28.03.2010

Negative agribusiness confidence at last lifting its head

The ABC/IDC Agribusiness Confidence Index remains in negative territory (<50 Index points), even though it improved somewhat in comparison to the preceding quarter, as well as in comparison to the same quarter of the previous year. Agribusiness confidence rose almost to the levels recorded at the end of 2008. According to Mrs Lindie Stroebel, the economic intelligence manager at the Agricultural

Business Chamber (ABC) and compiler of the index, it would have been convenient to speculate whether it will return to the positive (even peaking) period in mid-2008. However, Stroebel warned that it would be dangerous, considering the expectations of lower commodity prices, strong exchange rates and the variable weather and production conditions being experienced, with specific reference also to the severe drought conditions in the southern and south eastern parts of the country.

The ABC/IDC Agribusiness Confidence Index remains in negative territory (<50 Index points), even though it improved somewhat in comparison to the preceding quarter, as well as in comparison to the same quarter of the previous year. Agribusiness confidence rose almost to the levels recorded at the end of 2008. According to Mrs Lindie Stroebel, the economic intelligence manager at the Agricultural

Business Chamber (ABC) and compiler of the index, it would have been convenient to speculate whether it will return to the positive (even peaking) period in mid-2008. However, Stroebel warned that it would be dangerous, considering the expectations of lower commodity prices, strong exchange rates and the variable weather and production conditions being experienced, with specific reference also to the severe drought conditions in the southern and south eastern parts of the country.

The Agricultural Business Chamber (ABC) and the Industrial Development Corporation (IDC) have found that confidence in the agribusiness sector in the first quarter of 2010 has increased by almost 11% since the first quarter of 2009; from 39.03 to 43.3 index points. The ABC/IDC Agribusiness Confidence Index measured a mere 9,4% higher in the first quarter of 2010, than the preceding quarter (39,55).

During the fourth quarter of 2008, the Index reached negative levels for the first time since 2006. Confidence dropped significantly after record turnovers and net operating income were achieved in 2008, due to high yields and the spike in commodity prices. The drop, however, did not come as a surprise as the global financial meltdown and economic slowdown at the time resulted in reduced purchasing power and demand. Even though the consequent relaxation in the monetary policy did assist considerably in stimulating the economy, the situation still deteriorated.

The Agribusiness Confidence Index reached its all-time low in the third quarter of 2009. The first quarter of 2010, as with the 4th quarter of 2009, again showed a small quarter-to-quarter increase, while the first year-to-year increase since mid 2008 was noted.

To download full article click here.

Copyright © 2018 by Agricultural Business Chamber