He also provides more information about the latest developments in the agricultural sector. 

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In this week’s insert, Sihlobo talks about the Agribusiness Confidence Index that retracted back to 67 points in the third quarter of 2021.

“Following a surge to an all-time high of 75 in the second quarter of this year, the Agbiz/IDC Agribusiness Confidence Index (ACI) retracted back to 67 points in the third quarter. Still, this current level reflects favourable conditions in South Africa's agriculture sector and for agribusiness. A level above the neutral 50-point mark implies that agribusinesses are optimistic about operating conditions in the country.

“The optimism reflects both the large output and higher commodity prices that have benefited farming businesses in the 2020/21 agricultural production season and the favourable outlook about the upcoming 2021/22 season.

“The higher commodity prices and the positive weather outlook, which shows prospects of above-normal rain across most regions of South Africa, are supportive factors for agribusinesses. This third-quarter survey was conducted between the last week of August and the first week of September and covered agribusinesses operating in all agricultural subsectors across South Africa,” says Sihlobo.

He adds that the ACI comprises ten sub-indices; some moderation across most of these explains the decline of the composite index in the third quarter of 2021.

“With that said, the sector is still in good shape and looking to another favourable season in 2021/22. For the near term, we expect the robust growth performance of between 6-7% y/y in agriculture's gross value added in 2021 from an already high base after the strong growth of 13,4% in 2020.

“Our colleagues at the Bureau for Food and Agricultural Policy (BFAP) have a more optimistic view, forecasting the expansion in agriculture’s gross value added at 7,6% y/y, underpinned by bumper harvest for major summer crops, relatively higher commodity prices as well as robust export activity. Our only major concern is the ongoing glitches in the country's logistics services, both in the in-country and shipping ports centres.

“This is an area that needs increased attention for policymakers in an export-oriented agricultural sector, along with the broader trade policy matter we discussed in the opening section of this note,” concludes Sihlobo.

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