South African agribusiness optimism remains despite confidence index dip
After a notable uptick in Q1 2025, the Agbiz/IDC Agribusiness Confidence Index (ACI) fell by 5 points in Q2 2025 to 65. Most respondents pointed to the uncertain global trade environment, lingering geopolitical tensions, and the domestic animal disease challenge as some of the key factors constraining the sector.
Despite the slight decline, the current level of the ACI implies that South African agribusinesses remain optimistic about business conditions in the country. The better summer rains and improvements at the ports, which have enabled exports with minimal interruptions, are some of the positives.
This survey was conducted in the second week of June, covering various agribusinesses operating in all agricultural subsectors across South Africa.
Figure 1: Agbiz/IDC Agribusiness Confidence Index
(Shaded areas indicate periods indicate periods of drought in South Africa.)">Source: Agbiz Research, South African Weather Service
(Shaded areas indicate periods indicate periods of drought in South Africa.)
Discussion of the subindices
The ACI comprises ten subindices; six of them declined in Q2 2025, while the rest remained unchanged. Here is the detailed view of the subindices.
• The turnover subindex confidence is down by 5 points to 55 in Q2 2025. We observed a deterioration in sentiment among agribusinesses operating in the red meat sector, while others maintained a roughly unchanged view from the previous quarter. Similarly, the net operating income subindex fell by 5 points to 65 points in Q2 2025. The drivers were the same as the turnover.
• The sub-index measuring export sentiment volume fell by 40 points to 60 in Q2 2025. This is still a relatively favourable level. For example, in Q1 2025, South Africa's agricultural exports totalled $3.36bn, up 10% from the same period a year ago, according to data from Trade Map. Thus, the decline in sentiment in Q2 is a normalisation.
• The general economic conditions subindex fell by 15 points to 50 in Q2 2025. This indicates concerns about growth prospects this year due to both domestic and global constraints.
• The market share of the agribusiness subindex fell by 5 to 65 points in Q2 2025. Most respondents maintained an essentially unchanged view, which enabled the high base to lead to a mild decline in sentiment.
Unchanged view
• The employment subindex remained flat from the previous quarter at 55 points in Q2 2025. The generally favourable sentiment reflects the upbeat production conditions in field crops and horticulture.
• The capital investments subindex was unchanged from Q1 2025 at 75 points. This is unsurprising, as high-frequency data, such as tractor and combine harvester sales, have remained strong in the first five months of this year.
• The general agricultural conditions subindex remained unchanged at 80 points from the first quarter of 2025. This mirrors the positive effects of La Niña rains in the 2024/25 summer season, which have boosted the production conditions in field crops and horticulture.
Changes in interpretation
• The subindices of the debtor provision for bad debt and financing costs are interpreted differently from the abovementioned indices. A decline is viewed as a favourable development, while an increase signals growing financial strain.
• In Q2 2025, the financing costs indices increased by 10 points to 85. This came as a surprise, as the easing interest rates in the country would have made the financing environment better.
• However, the debtor provision for bad debt was unchanged from Q1 2025 at 50. The subindex remaining at this level suggests that some farmers may still face financial pressures from the previous season, and there will likely be more from the livestock industry, which is currently struggling with foot-and-mouth disease.
In essence, the ACI results for Q2 2025 illustrate that the mood in the sector remains upbeat about the recovery this year. Still, the results also show that the recovery will likely be uneven as some key subsectors struggle with animal disease.
The dominance of geopolitical concerns amongst respondents' views illustrates South Africa's agricultural sector's strong dependence on export markets and the need to work to diversify markets. China, India, Saudi Arabia, and Egypt are among the key markets we should expand into.
Still, as we drive the diversification, we must work vigorously to retain the access we have in various markets in the EU, UK, Africa, Asia, the Middle East and the Americas, amongst others.
Also important are the collaborative efforts between business and government on addressing the biosecurity issues in South Africa's agriculture, along with pushing for more efficient network industries, better management of the municipalities, and the implementation of the Agriculture and Agro-processing Master Plan, which is key for the long-term growth of the sector.
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