Mzansi agro-industries are optimistic about the current operating conditions in the country. This, according to the Africa Agbiz / IDC Agribusiness Confidence Index (ACI), which recovered to 74 points in the last quarter of this year after declining slightly to 67 in the third quarter.
The survey, conducted during the last two weeks of November, looked at agro-industries operating in all agricultural sub-sectors across South Africa.
The results are at the second highest level since the creation of ACI in 2001, said Agbiz chief economist Wandile Sihlobo and reflect the favorable outlook for the 2021-2022 production season.
“Rising commodity prices, combined with the excellent weather outlook following a La Niña event, is conducive to farming activities and could help farmers offset the higher input costs that farmers incurred in the beginning. of the season, “he said.
The ACI has ten sub-indices and all of them have improved from the third quarter of this year.
The revenue and net operating income sub-indices increased 10 and 1 points from the third quarter to 92 and 85, respectively. This reflects improved farm incomes thanks to a large harvest in the 2020-2021 season for field crops and horticultural products, as well as generally higher commodity prices. However, especially for grains and oilseeds.
High inputs cost the only downside
“The main challenge that most respondents pointed out is the higher cost of inputs, which squeezes the profit margins of most farm businesses. Nonetheless, the favorable production outlook for the 2021-2022 season and ever higher raw material prices suggest that most agricultural businesses could remain profitable, ”Sihlobo stressed.
At the same time, after falling eight points in the third quarter, the market share sub-index improved by 6 points to 77 in the last quarter.
“Financial institutions and the horticulture and winter crop agro-industries were among the respondents who reported 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 it improved by two points between the third quarter and 62.
This is seen to reflect the general improvement in agricultural activity thanks to favorable rainfall and farmers reporting a 5% year-over-year improvement in summer crop planting this year, as well as a gradual improvement. general horticultural production.
A surprise increase
Surprisingly, the capital investment sub-index jumped 22 points to 79, the highest level since the second quarter of 2014.
“Some respondents attributed the improvement in this segment to industry consolidation and spending on movable property, which is reflected in recent sales of heavy-duty tractors and combines. “
Meanwhile, the sub-index measuring the volume of export sentiment rebounded 6 points to levels seen in the second quarter of this year, which is 79.
“The significant harvest of field crops and horticulture, combined with the cooperation between logistics players and Transnet to facilitate exports, has helped to keep exports at fairly high levels. “
“This also reflects a certain normalization of export activity after the serious challenges faced by Transnet in the third quarter,” noted Sihlobo.
READ ALSO: Agricultural confidence improves thanks to good harvests, favorable outlook
Students learn how to grow wine grapes
In other news, learners at Boland Agricultural High School can expect to gain first-hand experience in growing wine grapes, after Vinpro’s Gen-Z Vineyard project established 40 wine grape cultivars. different in the school premises this week.
Last year, Boland Agricultural High School partnered with the Gen-Z team to start planning and coordinating this new project, after the Junior Agricultural Association expressed the need to plant a demonstration vineyard.
“The Boland agricultural school project fits 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 create value for learners and producers in the region, ”said François Viljoen, director of the wine industry organization Gen-Z Vineyard Project by Vinpro.
Gen-Z aims to connect wine producers, grape growers, suppliers and researchers with the latest practices, technologies and tools in the vineyard by establishing small-scale demonstration sites in wine regions of South Africa.
A total of 21 cultivars of red and 19 white grapes were planted at the Boland agricultural school, with the aim of seeing how these cultivars would perform in the terroir of the Agter-Paarl region.
“This is the first school where we have set up such a demonstration vineyard, in order to give learners an early exposure, not only to viticulture in general, but to the different nuances of the estate in terms of grape variety, terroir and of vineyard. practices, ”says Viljoen. Producers, wine growers and other stakeholders in the area will also be able to visit the vineyard during demonstration sessions.
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