa.
Discussion of the Performance Indicators
The ACI comprises ten performance indicators; nine improved notably in Q1 2025, while one declined mildly. Here is the detailed view of the performance indicators.
- Turnover Confidence: Increased 14 points from Q4 2024 to 60 in Q1 2025. The most optimism was observed in agribusinesses operating in fruits and winter crops, while others remained generally unchanged from the previous quarter. Similarly, the net operating income indicator lifted by 28 points to 70 points in Q1 2025, its highest level since the end of 2022.
- Market Share: Increased by 3 points to 70 in Q1 2025. Most respondents maintained an unchanged view, with stakeholders in the winter grains regions signalling an uptick in confidence.
- Employment Confidence: Rebounded 13 points from Q4 2024 to 55 in Q1 2025. As the sector recovers from drought and animal diseases, optimism around employment possibilities is growing. Additionally, this year’s minimum wage increase was mild and aligned with industry expectations.
- Capital Investments: Up 13 points in Q1 to 75. High-frequency data, such as tractor and combine harvester sales, show strong improvement in the first two months of this year.
- Export Sentiment: Increased significantly by 17 points to 100 in Q1 2025. This reflects the activity as South Africa’s agricultural exports reached a record US$13.7 billion in 2024.
- General Economic Conditions: Lifted 3 points to 65 in Q1 2025. The recovery in sentiment could be due to the expected effects of the overall implementation of Operation Vulindlela.
- General Agricultural Conditions: Improved by 13 points to 80 in Q1 2025, reflecting the positive effects of La Niña rains in the 2024/25 summer season.
Changes in Interpretation
Two performance indicators, debtor provision for bad debt and financing costs, are interpreted differently. A decline is seen as a positive sign, while an increase indicates growing financial strain.
- Financing Costs: Declined by 4 points in Q1 2025 to 75, aligning with the easing of interest rates.
- Bad Debt Provision: Increased by 8 points to 50, signalling that some farmers may still be facing financial pressure from the previous season.
Overall, the ACI results for Q1 2025 show that the mood in the sector is upbeat, reflecting the recovery in the agricultural industry following a challenging season of drought and animal diseases. “It is heartening to see that geopolitical tensions haven’t weighed on the sector heavily. We should build on this optimism for the sector’s long-term growth. An effort to keep the sector on a positive path requires collaborative efforts between business and government on pushing for the effectiveness of the network industries, better management of the municipalities, further efforts to open new export markets, and the implementation of the Agriculture and Agro-processing Master Plan,” concludes Wandile Sihlobo, Chief Economist of the Agricultural Business Chamber of SA (Agbiz).
With continued investment, supportive policies, and favourable weather, South African agriculture is on track for a strong year in 2025.